The People of America's Oil and Natural Gas Indusry

Natural Gas, Emissions Progress and CPP Compliance

Mark Green

Mark Green
Posted September 2, 2016

PJM Interconnection, which oversees the much of the Mid-Atlantic electric grid, has a new report analyzing various options for complying with EPA's Clean Power Plan (CPP) – which would limit carbon dioxide emissions from existing power generation resources and proposes a federal plan to be implemented if the states don’t act. PJM's report is extensive, with lots to digest, but some quick takeaways.

First, it’s noteworthy that combined-cycle natural gas is the primary new energy source in each of PJM’s compliance scenarios:

scenarios

Why? PJM explains:

“… each scenario results in significant levels of new combined cycle resources. Combined cycles are needed to maintain resource adequacy. Their capacity value compared to new renewable resources means that it is lower cost to continue to develop combined cycles both to satisfy load growth and to compensate for reductions in the level of operating steam turbine-driven resources, and help in achieving mass-based emissions targets.”

In other words: abundant, affordable and reliable. Natural gas appears in each of PJM’s compliance scenarios for good, market-based reasons – with ample availability and dependability driving its economic benefits. In the marketplace, this is a winning hand for America.

And cleaner. Two charts below show that as the percentage of combined-cycle natural gas increases, emissions go down:

tandem

We already know that increased use of domestic natural gas is the chief reason U.S. energy-associated emissions of carbon dioxide are in retreat, allowing the U.S. to lead the world in CO2 reductions. This is occurring simultaneous with a U.S. energy renaissance that has made the United States the world leader in natural gas and oil production and economic growth – breaking the historic pattern in which greater energy production and economic expansion were accompanied by emissions increases.

That right there is the U.S. Model: Growth benefiting America economically and in an energy security sense and lower carbon emissions – thanks mostly to natural gas largely developed with safe hydraulic fracturing.

Back to PJM’s report on complying with the CPP. Thinking about the ongoing public policy discussion surrounding the CPP, there’s a telling point in a side analysis of the impact of lower natural gas prices:

“A lower natural gas price forecast (with gas prices remaining in the $3-$4/MMbtu range, in constant 2018 dollars over the 20-year study period) has a greater effect on emissions levels, the retirement of fossil steam resources and new entry of natural gas combined cycle resources than even the most stringent of the studied compliance pathways that also regulate the CO2 emissions of new natural gas combined cycle resources. … Because of accelerated retirements, there would be no cost to achieve compliance, and the resulting emissions would be below the final Clean Power Plan targets, even without the Clean Power Plan.”

Shorter: Abundant, affordable natural gas and basically letting the market work – vs. a bureaucratic, command-and-control approach – will drive economic and environmental progress. Again, it’s a description of the U.S. Model. API President and CEO Jack Gerard from a teleconference with reporters this week:

“It’s not a theoretical or philosophical conversation about what regulation’s good or bad. We’ve now demonstrated (that) market forces have driven us to leading the world in reducing carbon emissions. We think we’ve got to recognize that and what brought us there and focus on those opportunities, not to come out with some idea as to how we’re now going to change that behavior by imposing unnecessary and in many ways redundant regulations.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.