Obama's clean power plan will hit shale gas share of electricity
Post Date: 10 Aug 2015 Viewed: 411
The final version of the clean power plan has thrown the Obama administration into conflict with shale gas, America’s 21st-century energy darling.
Coal, the most polluting source of electricity, has already entered a long twilight. Around a fifth of all US coal-fired plants are expected to shut between 2012 and 2020 and some analysts believe the hamstrung sector to be in ‘structural decline’. Should the clean power plan survive an anticipated blitzkrieg of legal and state government challenges, it will hasten this demise.
The competition to replace coal plants as they shut down is fierce. Billions of dollars worth of generating income is at stake. And at the moment, lightly-regulated gas fracked cheaply from the US’s vast shale fields is inexorably filling the vacuum.
For a brief moment in April and for the first time in history, gas deposed coal as the largest source of electricity in the country. Under the clean power plan as proposed by Obama in June last year, gas would have permanently overtaken coal as the largest energy source by 2020.
But over the weekend, the administration announced changes designed specifically to give wind and solar a fighting chance.
These include a programme of “strong incentives” in the form of pollution credits for states that improve energy efficiency in poor communities or build lots of renewable energy before the targets come into force in 2022. These credits can be used to offset pollution emitted later. .
A fact sheet released by the US government on Sunday said the new provisions would “drive more aggressive investment in clean energy technologies than the [original] proposed rule, resulting in 30% more renewable energy generation in 2030.”
Experts said that this may force gas to cede a little of the floor in the jostling to dance on the grave of the coal industry.
“This looks like a whole new thing,” said Bloomberg New Energy Finance’s Americas chief, Ethan Zindler. “They’ve suggested that they want more renewables shorter term. That has the potential to take a bite out of gas.”
This was important, said Zindler, because a mini-crash in new renewable energy is expected in the coming years as government tax credits expire, with little hope of renewal through the Republican-dominated Congress.
“If this does provide a short-run boost for renewables in 2017, 18 and 19, that’s very good news for the industry because right now they are not looking like great years for the sector.” However he cautioned that the details of the renewables plan had not yet been released.
Overall, the new plan also pushes for a slightly increased target of 32% reduction on 2005 emissions levels by 2030. This is up from 30% in the original plan.
“The tighter target means states would have to do more than originally estimated in the draft rule,” said John Reilly, an energy economist at the Massachusetts Institute of Technology. “Thus, it does make gas somewhat less attractive... this would seem to give a boost to renewables, but the reduction might be met with nuclear or efficiency.”
The gas industry reacted furiously on Monday. “An accelerating move to natural gas is critical to keeping the lights on,” said Marty Durbin, president and CEO of America’s Natural Gas Alliance. “With the reported shift in the plan, we believe the White House is perpetuating the false choice between renewables and natural gas. We don’t have to slow the trend toward gas in order to effectively and economically use renewables.”
Rick Umoff, an adviser at the Solar Energy Industries Association, said it expected the rule to drive investment towards solar: “We believe states will use a more flexible timeline under the clean power plan to invest in solar early so they can take advantage of the booming solar economy, in addition to the compliance incentives that the EPA is planning to offer – ultimately benefiting both ratepayers and the environment.”
“The clean energy incentive programme holds promise as a way to encourage states to move forward well before 2022,” said Tom Kiernan, CEO of the American Wind Energy Association.
In an indication of exactly where the coal industry still sees its biggest enemy,World Coal Association chief executive Benjamin Sporton took aim at natural gas. “Unabated gas is not a solution to tackling climate change; gas also needs carbon capture and storage to achieve significant CO2 reductions,” he said.
Burning gas emits less CO2 than coal, although it is still a significant source of carbon. Concerns have also been raised over the carbon savings that gas can offer. Methane, a much more powerful greenhouse gas than CO2, is released in unknown quantities during the extraction process. This negates at least some of the carbon savings made from shale gas.
While Zindler thought the new changes would boost renewables, he said the long term positive trends for gas meant that it would probably continue to grow. An Energy Information Administration (EIA) analyst said she had not had time to evaluate the effect that the changes could have on the existing projections.
But the changes to the plan indicate Obama’s intention to force as many fossil fuels out of the electricity system as early as possible.