Coal displacement could strain US gas supplies

July 19, 2010
A push in the US to cut emissions of carbon dioxide by 20% would strain domestic supplies of natural gas and require new supply of energy from nuclear and renewable sources for power generation.

A push in the US to cut emissions of carbon dioxide by 20% would strain domestic supplies of natural gas and require new supply of energy from nuclear and renewable sources for power generation.

Without major technological changes, achievement of that emissions target would fall most heavily on coal, according to a modeling study by researchers at the James Baker III Institute for Public Policy at Rice University.

To sustain emission cuts beyond what's possible by replacing coal with gas in electric power generation, the researchers—Rice Scholars Dagobert L. Brito and Robert F. Curl—advocate separate pricing for carbon emitted by transportation fuel.

Brito and Curl calculate the cost of a carbon dioxide constraint in the production of electricity as a function of the price of fuels in a study that models the displacement of coal generation by natural gas. They say the transition probably occurs over about 20 years.

"Beyond that period, reductions in carbon dioxide must come from reductions in transport fuels or the replacement of gas electricity generation by nuclear power or renewable, etc.," they say.

Displacing coal

The study assumes that for at least the next decade, baseload electrical generation capacity comes from coal and gas and that cuts in carbon dioxide emissions in the US come mainly from displacing coal-fired with gas-fired generation.

It calculates that replacing existing coal generation capacity with modern coal-fired capacity can reduce emissions by only 5%.

"Unless there is a technological breakthrough in carbon sequestration, the carbon intensity of coal means that 'clean coal' cannot be an important factor in reducing carbon dioxide," the study says.

"However, through the development of nontraditional sources of natural gas, the United States is in the fortunate position of having enough new natural gas production coming online to make it possible to shift electricity generation from coal to natural gas, with a concomitant reduction in carbon dioxide emissions."

Gas supply strains

But the study says the development of gas supply able to maintain this shift is doubtful.

"Therefore, development of nuclear and renewable electricity generation will need to continue at a rapid pace," it says. At current prices for fuels, a carbon price of about $30/tonne would shut down 10% of coal-fired generation capacity. A carbon price of $45/tonne would shut down 90% of capacity, Brito and Curl estimate.

But they add that the carbon prices compatible with elimination of coal generators would reduce carbon dioxide from transportation fuels by only 5% or less.

"Thus, it might be necessary to decouple the pricing of allocations for transportation fuel from the allocations for the production of electricity," they say.

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