The gas industry is still seeking more from the climate change bill Congress will pass ... sometime. Probably. After having been scolded roundly by former Senator Tim Wirth and others several months ago for having missed the boat on the issue, the gas sector got itself in gear.
It hasn't succeeded so far in getting provisions it wants the Senate to include, so the industry, along with coal and nuclear, and efficiency interests, is continuing to work senators on the issue. The Kerry-Boxer bill is the vehicle for action, though it could be viewed as only a kind of position paper: A lot of horse-trading is yet to come.
This clearly represents a gesture toward getting gas plants built as lower-carbon alternatives to coal. But as one industry executive said to our colleague Rodney White, it is an unfunded item and just has no real impact. What would EPA incentives be?
Meanwhile, though, lots of people see gas having some strong prospects without any special provisions in a climate program. The North American Electric Reliability Council says gas will displace coal as the leading peak-capacity fuel by 2011. It also said "flexible, fast-acting resources that can help deal with the volatile availability of wind power" will be needed; this is code for gas plants, although a number of grid executives have said in recent months that they want batteries and other storage devices to ramp up to the point where they can play significant wind-balancing roles.
Municipal utilities, through the American Public Power Association, want the Senate to "provide the electric utility sector with the amount of allowances necessary to operate under the bill's established targets and timelines without having to fuel-switch," presumably from coal to gas.
A Department of Energy analyst said the other day that the nuclear industry's prospects are threatened by expanding gas reserves that make gas generation increasingly attractive, our colleague Randy Woods reports. Nuclear plants are horribly expensive to build, but their ongoing generation costs are low. Gas works the other way around, at least if gas prices go up -- and that's the rub for people looking at the fuel's historically impressive volatility.
If gas prices remain low and are less volatile because of the vast shale reserves that have been identified, gas could provide a "big challenge" to new nuclear plants, said James Joosten, senior energy analyst at DOE's Energy Information Administration. (There are those, however, who challenge that sunny supply-price outlook.)
And renewable-energy luminaries like Robert Kennedy Jr. have been pushing gas as a bridge to a low-carbon future and a natural partner for solar plants, in which he has an interest. He also favors requiring power system operators to dispatch plants according to carbon content (gas would go before coal). So far this idea hasn't caught on in Congress, and it would be impossibly incongruous with the coal-supportive measures in climate bills so far.
Bottom line: Despite the optimism about gas in some quarters, the industry isn't feeling secure. And to be sure, Jim Rogers of Duke Energy did not long ago warn away from it, labeling it the "crack cocaine" of the power sector, and that must hurt.
