² The notion of natural gas as a bridge to a clean energy future is well articulated in Christopher Flavin, and Nicholas Lenssen, Power Surge: Guide to the Coming Energy Revolution (New York: W.W. Norton, 1994).
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³ For example, an influential 1979 collection from Harvard Business School noted that "many, perhaps most, informed geologists believe that enough gas exists [in the U.S.] to sustain a national consumption rate equal to the current 20 [trillion cubic feet] level for at least twenty-five to thirty years, but at higher prices than American are accustomed to paying. Beyond that, there is doubt that even very considerably higher prices would sustain consumption much above the current rate." I.C. Bupp and Frank Schuller, "Natural Gas: How to Slice a Shrinking Pie" in Daniel Yergin and Roger Stobaugh (eds.), Energy Future (New York: Random House, 1979), 57. Another author in the same volume reported enthusiastically that from 1977 to 1979, the commercial price for a photovoltaic system had fallen from over $15,000 to as low as $3,000 per peak kilowatt. Modesto Maidique, "Solar America," in Energy Future, 208.
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⁴ American Gas Association, 1976-1985 Historical Statistics of the Gas Utility Industry, 146; and U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 1997, 115 (hereafter, AEO 1997). Summaries of AEO 1997 appear on the Internet at http://www.eia.doe.gov/oiaf. General energy information is available from EIA's National Energy Information Center in Washington, DC at (202) 586-8800. More efficient gas-fired electricity-generating plants increased the effect of declining gas costs. Early industrial gas combustion turbines had efficiencies as low as 20-25%. New combined cycle units—which produce electricity in two stages, using hot exhaust gas from the first stage to produce steam for the second stage—exceed 50% efficiency. At 25% efficiency, the generation of one kilowatt-hour of electricity consumes 14 cubic feet of natural gas, worth about 2.8 cents at the average 1995 delivered cost. Doubling the efficiency reduces the fuel cost of that same kilowatt-hour to 1.4 cents.
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⁵ In 1954, the United States Supreme Court directed the Federal Power Commission (predecessor to the Federal Energy Regulatory Commission) to regulate the wellhead price of natural gas sold in interstate commerce. The FPC began to impose price ceilings in 1960. Until about 1969, however, those ceilings probably were little if any lower than the prices that would have prevailed in an unregulated market. The gap between price ceilings and the presumed unregulated price subsequently widened with the general increase in energy prices resulting from the 1973 oil embargo.
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⁶ In Order No. 436 (1985), the FERC ruled that either pipelines could transport gas for everyone (including their competitors), or they would be disallowed from offering new transportation service to anyone. Pipelines proved unable to operate successfully without offering a transportation service. By 1990, every major pipeline company had agreed to carry gas on a non-discriminatory basis. In Order No. 636 (1992), the FERC abandoned the pretense of choice and ordered non-discriminatory pipeline transportation outright.
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⁷ Recently, both the FERC and the state commissions have shifted from policies aimed at protecting small residential gas consumers to policies emphasizing industrial development and economic efficiency.
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⁸ Prior to the 1950s, most American natural gas was produced as a by-product of oil.
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⁹ AEO 1997, 57.
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¹⁰ These projections parallel those of the American Gas Association (AGA) and the Gas Research Institute (GRI). AGA projects a 2010 wellhead price of $1.99 in 1994 dollars, representing a 1.5% annual real price increase from 1995. Foster Natural Gas Report (25 Jul. 1996), 33. GRI projects a 1.5% annual real increase in the price of gas delivered to electric generators over the same period. GRI, Baseline Projection Data Book (1996), 497.
