John Rowe CEO of Exelon was the opening keynote speaker of the Wharton Energy Conference today at the Union League in Philadelphia. IGEL is a sponsor of the conference. Rowe extolled the benefits of natural gas and called it a complete game changer for energy production. The Marcellus shale play is a light in a bad economy, he said, making natural gas much cheaper than almost every other energy production. Switching natural gas is an important part of the Exelon 2020 plan to become more green. Other steps include upping nuclear production, infrastructure improvements, and energy efficiency investments. As the longest serving CEO in energy (28 years) Rowe called this new age of natural gas unlike anything he has ever seen.
At the energy policy panel, experts discussed the next wave of energy policy. Susan Tierney, former Assistant Secretary of policy for the U.S. DOE, argued that the US will never have a comprehensive energy policy due to political landscape. Its not possible. We do have, however, in essence a quilt of patchwork policy. We must shape what we have, she said, by clean energy standards, etc. EPA is using Clean Air Act rules and updates that will help retire old, inefficient plants. Dr. Tierney also extolled the benefits of natural gas, especially in the face of a wave of coal plant retirements. New gas plants are a relatively economical investment, she said. They are now the fuel and technology of choice. By 2025, the U.S. is supposed to support three times as much renewable fuels in our energy policy, but this will be difficult in the face of cheap gas. She argued that we could reduce greenhouse gas emissions by 50 percent using today’s policy, but not much more than that.
In the short term, natural gas’ cheap prices puts tremendous pressure on alternative energy development, said Adam Umanoff, partner at Akin Gump Strauss Hauer & Field LLP. He highlighted advancements in alternative energy such as wind, that are becoming more and more cost effective and competitive. They are not competitive yet, however, and cheap natural gas makes it hazy for alternative energy for the next few years. Dr. Tierney said technological breakthroughs will change the energy landscape in a longer term view. For example, the Midwest would be in a great place for wind once energy storage works. Umanoff highlighted novel technologies such as concentration solar plants in the desert. Using salt, heat and steam, there is 4-6 hours of storage capacity available. It is not quite commercial today, but we are getting close, he said.
At the lunch keynote, Dan Pickering, co-president of Tudor, Pickering, Holt & Co., further discussed natural gas. He also praised its cheapness, saying that there is a 100 year supply. While he briefly mentioned drilling being unsightly, and alleged that there was not a lot of science behind the allegations of natural gas drilling (fracking) causing environmental degradation, the environmental impacts of natural gas were not discussed.
Many environmentalists are gravely concerned about the environmental degradation and health impacts from natural gas drilling by fracking and tar sands mining. Natural gas leakages from pipelines is another problem, contributing three trillion cubic feet of methane, a greenhouse gas several times more potent than carbon dioxide, to the atmosphere annually – a climate impact equal to emissions from half the coal plants in the US. Leaks and emissions, according to a National Center for Atmospheric Research study, means that even a partial switch to natural gas from coal, will still accelerate climate change through 2050.
While natural gas does indeed appear the cheapest option, what about these externalities? If we priced carbon and greenhouse gas pollution through taxes, would natural gas still be a panacea? If we priced ecosystem services like watershed protection, would natural gas still win out? These questions are important as we discuss America’s energy future. While natural gas may win out, we need to have comprehensive discussions to mitigate negative environmental impacts and move forward in a positive way on energy.
Author Caroline D’Angelo is a graduate student in the Master of Environmental Studies Program, focusing on environment and business. She is IGEL’s graduate intern and directs IGEL’s website and social media campaign and also conducts research.