NGC: Climate change bill could raise gas demand

March 12, 2008
Climate change legislation currently before Congress could dramatically increase natural gas demand, warned a coalition of four trade association executives. Consumption could climb 20% over the next decade if S. 280 becomes law, the Natural Gas Council said on Mar. 11. The bill is co-sponsored by US Sens. Joseph I. Lieberman (I-Conn.) and John McCain (R-Ariz.).

Nick Snow
Washington Editor

WASHINGTON, DC, Mar. 12 -- Climate change legislation currently before Congress could dramatically increase natural gas demand, warned a coalition of four trade association executives. Consumption could climb 20% over the next decade if S. 280 co-sponsored by US Sens. Joseph I. Lieberman (I-Conn.) and John McCain (R-Ariz.) becomes law, the Natural Gas Council said on Mar. 11.

The council sent a summary of its findings to US House and Senate members. "We want members to understand that their actions will have serious consequences for America's natural gas customers. Meeting the nation's clean air goals requires natural gas, and lots of it. While the industry whole-heartedly supports increased energy efficiency, conservation and use of renewable fuels, US energy demands cannot be met by these measures alone," said David N. Parker, president of the American Gas Association and an NGC member.

The group's findings contradict an early analysis by the US Energy Information Administration, which indicated that gas use would decline if the Lieberman-McCain bill is adopted. "But the EIA analysis incorrectly assumes 145 new nuclear plants will be built by 2030. Another study by the NGC assumes that only 25 nuclear plants in that same time period," it said.

That estimate probably is more accurate since only one nuclear power plant has been ordered in the last 30 years, NGC said. It said its study found that climate change legislation would increase gas demand by an average 14%/year (3.6 tcf) in the 2020-30 period, spiking to 23% (5.9 tcf) relative to EIA's 2007 Annual Energy Outlook's baseline levels.

'Political, societal realities'
"Because of the rules under which EIA operates, that agency didn't factor in the political and societal realities industry and policymakers will need to face when complying with a possible climate change law," said Barry Russell, president of the Independent Petroleum Association of America and an NGC member. "When such realities are considered, the same analysis reveals a very different and striking impact on energy markets," Russel added.

"As a country, we need nuclear power, solar, wind, and coal too. But electric utilities are switching to natural gas because it provides on-demand power and clean air objectives quickly," observed another NGC member, Natural Gas Supply Association Pres. Skip Horvath.

Such a switch to gas will need to be accompanied by increased access to new domestic supplies, according to a fourth council member, Interstate Natural Gas Association of America Pres. Donald F. Santa. "An estimated 250 tcf of gas, or more than 10 years of supply at the current rate of consumption, is off-limits to US consumers," he said.

Achieving national environmental goals in an economically sustainable manner requires making informed decisions to open new conventional gas sources in currently restricted basins, the summary noted. "Because it can take years to bring new natural gas supplies to market, the time to make the important decisions increasing access is now," it said.

Contact Nick Snow at [email protected].