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¹¹ For biomass, see Eric Larson and Christopher Marrison, Center for Energy and Environmental Studies, "Economic Scales for First-Generation Biomass-Gasifier/Gas Turbine Combined Cycles Fueled From Energy Plantations," prepared for Turbo Expo '96, the 41st ASME Gas Turbine and Aeroengine Congress in Birmingham, UK (10-13 Jun. 1996). CEES is located in Princeton, NJ at (609) 258-4966. For wind, see Alfred Cavallo, Susan Hock, and Don Smith, "Wind Energy: Technology and Economics" in Thomas Johansson et al. (eds.), Renewable Energy: Sources for Fuels and Electricity (Washington, DC: Island Press, 1993), 152. For solar thermal, see Pascal de Laquil, III et al., "Solar Thermal Electric Technology" in Renewable Energy, 280-281. For photovoltaics, see Tom Jensen (Strategies Unlimited, Mountain View, CA), "Scenarios for Global Capacity Building," presented at 25th Annual IEEE Convention in Arlington, VA (May 1996). For various technologies, see H. Ishitani and T.B. Johansson, "Energy Supply Mitigation Options" in R. Watson, M. Zinyowera, and R. Moss (eds.), Climate Change 1995: Impacts, Adaptations and Mitigation of Climate Change: Scientific-Technical Analyses (Cambridge: Cambridge University Press, 1996). This volume is one of three comprising the Intergovernmental Panel on Climate Change s Second Assessment Report, a compendium of climate science, policy and economics. It can be ordered from Cambridge University Press in England at 44-1223-325970. The IPCC Secretariat can be reached in Geneva at 41-22-730-8215. Summaries of the IPCC reports can be found on the Internet at http://www.ipcc.ch.
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¹² The mid-1990s featured bemusingly volatile gas prices. In winter 1992, wellhead prices fell to about $1.30/thousand cubic feet (mcf), but in October, soared to about $2.40/mcf. By 1995, prices tumbled back to about $1.40/mcf; average prices that year were only $1.55/mcf. By mid-1996, however, prices had bounced up to over $2.30/mcf. U.S. DOE, Energy Information Administration, Natural Gas 1996: Issues and Trends (December 1996), Figure ES-1, DOE/EIA-0560(96).
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¹³ U.S. DOE, EIA, 1995 International Energy Annual, 107-109; U.S. DOE, EIA, 1995 International Energy Outlook, 37.
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¹⁴ Natural gas contains perhaps 90% methane (CH4), but the gas stream at the wellhead also typically includes heavier hydrocarbons, such as propane (C3H8) and butane (C4H10). Refiners remove some of these substances for separate sale. Propane tanks abound in rural America, while butane serves small-scale uses such as camp stoves.
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¹⁵ Natural gas can be chemically converted into heavier hydrocarbons such as diesel fuel. While feasible for over half a century, this process has been too expensive to compete with products refined directly from oil. Recent technical improvements may make the conversion practical even at current oil prices. See "Exxon Project to Expand Use of Natural Gas," Wall Street Journal (30 Oct. 1996), A3. Even with the improvements, the resulting liquid fuel carries substantially less energy than the original gas. Due to this energy loss and the cost of the conversion plant, the process likely will be used only where the lack of a pipeline link to adequate markets makes gas very cheap. In this respect, its economics would be similar to those of LNG.
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¹⁶ IEO 1995, 38. LNG also proves useful for "peak shaving": Sellers store the gas in the market area as LNG during off-peak periods when pipeline capacity is not fully utilized and then regasify it to meet peak demand.
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¹⁷ Handbook of Energy and Economic Statistics in Japan (Tokyo: Energy Conservation Center, 1996), 41.
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¹⁸ The World Bank estimates that in 1990, Nigeria flared 21 billion cubic meters (bcm) or 76% of its gas production; the U.S.S.R., 19 bcm or 2% of production; and Algeria, 7 bcm or 5% of production. The world flared 107 bcm or 4% of total production. John Homer, Natural Gas in Developing Countries, Discussion Paper No. 190 (Washington, DC: The World Bank, 1993), Table 2.9. To order World Bank publications, call (202) 473-1155.
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¹⁹ Stuart Brown, "Here Come the Pint-Size Power Plants," Fortune (1 Apr. 1996), 64C.
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²⁰ For this market generally, see Rural Energy and Development: Improving Energy Supplies for Two Billion People (Washington, DC: The World Bank, 1996).
