Letters to the Editor
June 2004
To the Editor:
I would like to offer a balanced perspective to the views voiced in your April 2004 edition by Roger Bezdek and Robert Wendling, ("The Case Against Gas Dependence," p. 43). Just as it would be ineffective to dictate natural gas as the single fuel or raw material for any and all applications, the answer to the current tight supply/demand balance is not to specifically exclude natural gas and prescribe non-natural gas solutions, as the authors suggest. Natural gas supplies about one quarter of North America's energy requirements. In each consumer sector-residential, commercial, industrial, and power generation-natural gas plays a unique, vital role that reflects the economic, environmental, and reliability benefits we derive from it.
The authors suggest command-and-control energy policy that would exclude natural gas from new power generation, based on their premise that natural gas is "best-suited" for space-heating and industrial use. While they do not state natural gas is ill-suited for power generation, their article proceeds through various figures, statistics, thoughts, and assertions to summarize with their "case against natural gas for power generation." As chair of the Natural Gas Task Force of the Edison Electric Institute (EEI), I find it troubling that the authors rail against the innovative gas-based technologies that have been so important to our economy in recent years by efficiently converting clean fuel into much-needed electricity. Their exposition contains many points with which to take issue, but most importantly, it does not offer a balanced view of the future role of natural gas in our economy and for our environment.
The National Petroleum Council (NPC) recently submitted its report, Balancing Energy Policy - Fueling the Demands of a Growing Economy, to the secretary of energy. This report documents a thorough, cohesive analysis of natural gas demand, supply, and infrastructure. In addition to my role as chairman of the EEI Natural Gas Task Force, I was the vice chair of the NPC's 18-month study effort, leading the Demand Task Group; our task group reflected the diversity of natural gas consumers, including generators of coal and nuclear power, consumers across many industries, and local distribution companies. Similarly, experts in the Supply and Infrastructure Task Groups from across the respective industries engaged in extensive outreach and analyses. Our collective and coordinated analyses formed the basis of a thoughtful, deep exploration of the key issues facing the North American economy with regard to natural gas and alternate energy sources-importantly, including energy efficiency.
I believe any analysis of natural gas must consider the study's findings and recommendations. The study documents the conditions to which Bezdek and Wendling refer, including the impact of higher natural gas prices on industrial consumers. However, its recommendations stand in vivid contrast to the single prescription that they propose. In response to the secretary's request, the NPC recommended a portfolio of actions by government and industry. These vital, integrated actions include improving efficiency and flexibility of demand, increasing diversity of supplies, sustaining and enhancing the reliability of infrastructure, and promoting market efficiency. Far from an argument for 'gas dependence,' the analyses made clear that increasing use of both renewable and coal-fired generation capacity (utilizing appropriate environmental controls) is a likely response to growing electricity demand. For example, the NPC's view of a "Balanced Future" contains one of the most aggressive outlooks for renewable energy of which I am aware: over 150,000 MW of renewable generation capacity in the United States over the next 20 years.
The U.S. resource base currently supplies 85 percent of our natural gas needs, with the balance being imported from Canada and a small amount of liquefied natural gas (LNG). The close relationship with Canada should continue, but the United States must do more. To address our supply needs, we need to further encourage development of our own resources in an environmentally sensitive manner in the inter-mountain west and offshore our coasts. Canada and Norway routinely drill in similar settings, benefiting society with minimal environmental degradation. We need to resolve the issues associated with pipelines to bring the substantial arctic resources to serve Canada and U.S. markets. Finally, we need to ensure prompt permitting of LNG regasification terminals as part of the process to encourage the vast worldwide natural gas reserves to be developed and delivered to U.S., Canadian, and Mexican consumers. LNG has been a reliable source of natural gas supply to the U.S. northeast for decades, and currently represents about 1 percent of the total U.S. supply. The NPC study assessed the many economic, environmental, and societal factors associated with increasing LNG supplies and found that a combination of new LNG receiving facilities, and expansions to existing facilities, will likely result in LNG supply on the order of 10 percent of our natural gas by the end of this decade.
We do need a sound energy policy, grounded in economically rational choices, not governmental fiat. Producers need the ability to explore for gas, and pipeline and storage operators need to be able to site their facilities into areas needing additional infrastructure-and to be compensated by the marketplace for their investments. Distribution companies should be able to contract for needed capacity without fear of undue regulatory backlash, and power generators need regulatory clarity to allow efficient investments. And we must more purposefully allow industrial consumers and power generators to install alternate fuel capability to reduce consumer costs, moderate price volatility, and increase the reliability of energy delivery.
In closing, I commend the actions of many individual states, and particularly the National Association of Regulatory Utility Commissioners (NARUC), in thoughtfully and purposefully addressing natural gas issues. For well over a year, the NARUC Gas Committee has been actively educating its constituents on steps to be considered and/or pursued to meet their individual states' energy and reliability needs. This educational effort needs to continue at all levels to ensure the development of a balanced policy toward the supply and utilization of natural gas and alternate energy sources for the benefit of our economy and the environment.
Sincerely,
Robert B. Catell
Chair, Natural Gas Task Force, Edison Electric Institute
Chairman and CEO, KeySpan Corp.
The authors respond:
We appreciate Mr. Catell's thoughtful comments, but must take issue with several of them. He may have derived the wrong conclusion from our analysis. Neither we nor the sponsor of our study, Americans for Balanced Energy Choices, contend that natural gas should be removed from the electricity mix. All fuels will be required to meet the nation's increasing electricity requirements in the coming decades.
Coal especially will be required for future electricity generation. Coal is affordable, has a stable, declining price, and does not compete in other sectors. Significantly, in an era of increasing oil and gas imports, the United States has a 250-year domestic supply of coal.
Finally, technology is continually making coal a cleaner energy source. As we noted, the rate of emissions per ton of coal use has decreased 70 percent over the past three decades, and this trend continues. For example, the Department of Energy's FutureGen project is developing a coal plant that will capture carbon dioxide and sequester it, and also will produce transportation grade hydrogen that can be used to fuel vehicles. -Roger Bezdek and Robert Wendling
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