North Am power firms warn on climate legislation

10 November 2008 19:09  [Source: ICIS news]

WASHINGTON (ICIS news)--Climate-control legislation at the national, regional and local levels in North America will force a major shift from coal to natural gas among utilities and threatens electric reliability, power sector officials said on Monday.


The North American Electric Reliability Corporation (NERC) said a survey of its member power-producing companies found that present laws and anticipated new legislation to limit the continent’s emissions of greenhouse gases (GHG) constitute the most pressing and pervasive issue facing electric utilities.


NERC said the survey by its planning committee “has identified initiatives currently under way to address climate change and reduce greenhouse gas emissions as among the most important emerging issues facing the reliability of the [continent’s] bulk power system over the coming years”.


Among the most worrisome consequences of increasing federal, regional, state and local climate legislation, said the corporation, is “broad-scale fuel switching from coal to natural gas and increased dependence on natural gas”.


In addition, the survey report said, increasing reliance on natural gas as a power fuel will impact the reliability of the North American power system.


“This ‘dash to gas’ poses the most immediate risk to reliability,” NERC said in its report.


Increasing demand for natural gas, along with limitations on US domestic production, are pressing concerns for the country’s chemicals producers because they depend heavily on natural gas as a major feedstock and energy fuel.


Chemical manufacturing also consumes high volumes of electric power, and producers have faced higher utility costs along with four-fold increases in natural gas prices since 1999.


­“Fuel-switching raises a number of reliability issues, from reductions in available generation capacity to natural gas supply security,” NERC said.


The study noted that wide-scale fuel switching is already under way as utilities - facing or anticipating stringent restrictions on their emissions under climate legislation - abandon abundant supplies of coal in favour of cleaner-burning gas.


From 2002 and 2007, NERC said, more than 30,000 megawatts (MW) of coal-fired generating capacity have been cancelled, and an additional 3,500MW of coal-powered generating plants have been scratched in the first six months of 2008.


In contrast, NERC said its research shows “an increase of over 20,000MW of planned natural-gas-fired capacity additions over the 2008-2016 period when compared with data submitted just one year ago”.


“It appears that greenhouse gas issues and electric utility reliability are on a collision course,” said one member power company in responding to the NERC survey.


The study said that nearly 40 US states, all eight Canadian provinces and the majority of northern Mexico have either mandated or are involved in ongoing initiatives aimed at climate change.


In addition, President-elect Barack Obama and the now increased Democrat majority in the US Congress support aggressive cap-and-trade climate legislation that would cut US emissions of greenhouse gases to 90% below 1990 levels by 2050.


The full NERC report is available on the corporation’s Web site. 


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By: Joe Kamalick
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