Executive Order Could Avert Next Major Energy Crisis
Across the country, scores of coal plants are shutting down and many nuclear plants are at risk of closing. Consequently, natural gas is in great demand for electricity production. But serious supply problems have developed from a shortage of gas due to a failure to overturn moratoriums on the construction of new pipelines. This problem dwarfs anything likely to happen with the rest of the power sector.
Natural gas is a wonderful fuel – clean burning, produced domestically, and plentiful – and power plants fueled with natural gas have many advantages. Current trends, however, indicate that serious stresses are building due to a shortage of gas pipelines. If natural gas can’t get to market, no one will drill for it. This could mean trouble for an industry worth hundreds of billions of dollars. And it could expose consumers of natural gas to much higher gas and electricity prices and loss of reliability. Some parts of the country, particularly the Northeast and mid-Atlantic, have already had warnings about the negative economic impacts of pipeline shortages.
In New York state, for example, existing natural gas infrastructure is not capable of meeting demand – and Gov. Andrew Cuomo’s opposition to the construction of new pipelines in the state has resulted in a severe lack of capacity, causing several natural gas utilities to implement a moratorium on new residential and commercial connections. A moratorium could devastate economic development in New York.
The case for building more pipelines is strong. A rapid scale-up of natural gas production is needed to meet increasing national demand for electricity just as most of the coal and nuclear power fleets are being phased out. Last year LNG from Russia was delivered to Boston to meet consumer needs for natural gas during a cold snap, because a pipeline to carry gas to New England from the prolific Marcellus shale a few hundred miles away in Pennsylvania couldn’t be built.
Some politicians, including Gov. Cuomo, have said they want energy companies to focus more on renewable power sources, instead of building more gas plants and pipelines. Although solar and wind energy are emission-free, it is a matter of common sense that when faced with difficult environmental challenges, the more options that are available, the more likely emissions will be reduced. In fact, the switch from coal to natural gas nationally has reduced carbon emissions from electricity production to mid-1980’s levels.
The United States has been a laggard rather than a leader in energy decision-making. Implementing a natural gas agenda will require political leadership capable of neutralizing the longstanding opposition of people for whom the biggest dragons to be slain are the construction of new pipelines or the natural gas industry itself. A failure to act will drive away investment in natural gas production and cost thousands of jobs. It will also compromise environmental objectives. And it will increase the price of natural gas, which would harm consumers of natural gas and electricity and put U.S. exports of liquefied natural gas at a competitive disadvantage with other countries.
A key question, then, is what should be the federal government’s role in the siting and construction of new pipelines? The most sensible approach would be for the Administration to issue an executive order that would open the door for more natural gas pipelines.
This new agenda would be a clear departure from more than three decades of controversy, timidity, and indecision in U.S. infrastructure policy. It is one of the unfortunate legacies of the years of policy drift that now, at the very moment that environmental concerns are building and the need for low-carbon energy sources is growing more urgent, the ability of natural gas to respond to this need is in doubt.And that could become problematic.
Matthew Kandrach is President of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.