Nike is famous for their motto “Just Do It”; inspiring athletes to better themselves. If only the government would “Just Say It”…. the two words “natural gas” that is, and better the United States through cleaner burning energy, job creation, less dependence on foreign oil and finally reducing our trade balance.
Cleaner Burning Energy:
In 2005 the EPA instituted the Clean Air Interstate Rule (CAIR) which put into place a cap and trade system for sulphur dioxide (SO2). States that produced heavy air pollutants could then purchase allowances from lower polluting states who never produced up to the maximum S02 levels they were allotted…. hence the term “cap and trade”. The goal of cap and trade is to reduce S02 emissions 50% by 2015. In 2008, a court ruled the cap and trade system to be illegal because upwind states that produced heavy emissions were unjustly letting their chemicals spill into downwind states. Bernstein Research expects that when new regulation is released in April, guidelines will be more stringent and on a state by state basis. This regulation would put much more emphasis on the “cap” and a lot less emphasis on the “trade”.
What does this mean for natural gas? It means that many U.S. power plants run by coal will have to purchase S02 scrubbers to keep in line with the new regulation. These scrubbers are expensive and in some cases make the coal fired power plants uneconomical to run. Bernstein Research estimates that 23% of the current coal-fired power generation plants would be shuttered in the coming years. Natural gas plants, which burn cleaner than coal, could be an alternative to step in and fill that supply’s place. This could boost the utility demand for natural gas by as much as 16%. Per the American Gas Association, in 2000 over 23,453 megawatts of new power generation was brought on line in the U.S. and almost 95% of this power was fueled by natural gas. The switch to cleaner burning fuel has been underway for a while now.
Job Creation and Independence:
The technology needed to utilize natural gas is already proven and we have an abundance of the natural resource available to us domestically. JP Morgan estimates that the U.S. has over eight thousand trillion cubic feet of natural gas, more than any other country. Developing a natural gas infrastructure across the U.S. for use in commercial vehicles and in power generation would not only reduce our dependence on foreign oil, but would create jobs as well. Best of all, other than the government simply making the statement “we are committed,” the private sector can make this happen with little or no “stimulus” and better yet without U.S. treasury debt financing.
Ryan Comstock, CFP®
nice article.