Emission cuts will require more natgas - study

03 October 2007 22:29  [Source: ICIS news]

WASHINGTON (ICIS news)--US Senate legislation to sharply cut greenhouse gas emissions would create price pressures, driving up natural gas and electricity costs and requiring more natural gas supplies, according to a study released on Wednesday by the Natural Gas Council (NGC).

The NGC commissioned the study by Science International Applications Corporation (SAIC) to advise Congress on the economic impact of the Climate Stewardship and Innovation Act of 2007, sponsored by senators Joseph Lieberman (Democrat-Connecticut), and John McCain (Republican-Arizona); and to rebut a report by the US Energy Information Administration (EIA) that claimed less natural gas would be required to reduce carbon emissions.

The act calls for a 30% cut in greenhouse gas emissions by 2020 from present levels and a reduction of 60-80% by 2050.

"Climate change proposals inevitably compel greater demand for natural gas," Mike Linn, chairman of the Independent Petroleum Association of America (IPAA) and NGC, said.

Natural gas is used as a petrochemical feedstock in the US.

"No climate change approach should be adopted unless it includes mechanisms to assure access to American natural gas,” Linn said. “Even with the potential changes in the energy supply mix to expand renewable fuels, improve efficiency and enhance conservation, natural gas will continue to be a significant supply component and leading solution to reducing greenhouse gas emissions."

The NGC rejected the EIA's projection that 145 new nuclear power plants would be needed in the US by 2030 in order to cut greenhouse emissions. Instead, the NGC study found that the use of a mix of technologies designed to reduce carbon dioxide emissions would be more likely.

The study also found that constraints on nuclear energy would boost natural gas demand as the nation struggled to comply with limits on carbon dioxide emissions. Importing liquefied natural gas would alleviate prices somewhat, but climate control measures could still result in higher wellhead gas prices.

As foreign gas supplies are uncertain, the NGC survey said, lawmakers should open up new sources of natural gas in areas currently restricted from natural gas exploration.

Electricity prices are also likely to rise because electricity producers will pass the costs of incorporating carbon dioxide mitigation technologies along to customers in order to comply with climate control legislation.

The NGC consists of major natural gas trade associations, including the American Gas Association, the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, and the Natural Gas Supply Association.

The Lieberman-McCain bill is still under consideration by the Senate Environment and Public Works Committee.

By: Mickey McCarter
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