NGC prefers full fuel cycle approach to McKinsey recommendations

Members of the Natural Gas Council would like the administration of US President Barack Obama to adopt a full fuel cycle approach to keep energy costs low and reduce emissions instead of spending $520 billion on recommendations in a recent McKinsey & Co. study.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Sept. 18 -- Members of the Natural Gas Council would like the administration of US President Barack Obama to adopt a full fuel cycle approach to keep energy costs low and reduce emissions instead of spending $520 billion on recommendations in a recent McKinsey & Co. study.

The study, “Unlocking Energy Efficiency in the US Economy,” and its recommendations were based on flawed methodology that did not accurately capture energy lost during its production and transportation, NGC officials said in a Sept. 16 letter to McKinsey officials.

“While the report highlights the potential to achieve significant savings in US energy consumption, we respectfully submit that its value as a blueprint for a comprehensive national energy strategy is undermined by its exclusive focus on end-use, or site, energy savings, rather than a full fuel cycle analysis of the potential to save energy,” they said.

The full fuel cycle approach considers the amount of energy produced and lost from the point of its production to the final point of use, according to the NGC. Consequently, it provides a more precise measurement of energy efficiency and environmental impacts than the method use in “Unlocking Energy Efficiency,” which only considered energy used at the site, it said.

NGC leaders pointed to a recent Lawrence Livermore National Laboratory analysis that indicated the US could gain energy savings from capturing “rejected energy,” such as waste heat from electric power plants, which could warm buildings or turn turbines to generate additional electricity—and do so at lower costs.

This analysis said 75% of the rejected energy associated with residential, commercial, and industrial sectors occurs before end-use applications, the NGC officials said. That type of significant energy impact led the National Academy of science to recommend in May that the nation move toward a full fuel cycle measurement of energy consumption for assessing national and environmental impacts, they added.

NGC includes leaders from the American Gas Association, the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, and the Natural Gas Supply Association. It was formed in 1992 as a forum for gas industry leaders to discuss common concerns, and to advocate for the removal of impediments to efficiently producing, processing, transporting, distributing, and consuming gas.

Contact Nick Snow at nicks@pennwell.com.

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