New EPA rules may give natural gas a boost

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The Environmental Protection Agency’s carbon dioxide limits for power plants are likely to accelerate the decline of coal for electricity generation, and regulators predict that most of the slack will be picked up by natural gas.

An analysis attached to last week’s proposed regulation to reduce carbon emissions from existing power plants by 30 percent predicted that, if the rule were to become final, natural gas would edge out coal to become the most common fuel for power plants by 2030.

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It said natural gas would have 32 percent of the market, just ahead of coal’s 31 percent.

The natural gas industry has not taken a position on the EPA’s proposals, which serve as the centerpiece of President Obama’s second-term climate change program. They argue that, either way, the natural gas industry is primed to expand its role in the power supply.

“With or without the rule, natural gas is going to play a much bigger role in power generation going forward,” said Marty Durbin, president of America’s Natural Gas Alliance.

But the rule gives the industry “a very good opportunity to continue providing more power and reducing emissions,” he said.

The natural gas production boom of recent years and resulting price decreases have already shifted some electricity producers to natural gas from coal.

In 2013, natural gas accounted for 27 percent of electricity fuel, compared with coal’s 39 percent. Nuclear followed at 19 percent.

Christopher Knittel, an energy economics professor at the Massachusetts Institute of Technology, said there’s little doubt that the EPA’s rule will be a major boon to natural gas.

“The EPA has in mind that this will certainly continue to incentivize the shift from coal to natural gas,” Knittel said. “Of course, the market’s already doing that, because natural gas is cheap.”

But natural gas is only competitive with coal in terms of cost because of previous rules limiting emissions of pollutants like sulfur dioxide, nitrogen oxides and mercury, Knittel said. Those rules have helped to make coal more expensive than it previously was.

Durbin also said that previous pollution rules for power plants have helped natural gas. He used recent mercury limits as an example.

“The mercury and air toxics rule already had states and utilities looking at whether or not individual plants could meet those regulations,” he said.

Natural gas emits about 40 percent less carbon than coal for the same amount of energy, the EPA said.

Sen. Mark Udall (D-Colo.), who supports the EPA’s proposal, thinks it’s good news for natural gas.

“If designed correctly, the new rule should help Colorado and the nation’s natural gas companies, as well as clean energy technologies,” said Mike Saccone, a spokesman for Udall.

But Sen. Mary Landrieu (D-La.) said the EPA has had no part in the success of the natural gas industry — nor should it.

“The EPA rule is not spurring work for natural gas,” she said. “Natural gas is spurring work for itself.”

Landrieu, who staunchly opposes the EPA’s proposal, credited natural gas’s low prices and emissions with its success.

The EPA also predicted smaller increases in market share for nuclear power and renewable energy.

“We’ll probably see some existing nuclear plants that were going to shut down stay online for a little bit longer,” Knittel said. Renewable power sources are not as reliable as natural gas, so they’re unlikely to take much of the slack from coal, he said.

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