EPA Clean Power Plan Could Drop Hammer On Natural Gas

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When the US Environmental Protection Agency announced the Clean Power Plan last summer, the agency hinted that natural gas would play a big role in reducing the nation’s dependency on coal for power generation. That scenario has already been playing out, but as EPA prepares for final rule making, it looks like the natural gas industry is in for a rude awakening.

US EPA Clean Power Plan 30 percent

The EPA Clean Power Plan

For those of you new to the topic, the EPA Clean Power Plan was proposed on June 2, 2014, in support of the Obama Administration’s Climate Action Plan.

The goal, set for 2030, is to reduce carbon pollution from power plants in the US by 30% compared to 2005 levels.

Here’s why EPA is targeting power plants:

Power plants are the largest source of carbon pollution in the U.S., accounting for roughly one-third of all domestic greenhouse gas emissions.

The proposal will also cut pollution that leads to soot and smog by over 25 percent in 2030.

The Clean Power Plan doesn’t issue a one-size-fits-all solution for states to replace coal with other sources. The video that accompanied the 2014 announcement translates into a “main compliance strategy” that relies on a transition to natural gas before renewables, with natural gas factoring in strongly up through the 2030 target date:

Here’s another hint:

US EPA Clean Power Plan natural gas

Notsofast On That Natural Gas Thing

All that must have been giving the natural gas sector the happiest last year, but this year other sorts of hints have been dropping.

The year started off with a bang in January, when President Obama announced new rules for reporting greenhouse gas emissions from oil and gas operations.

That might not seem like a huge deal but it is an obvious first step to addressing the issue of fugitive methane emissions.

The new reporting requirement also follows up on a 2014 ARPA-E initiative that pumped $30 million worth of R&D into new technology for measuring methane emissions, from gas and oil transportation as well as drilling operations. Stanford University also just kicked off a big methane detective initiative this summer, as part of a broader program aimed at resolving some thorny issues posed by natural gas.

While natural gas is a cleaner-burning fuel than coal, the fugitive emissions issue is just one part of a whole huge bundle of risks and impact associated with natural gas fracking (short for hydrofracturing, a method of drilling that involves pumping millions of gallons of chemical brine underground at high pressure).

Throughout this year, several new natural gas studies have associated fracking with local impacts including increased hospitalizations and increased rates of low-birth-weight babies, as well as local economic and water resource issues. A particularly incendiary article in Newsweek, followed up in detail by Rolling Stone, anecdotally linked fracking to miscarriages and infant deaths in a region of Utah.

EPA also issued its long-awaited study on fracking and water contamination risks this year. Although the natural gas industry spun it as a win, the EPA study clearly stated that a “significant data gap for hazard identification” prevented it from reaching any immediate conclusion, other than to cite several examples that appeared to confirm a link between fracking and water contamination.

One More Thing About That Natural Gas Thing

All this bad news is bad enough for the natural gas industry, but so far the low price of natural gas has given it a leg up on competing alternative fuels, namely wind and solar energy.

However, that may all be about to change. The natural gas industry has been lobbying heavily for federal permission to increase exports of liquid natural gas (LNG), and the Obama Administration has been slowly but surely doling out more permits for LNG export terminals.

That’s going to put upward pressure on domestic prices, as described yesterday by Bloomberg. Under the title “Gas Awakening From U.S. Shale Slumber as LNG Shipments Near,” reporter Naureen MalikChristine Buurma had this to say:

Seasonal price swings will intensify as the country begins shipping liquefied natural gas cargoes to Asia and Europe later this year, said Bank of America Corp., RBC Capital Markets LLC and Wood Mackenzie Ltd. While that’s good news for traders yearning for volatility, it could be bad news for consumers.

Exports will help prices rebound from the slump caused by the U.S. pumping record amounts from shale formations. Growing domestic winter demand is already causing spikes and trading volumes in futures markets have rebounded to the highest level in three years…


 The Clean Power Plan Hearts Wind And Solar

For utilities and other energy stakeholders (such as the Department of Defense) looking for price stability, the ripple effect of LNG exports puts natural gas deep in the doghouse. However, it creates a huge opportunity for wind and solar, and that could be reflected in the latest iteration of the Clean Power Plan.

For that we turn again to Bloomberg, which yesterday reported that “Obama’s Power-Plant Rule Said to Include Boost for Renewables:”

The Obama administration plans to offer new incentives for solar and wind energy in its plan to cut power-plant emission as a way to counter delaying the initial deadline by two years, a person familiar with the rule said.

The renewable incentives will allow deeper cuts in carbon emissions in the long term while giving more flexibility to states that must implement the rule, said the official who sought anonymity before an official announcement.

Notably, as Bloomberg notes, renewables are expanding faster than anticipated and costs are dropping, particularly for solar.

If Bloomberg’s insider-y information bears out, it looks like the Clean Power Plan is prepared to skip over natural gas and cut straight to the mustard.

Stay tuned.

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Image Credits (screenshots): via US EPA, YouTube.

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Tina Casey

Tina specializes in advanced energy technology, military sustainability, emerging materials, biofuels, ESG and related policy and political matters. Views expressed are her own. Follow her on LinkedIn, Threads, or Bluesky.

