Horvath's assertion was prompted by a question posed in National Journal's blog by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman: Should we start swapping coal-fired power plants for natural gas-fired plants? (A timely question as the gas lobby presses for incentives in the climate change bill.)
Bingaman, a Democrat from New Mexico, said the idea was posed October 28 by Lamar McKay, chairman and president, BP America. McKay testified before Bingaman's committee "that replacing about 8-10 of these old coal plants per year in this manner would account for about 10% of the cumulative 2020 domestic emissions reduction contemplated by pending climate bills, and that these reductions would come at a cost equivalent to about $13/ton of CO2 reduced," the senator said.
"What would be the pluses and minuses of such an initiative?" Bingaman asked. "If we greatly expand our use of natural gas in the utility sector, how would that affect the manufacturing sector, which also has a growing need for natural gas? How likely is it that utility fuel will switch to natural gas in any case, independent of the passage of climate legislation or specific initiatives?"
In his entry on the blog site, Horvath said NGSA is aware of concern that pushing gas could send prices up. But with new shale-gas drilling techniques sending reserve estimates up aboug 40%, he said, Congress should encourage gas use for generation.
"It's a no-brainer that we should provide incentives to encourage the retirement of power plants that are inefficient and produce high amounts of carbon, so that they can be replaced with cleaner, more efficient power plants," he said. Whether generators would switch to gas anyway is "hard to say," he said, "because both the House and Senate climate bills contain measures that disadvantage natural gas in the distribution of emission allowances to a degree that could distort and delay a shift to natural gas-fired power generation."
William O'Keefe, former executive vice president and chief operating officer of the American Petroleum Institute and now head of the George C. Marshall Institute, advises steering clear of pushing the industry one way or another. Recalling the unhappy history of government mandates both against and for natural gas, he says:
"The development and use of shale gas should be determined by the cost of production and technology, not policies that distort market forces. Policy barriers that impede the market's ability to determine the highest valued use of additional gas supplies -- such as permit and leasing restrictions or tax policies -- should be removed.
... Given our recent experience with bubbles and busts -- and the tendency to underestimate costs to attract investments -- it would probably be prudent to go slow in pushing shale gas. ...Policymakers should also examine ... the existing policies that result in "older and inefficient" generating facilities remaining [in] service. It is likely that New Source Review requirements and other Clean Air Act regulations along with depreciation rules create impediments to building new, more efficient generating facilities.
Weighing in with an industrial's viewpoint, Frank O'Brien-Bernini, chief sustainability officer of Owens Corning, endorses policy that encourages gas, but also calls for energy efficiency as a front-line strategy. "Fuel switching to cleaner primary fuels for the production of electricity, while we build a more renewable infrastructure, is a perfectly logical bridging strategy," he says. "... One strategy that is often overlooked, or at least rarely treated analytically inside climate and/or energy policy options, is the major role buildings can play in this."
Policy should drive fast retrofits of buildings and require new buildings to be at least 50% more efficient than today's average, and it should "assure that the saved on-site combusted fuels and delivered electricity are fuel-switched and managed to maximize carbon reductions."
Late afternoon, O'Brien-Bernini had an "agree" tally of 14; Horvath 2, O'Keefe 1.