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²¹ Such opportunities occur in rural and urban locations in developed and developing countries. See, for example, Michael Tennis et al., Renewing Our Neighborhoods: Opportunities for Distributed Renewable Energy Technologies in the Boston Edison Service Area (Union of Concerned Scientists, 1995).
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²² In contrast to renewable energy technologies, however, distributed gas systems will require a supply of high-pressure fuel, which may limit their success. H. Lawrence Goldstein, Small Turbines in Distributed Utility Application: Natural Gas Pressure Supply Requirements, NREL/SP-461-21073 (Golden, CO: NREL, 1996).
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²³ "U.S. PV Cell/Module Shipments Increase 14.7%," PV News 16 (Feb. 1997), 7.
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²⁴ "Global Wind-Energy Rated Capacity Grew 1200 MWe in 1996, as Expected: AWEA," The Solar Letter 7 (31 Jan. 1997), 35. For world wind news, see the American Wind Energy Association website at http://www.econet.org/awea.aweanews.html.
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²⁵ "1996 World PV Cell Shipments up 15.5% to 89.6 MW," PV News 16 (Feb. 1997), 1. Japanese policy combines generous domestic support and aggressive exports. In 1997, the government is expected to ramp up its subsidized "70,000 Roofs" photovoltaic program to 10,000 homes served (about 40 MW), up from 1,866 homes the previous year, at a cost to the government of about $120 million. Participating households pay about $20,000 after receiving the subsidy, but the program still had to turn away some 9,000 families in 1996. "Japan s MITI Proposes 10,000 Roofs, 12 Billion Yen Subsidy For FY 1997," PV News 15 (Dec. 1996), 3.
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²⁶ For a summary, see Irving Mintzer, Alan Miller and Adam Serchuk, The Environmental Imperative: A Driving Force in the Deployment of Renewable Energy Technologies, Issue Brief No. 1 (College Park, MD: Renewable Energy Policy Project, Apr. 1996). Note that not all renewable energy technologies are zero-emission. Biomass combustion may release substantial pollutants, and geothermal facilities may emit the greenhouse gas methane. Some intermittent renewable energy plants co-fire with natural gas as well.
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²⁷ Flue gas desulphurization (FGD) for coal and oil plants is possible, but expensive.
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²⁸ D.W. Dockery et al., "Acute Respiratory Effects of Particulate Air Pollution," Annual Review of Public Health: 1994 15 (1994), 107-32. See also Deborah Shprentz, Breath-Taking: Premature Mortality Due to Particulate Air Pollution in 239 American Cities (New York City: Natural Resources Defense Council, 1996).
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²⁹ Curtis Moore, Life and Death: Protecting Human Health Under the Clean Air Act (American Lung Association, Jul. 1995). The ALA can be reached at (202) 785-3355. See also Moore, Dying Needlessly: Sickness and Death Due to Air Pollution, Issue Brief No. 6 (College Park, MD: Renewable Energy Policy Project, Feb. 1997).
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³⁰ Nebojsa Nakicenovic, "Energy Primer" in Watson et al. (eds.), Climate Change 1995: Impacts, 80.
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³¹ Homer, Natural Gas in Developing Countries, 18. For early warnings, see Jerry Bishop, "Global Threat: New Culprit is Indicted in Greenhouse Effect: Rising Methane Level," The Wall Street Journal (24 Oct. 1988), A1-A6; and Paul J. Crutzen, "Methane's Sinks and Sources," Nature 350 (4 Apr. 1991), 380-381. Crutzen suggests leakage of 6-9% of global natural gas production and warns that if the figure is accurate, "not even a switch from coal to natural gas would alleviate future global warming."
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³² A joint study conducted by the Gas Research Institute and the EPA reports leakage from the domestic gas industry as 1.4% ą 0.5%. Methane Emissions from the Natural Gas Industry, (Jun. 1996), 1, GRI-94/0257, EPA-600/R-96-080. See also "U.S. EPA Announces Voluntary Program to Reduce Methane Emissions from Natural Gas Industry," Energy, Economics and Climate Change (Mar. 1993), 13. Note that American methane emissions could climb should natural gas become widely used in less controlled, distributed applications such as an automotive fuel.
