Natural Gas and the Clean Power Plan

In June 2014, the EPA announced a new plan for cleaner energy designed to cut carbon pollution. These EPA standards and limits are a groundbreaking development, as there have never been national limits on carbon pollution created by plants. Existing power plants need to meet reduced emission rates in order to achieve the goal of a 25 percent reduction in emissions between 2020 and 2029.

Building Blocks of Reduced Emissions

The EPA’s proposed process is designed to give states flexibility in how they meet the new requirements, and how they set goals. This is important because different states have a different mix of energy sources, and different consumption patterns and needs. States will use the EPA established “building blocks” to determine their goals.

Building blocks include:

• Coal plant heat rate improvement
• Increased use of existing natural gas
• Clean generation (renewable & nuclear)
• End-use energy efficiency

Converting Rate-Based Goals to Mass-Based Goals

As you might imagine, there’s a great deal of discussion about how states will handle emission reductions. EPA guidelines initially provided a rate – but not a mass quantity. Rate-based goals need to be translated to mass-based goals to avoid confusion, and standardization and conversion methods would be helpful guidance for states, regardless of the pathway to compliance states choose.

On November 13, the EPA shared a proposed rule that outlines conversion. Of course, this is only the beginning of the discussion, as tens of thousands of public comments have been shared related to the proposed rule. In the coming months, we’re likely to have greater clarification on rates/mass requirements so states can better demonstrate that goals have been met.

Will It Be Enough?

These issues aside, the Clean Power Plan has its critics. A recent study reports that a 9 percent emission reduction over the long term isn’t enough – it says natural gas use is too great, to the detriment of green energy development. However, the net impact of the Clean Power Plan on the natural gas industry is actually less demand. Scott McKey with the Bipartisan Policy Center explains what the Clean Power Plan could mean for the natural gas industry by outlining several scenarios.

“Even though the proposed rule’s second building block encourages increased dispatch of existing under-utilized natural gas combined cycle combustion turbines, the proposal’s incentives to boost the deployment of end-use energy efficiency throughout the economy results in lower total electricity demand and, thus, lower natural gas consumption in the electric power sector when compared to the EPA Base Case [EPA Base Case is projected natural gas use without the Clean Power Plan].”

In every case, the natural gas industry is growing. However, the end-use efficiency building block from the EPA changes this projected growth – natural gas demand will decrease because states will begin to make existing natural gas use more efficient.

Natural Gas Means Cleaner Energy

Ultimately, natural gas is a bridge to clean energy options and will transition from coal and diesel sources. Its carbon emissions are almost half of what coal emits.

How much carbon dioxide is produced when different fuels are burned?
Pounds of CO2 emitted per million Btu of energy:

(Source: Reported by the U.S. Energy Information Administration)

Ultimately, natural gas is a cleaner source of energy that will help the U.S. develop an energy mix that suits our future needs, and a critical part of on-going energy needs of the United States.

Image Credit: Bilfinger SE