By Jim Snyder - 03/01/10 11:00 AM EST
Natural gas lobbyists, who felt their industry got the short shrift in climate legislation, are pushing new incentives to encourage utilities to switch from coal to natural gas.
In doing so, the sector is starting a lobbying fight with the coal industry, which has long and deep ties on Capitol Hill and is determined to hold onto its role as the dominant source of electricity in the United States.
The president’s speech was to validate a lobbying campaign to promote the industry’s profile in Washington that has built on new discoveries of huge natural gas reserves in shale rock formations in Texas and the Northeast. But the president ended up only reiterating his support for comprehensive energy and climate legislation in his speech before the Business Roundtable on Wednesday, without mentioning natural gas specifically.
Natural gas releases about half of the carbon emissions as coal when burned. According to the Congressional Research Service, displacing older coal plants with nearby natural gas facilities could cut greenhouse gas emissions from the utility sector by 20 percent. The report, however, also raised unanswered questions about the feasibility of such a switch.
Coal now accounts for around 50 percent of the electricity produced in the United States; natural gas, around 20 percent.
But the fight is just getting started, after years in which energy sectors co-existed peacefully by not challenging one another directly. Climate legislation has strained relations.
America’s Natural Gas Alliance, a trade group formed to bring cohesion to the industry’s lobbying efforts split among producers, pipelines and distribution companies, has spent $1.6 million on lobbying since starting in 2009. Its founders say the annual budget could reach $80 million.
The alliance has spent some of its money promoting a reversal of the coal-natural gas ratio of electricity production.
Industry lobbyists say the need for the revived campaign was underscored by the House climate bill.
The measure included enough incentives for “clean” coal and renewable energy that natural gas use would actually decline in upcoming years, according to the Energy Information Administration, even though natural gas is cleaner than coal and more dependable than the wind or the sun.
The climate bill and the fact that Obama failed to mention natural gas among his energy priorities in his first major address to Congress after his Inauguration has left the natural gas industry with middle-child-like insecurities that it is trying hard to put behind it.
Three gas groups — the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, and the Natural Gas Supply Association — called for natural gas to be included in a “clean energy standard” that would mandate use of lower carbon fuels and renewable energy sources.
A clean energy standard could force some utilities to replace coal with natural gas.
“It’s time for policymakers to recognize the new domestic supply reality for natural gas,” said Donald Santa, president of INGAA, said in a release.
Other proposals floated include loan guarantees to help utilities finance natural gas plants, or tax incentives to encourage power companies to shut down their dirtiest coal facilities.
“ANGA members want to see proposals that recognize that an increased use of natural gas gives this country an extraordinary opportunity, right now, to both accelerate greenhouse gas emissions reductions and advance our clean-energy economy,” said ANGA President and CEO Regina Hopper in an email response to questions.
The coal industry rests its carbon-constrained future on “clean” coal technologies that would sequester and store CO2. Coal-powered utilities are responsible for around 33 percent of the carbon dioxide emissions from human activity in the United States.
In the near-term, though, coal lobbyists continue to stress the economic advantages of the fossil fuel.
The National Mining Association, the coal industry’s main trade group, put out a preemptive press release prior to the president’s speech that said displacing coal with natural gas would hurt the economy.
“Creation of an artificial electricity generation market for natural gas in place of affordable, abundant and reliable coal is bad public policy and undermines the administration’s economic and energy objectives,” said Hal Quinn, president and CEO of the mining group.
One coal lobbyist was putting together a fact sheet challenging the natural gas industry’s 100-year supply claim and noting historic and projected cost differences between coal and natural gas.
Climate legislation would likely reduce coal use, but the industry has proved remarkably adept at surviving in a difficult political climate.
A coal caucus formed in January by Rep. Shelley Moore Capito (R-W.Va.) has grown to 68 members, including 28 Democrats.
The House-passed bill included tens of billions of dollars in subsidies to help the industry develop carbon-capturing technologies thanks in large measure to a Democrat: Rep. Rick Boucher, who comes from a coal-producing district in Virginia.
Besides the National Mining Association, the industry is promoted by the American Coalition for Clean Coal Electricity, which has worked to build a grassroots network for coal over the past several years.
Because everyone uses electricity, the fight between coal and natural gas will draw in other groups as well.
Coal counts the support of railroads — another venerable Washington power — that get a large portion of revenues from transporting coal.
Chemical and fertilizer industries use natural gas as a feedstock. Those and other groups that use it as a raw material are worried that if utilities use more of it, the cost — and thus the cost of their products — could increase as well.
“We’re concerned if there is a fuel switch that it’s going to affect the price and availability of fertilizer that our folks need,” said Rick Krause, a lobbyist for the American Farm Bureau Federation.
Natural gas lobbyists, however, insist that times have changed and that new discoveries and greater use of drilling techniques, like hydraulic fracturing that allow access to gas in shale rock formations, change the debate in their industry’s favor.