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³³ See Fred Pearce, "Plug a Leak and Save the World," New Scientist 150 (25 May 1996), 7. Thanks to Nick Sundt of Global Change for this calculation. Sundt can be contacted for further information at (202) 547-0850.
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³⁴ One percent of 588 bcm is equal to about 180 bcf, or 180,000 mcf.
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³⁵ These numbers imply that even if a climate crisis impelled immediate and drastic CO2 emission reductions, many decades would pass before enough CO2 left the atmosphere to restore a more benign global climate. Indeed, reducing methane leakage would have a quicker effect. Note that atmospheric half-lives are complex and difficult to calculate; these figures are rough. J. T. Houghton et al., "Technical Summary," Climate Change 1995: The Science of Climate Change (Cambridge: Cambridge University Press, 1996), 15.
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³⁶ See, for example, Power Surge, 112.
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³⁷ Coal combustion produces about 38% of energy-related CO2 emissions. Displacement of coal by gas would reduce CO2 emissions by about half through the combined effect of less CO2 produced per unit of primary energy and the greater efficiency of gas-fueled generators. See Robert Watson, Marufu Zinyowera and Richard Moss, Technologies, Policies and Measures for Mitigating Climate Change (Intergovernmental Panel on Climate Change: Nov. 1996), 39.
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³⁸ See, for instance, David Roodman, "Paying the Piper: Subsidies, Politics and the Environment," Worldwatch Paper 133 (Dec. 1996), 32-33.
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³⁹ Power Surge, 112. We estimate the figure of 48% from a section of their graph corresponding to those years. Other experts posit—controversially—the practical exploitation of huge exotic sources of natural gas, such as undersea masses of methane hydrate. See, for example, Richard Monastersky, "The Mother Lode of Natural Gas," Science News 150 (9 Nov. 1996), 298-299.
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⁴⁰ Shelley Clarke, "Megacities in Crisis?" Resources 19 (Jan. 1997), 7. For example, in 1994, China s residential and commercial sectors together consumed only about 18% of the nation's power, compared with 68% the United States. 1996 China Energy Handbook (San Francisco, CA: Lawrence Berkeley Laboratory, 1996), Table IV-33; U.S. DOE, EIA, Monthly Energy Review (Jun. 1996), Table 7.2, DOE/EIA-0035(96/06).
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⁴¹ Alan Miller and Irving Mintzer, "Global Warming: No Nuclear Quick Fix," Bulletin of the Atomic Scientists 46 (Jun. 1990), 30-34.
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⁴² See Charles Herrick, Assessment of the Environmental Benefits of Renewables Deployment: A Total Fuel Cycle Analysis of the Greenhouse Gas Impacts of Renewable Generation Technologies in Regional Utility Systems (Alexandria, VA: DynCorp EENSP, 1995). DynCorp can be reached at (703) 998-3600.
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⁴³ Exemplifying the tension, Joseph Romm of the U.S. Department of Energy recently declared, "I don t believe renewable energy is in competition with gas," and asserted that both resources could thrive in a restructured energy system. In response, the Natural Gas Supply Association objected that measures to protect the renewable energy industry "will displace gas." "Boosting Gas Use is Key to the Clinton Administration s Efforts," Inside F.E.R.C. (10 Mar. 1997).
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⁴⁴ ASE, AGA and SEIA, An Alternative Energy Future (Washington, DC: 1992).
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⁴⁵ The BCSE can be reached in Washington, DC at (202) 785-0507. In January 1997, Enron Corp. purchased Zond. "Enron Acquires Zond, Launches Enron Renewable Energy Corp.," Wind Energy Weekly 16 (6 Jan. 1997), 1-2.
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⁴⁶ The U.S. DOE and the Electric Power Research Institute sponsored a conference on this topic: "Integrating Renewable Energy Technologies with Gas Turbine Systems" (27-18 Mar. 1996). The authors thank Doug Morris of EPRI and George Hay, III of the Collaborative Advanced Gas Turbine Program for supplying a workshop summary. Mr. Morris can be reached in Palo Alto, CA at (415) 855-2924, and Mr. Hay in Lafayette, CA at (510) 988-9792.