Tina Casey has 3152 posts and counting. See all posts by Tina Casey

24 thoughts on “EPA Clean Power Plan Could Drop Hammer On Natural Gas

  • Yoiks indeed. How long did people think US gas companies were going to continue to let Gazprom supply Europe at prices much higher than our domestic producers could command?

    LNG exports will only speed installation of wind and solar in the US as utilities try to avoid competing with LNG customers for gas on price. I wonder how fast Europe can get off gas?

    • Europe could cut natural gas use very quickly if they made that a goal. The fact that Germany has cut subsidies to renewables is basically an indicator of how unlikely they think it is their main gas supplier will decide it doesn’t want their money. But with the cost of renewables continuing to fall and with every solar panel, wind turbine, and ground heat pump taking a bite out of natural gas demand I expect international gas prices to fall. If major new LNG export facilities are built in the US they may be too late to the LNG export party and won’t be able to lock in long term contracts at high prices.

      • They will lock in large port costs, that someone will get stuck with.

    • Send us biomass to burn instead.

      • And EVs to drive.

      • Lots of biomass is already going from the southeast to Europe.

  • If true, this could be big. Forget 26-28% cuts, try more like 40%…

    If the rolling stone gets a big kick down the mountain, the avalanche will just start sooner.

    Oil and gas could be staring down the barrel in 2025, just like coal now…

    Gives me some hope that we *may* get out of this…

    • Generally change starts slow and then accelerates. Only after events such as Pearl Harbor or 9/11 do we see abrupt changes.

      If we (US citizens) want things to move even faster we need to show up at the polls and vote our desires. And take a few friends with us. A Democratic president will not be enough, we need to take Congress back out of the hands of the far right.

      • Renewables are good for business. Cheaper for the economy. Don’t have to pay for those pesky externalities.

      • Yes, I agree. But the hard part is to convince the people who get excited and pay attention to the presidential election cycle (youth, students, etc.) to return two years later and vote in the congressional midterms. They enabled the coattail effect to play

        out in 2008 and at least took the time to come back in 2014 to preserve the status quo. But they largely stayed home in 2010

        and 2012, which is why we have the congress we have now.

        Also . . . I always vote for the long shot most progressive Demo candidate in the primaries, simply to send a message along to
        whoever gets picked for the top of the ticket in the general election.
        I genuinely surprised myself in 2008 when the tall thin black guy with funny name I voted for in the spring was the same guy I got to vote for again that fall in the general . . . and he won.

        And . . . no third party candidates in the general, thanks, even if they look better than the Demo candidate. I did that in 1980 and, instead of Barry Commoner, it was 12 years of Reagan/Bush.

        • I think the youngs will show up this time. But the Republicans have used gerrymandering so effectively in many states that it makes taking back the House extremely difficult.

          I’m a bit pessimistic about what the next presidency will bring. If we elect a Democrat they may be able to do not much more than veto the crap. And, hopefully, Democrats will control enough votes in the Senate to prevent veto overrides.

          Our hope hangs, IMO, on business seeing money to be made/saved with renewables and efficiency.

          • We are watching intently over here. The UK really needs you guys to lead the way. God help us all if you end up with a Cameron 🙁

          • And once business see the money, they need to lean on the GOP. I agree on the gerrymandering. Need to pull politicians out of redistricting. A “simple” software solution based on boundaries of towns, schools districts, counties. Subdivide those based on population and then seed at town center. Minimize the aspect ratio or each congressional district.

  • The video seems to have a “Sheldon Cooper presents: Fun with Flags” feeling to it.

  • I think that the EPA’s projection of 30% coal by 2030 is too pessimistic and we should be demanding better. We have dropped from 50% to 37% in the past 15 years… why only another 7% in another 15 years… the decline should be accelerating, not slowing.

    • Yes, by 2030 coal needs to be well under 20% of our electrical supply.

      • I think that’s dialed in. Unless things change coal goes before NG. Getting us under 20% coal in 15 years would mean a 1.3% market grab by renewables.

    • Agreed, but I suspect the Administration doesn’t want to be on record saying that is what will happen cause they will get all kinds of ‘War on Coal’ rhetoric from the right. If they simply set NG keep slaughtering coal in the market place then it is a lot harder for coal to demonize them, they have to explain how the ended up with less of the market share then even the EPA projected and the answer will be ‘markets’ and the right-wing having worshiped at that alter can’t blame it.

      • Good explanation. It’s the most plausible.

  • “good news for traders yearning for volatility”? Really? The fact that this parasite class extracts vast sums of money from energy users by exploiting market instability is good news?

    • Gonna be a Powerwall parasite,
      Trading ‘lectricty all through the night,
      You say it’s wrong I know it’s right,
      Arbitrage is my delight,
      Got my software from Reposit,
      Came for free, no deposit,
      Providing services ancillary,
      Voltage regulation and frequency,
      And my solid state spinning reserve,
      Hands natural gas turbines a serve.

      • NIcely put.

    • I think you misunderstand the concept of personal-utility and common-good, but considering that people have been trying equate them since the time of Adam Smith this is understandable.

    • Volatility stems from temporary mismatches between supply and demand. Traders tend to flatten out those peaks through arbitrage – a practice as old as cross-border trade itself.

      Abuse happens and needs to be cracked down upon, but traders aren’t by definition a ‘parasite class’. Properly regulated trading improves both the efficiency and the stability of a market.

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