Reform Climate Change Policy
Robert Lifset
The energy economy has reached a historic moment. President Obama has an opportunity to shepherd the nation in a more sustainable, environmentally friendly direction that also improves the economy and our security.
However, the climate change legislation recently passed by the House of Representatives (H.R. 2454, The American Clean Energy and Security Act of 2009) contains a significant flaw that threatens the accomplishment of these objectives.
H.R. 2454 (and its companion in the Senate S. 1733) depends upon and provides large subsidies to produce ‘clean coal.’ An analysis of the bills conducted by the EPA found that the new policy could produce 14 GW of new electricity capacity by 2025 through subsidizing carbon capture sequestration (CCS) to the tune of $10 billion dollars. The first 5 GW of CCS will cost $2,000/kW. The analysis found that this and other subsidies would actually lead to the retirement of more oil and gas than coal capacity. Furthermore, all but one of the scenarios prepared by the EPA predicted or assumed, beginning in 2030, a significant increase in the nation’s nuclear capacity. This expansion would take place at the very moment when the bulk of the nation’s existing nuclear capacity would be far beyond it designed life-span. [1]
As a result, the success of this climate change policy rests on two shaky assumptions: that CCS will work and not produce problematic environmental problems of its own and that the public would be willing to accept a large expansion of nuclear capacity in twenty years.
Fortunately, there is a solution: natural gas.
New technological advances have allowed the energy industry to access significant new supplies of natural gas. Total gas reserves have jumped 58 percent in the past five years. At current consumption levels the US now has a ninety- year supply.
The problem with natural gas has long been its price volatility. Over the past ten years the price has fluctuated between $2.50 and $15 per million Btu.
But the large new sources of supply have lowered prices and kept them relatively low; and big infrastructure improvements in the last seven years have made it easier to move gas, helping reduce regional price spikes. The Energy Information Administration (EIA) now projects natural gas prices to remain below $7 per million Btu through 2025.
A more pragmatic climate change policy would embrace natural gas.
Natural gas is a proven technology; it produces far less carbon than coal or oil; it is produced domestically; it is cheaper than alternative or nuclear power. It does not require special subsidies.
Betting on CCS is risky; and if the House vote on H.R. 2454 is any indication, it is unlikely to attract the support of Democrats from coal producing states.
The President should advance a policy that acknowledges that natural gas and not ‘clean coal’ is the best means of reaching of reducing our green house gas emissions. It would also be a policy that stands a chance at obtaining the support of Republicans from gas-producing states.
A climate change policy that does more than establish a framework and ‘kick the can down the road’ would not rely on subsidies for coal and prey that a future generation will acquiesce to a nuclear expansion.
Natural gas may not meet the goals the current policy seeks to accomplish. And as a nonrenewable resource, an increased dependence on natural gas can last two or three generations at best. But a dependence on natural gas and not CCS and nuclear is the best means to achieve both an effective and bi-partisan climate change policy.
Robert Lifset is Donald Keith Jones Assistant Professor at the Honors College of the University of Oklahoma. He is currently working on a book assessing the connections between energy and environmentalism.
[1] By 2035 the bulk of the nation’s nuclear power plants will be seeking a second twenty-year operating license extension. Many of these plants, built in the 1960’s and ‘70’s, were designed to operate for forty years. If, in the 2030’s, these plants were granted a second extension their operating life would effectively be extended to eighty years.
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