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⁴⁷ Raw biogas damages turbine blades. For progress in making biogas clean enough for combustion in a gas turbine, see Hans Halling, "Green Gas to Light up the World," New Nordic Technology (Feb. 1996), 4-5.
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⁴⁸ See Carl Weinberg, "How Will Clean Energy Services be Provided in the Future?" presented at the World Renewable Energy Congress IV in Denver, CO (17 June 1995), or contact Weinberg Associates in Walnut Creek, CA at (510) 933-9394. See also the work of Joseph Iannucci of Distributed Utility Associates in San Ramon, CA, who can be reached at (510) 866-1650; and Power Surge.
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⁴⁹ John Nimmons & Associates, Inc. et al., Legal, Regulatory & Institutional Issues Facing Distributed Resources Development (Olympia, WA: Nimmons & Assoc., 1996), 13-17. Nimmons & Assoc. can be contacted at (360) 786-6040.
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⁵⁰ Hydrogen combustion, like natural gas combustion, can produce NOX in the air around the combustion point. Catalytic heaters minimize this process. For background, see James Cannon, Clean Transportation: A Market Opportunity for Renewable Energy, Issue Brief No. 7 (College Park, MD: REPP, Apr. 1997); Cannon, Harnessing Hydrogen: The Key to Sustainable Transportation (New York: Inform, Inc., 1995); Joan Ogden and Joachim Nitsch, "Solar Hydrogen" in Renewable Energy, 925-1009; Ogden and Robert Williams, Solar Hydrogen: Moving Beyond Fossil Fuels (Washington, DC: World Resources Institute, 1989).
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⁵¹ Power Surge, 288.
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⁵² For example, Rep. Dan Schaefer (D-CO), chair of the House Commerce Committee s Subcommittee on Energy and Power, includes in his bill to restructure the electric system a provision to ensure that renewable energy contributes 4% of total generation. See "Schaefer Reintroduces Utility Bill, EPA Backs Renewables," Wind Energy Weekly 16 (17 Feb. 1997), 1-2. The Tellus Institute estimates the impact of such a measure on average national electricity prices at about 0.03 cents/kWh by 2010. "Analysis of Renewable Portfolio Standards," Tellus Institute Energy Report 5 (Feb. 1997), 4. Contact Stephen Bernow at sbernow@tellus.com.
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⁵³ International trade agreements generally prohibit nations from barring imports outright, subsidizing the price of products produced domestically in order to discriminate against imports, or imposing prejudicial tariffs. Yet, there remain several ways in which governments can give their products an edge in the home marketplace. These range from government-supported R&D to more subtle devices involving, say, franchise licenses.
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⁵⁴ See Barbara Farhar, Energy and the Environment: The Public View, Issue Brief No. 3 (College Park, MD: Renewable Energy Policy Project, Oct. 1996).
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⁵⁵ "Restructuring Roundup," Quad Report 5 (Jan.-Feb. 1997), 6. See Edward Holt, Disclosure and Certification: Truth and Labeling for Electric Power, Issue Brief No. 5 (College Park, MD: Renewable Energy Policy Project, Jan. 1997); and Dawn Geiger, "Competition & Restructuring of the Electric Industry: Pilot Project Review and Status of Electric Competition in Various States," Iowa Consumer Advocate Office (Jan. 1997), available on the Internet at http:/www.spratley.com/reach under "Expert Papers."
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⁵⁶ Non-hydroelectric renewable energy supplies about 4% of the nation s primary energy. Most of this contribution comes from biomass; wind and solar together supply only about 0.05% of the total. AEO 1996, 76, 172. EIA projects a combined annual growth rate of 6% for wind and solar over the next decade. AEO 1996, 172. An increase in their annual growth rate to, say, 20% for the entire decade would reduce consumption of non-renewable energy by only about 0.2% in 2005.
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