Natural gas execs fear they’re next for regs

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Natural gas producers are keeping quiet about the controversial power plant rules from President Obama, fearing they could become the next target of federal regulators.

At least in the short term, a government-forced shift away from coal power would be a boon for the natural gas industry, which is already experiencing a renaissance thanks to advances in the drilling technique of fracking.

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The Obama administration has predicted natural gas would gobble up 32 percent of the electricity market by 2030 under the regulations — enough to eclipse coal as the nation’s top power source.

But business groups up and down the natural gas supply chain are wary of what comes next as the administration strengthens regulations on greenhouse gas emitters to combat climate change.

Randy Albert, a former executive for Consol Energy Inc.’s natural gas business, said charges from Republicans and some coal-state Democrats that the Obama administration is fighting a “war on coal” are not far off.

"I think it’s more than a war on coal, it’s a war on carbon,” said Albert, who now consults for the natural gas industry. “I think when they’re done with coal, they’ll go after gas."

Publicly, the natural gas industry has given a tempered response to Obama’s plan to slash greenhouse gas emissions from power plants by 30 percent.

In private, business groups representing natural gas are operating with “guarded excitement” about the prospects of increased demand, according to one source with knowledge of their thinking.

“There's a delicate dance going on,” he said, adding that support for more stringent rules is a wholly foreign concept for a segment of the economy that is accustomed to pushing back on government rules.

“At some point they're going to turn their crosshairs on the natural gas industry,” he said.

Some business groups see the power plant rule as a prelude to crackdowns on refineries, iron and steel, the paper and pulp industry — and natural gas.

“It’s not just aimed at one sector,” said Ross Eisenberg, vice president of energy and resources policy for the National Association of Manufacturers. “It’s setting up a precedent to go after all fossil fuels — and doing it in a fairly haphazard way.”

Eisenberg said the manufacturing industry and those it supports have ideological problems with regulations that favor some energy sources over others.

“I think there’s concern any time the government tries to engineer our energy portfolio,” he said.

The manufacturers association, whose members include businesses in both the coal and natural gas industries, is formally opposed to the rule.

But the response from natural gas trade groups has been more measured.

The American Gas Association, which represents more than 200 natural gas utilities, is promoting flexibility in the rule and language that won’t impinge on the “efficient and affordable” delivery of natural gas to homes and businesses,” said Jake Rubin, the group’s spokesman.

America’s Natural Gas Alliance, whose members drill and produce gas, hasn’t taken a position on the power plant standards.

“It’s a proposed rule, it’s a very complicated rule, and it’s a rule that will require a lot of input on the state level,” said Frank Macchiarola, who leads government affairs for the alliance. “And so for all of those reasons, we’re going to want to digest it, we’re going to want to comment on it, and the specifics of it will really matter when it goes into final rule stage and implementation.”

Macchiarola said natural gas interests have long been weary of regulations.

“We’re an industry that’s already heavily regulated, so we’re cautious about any regulation and we want to be careful in really examining that regulation and its impact on our businesses,” he said.

But the industry also has to decide if the proposal would be as much of a windfall for natural gas as it appears.

While the Obama administration largely leans on natural gas to replace coal in power plants, it has also touted renewable energy and energy efficiency in implementing them.

“While this rule looks like it is basically a huge boon to the gas industry, it won’t really be known for a while how the states mandate compliance and what the companies do to achieve compliance,” said John Coequyt, who leads the Sierra Club’s climate change efforts. His group is pushing federal and state regulators to avoid building new natural gas plants.

“It’ll help the natural gas industry, but I don’t think it unequivocally helps the natural gas industry,” said Jim Sweeney, a Stanford University professor who studies energy efficiency.