Electricity generation: Gas producers take on coal

There’s a battle going on: shale gas producers, searching for a home for their fuel, say natural gas can take on a larger burden of the electricity-generation market, but the coal lobby isn’t going without a fight.

Coal accounts for about half of U.S. electricity generation, while natural gas takes up about 21 percent, according to the U.S. Department of Energy. Natural gas producers want to see those numbers reflect Texas, where it’s natural gas that accounts for half and coal for about 36 percent.

“We are reminding folks just how much progress we can make in reducing greenhouse gas emissions if we increase our utilization of natural gas, which is twice as clean as coal,” said Tom Amontree, executive vice president of America’s Natural Gas Alliance, the year-old gas lobbying group funded by shale gas producers. “Not only is natural gas abundant in our country today, it also is vastly underutilized.”

Many environmentalists back natural gas because it emits half the carbon dioxide coal does, while elected officials are looking for ways to accommodate possible climate change legislation and energy production to meet an ever-growing population. They think natural gas can help locate that happy medium.

However, critics of the fuel say its price is too volatile – in July of 2007, 2008 and 2009, gas went from about $6.30 per million British thermal units to more than $13 per MMBtu to just more than $3 per MMBtu, respectively – and production couldn’t meet consumption if the fuel’s use is expanded further into generation and transportation.

Both lobbies say they’ve got plenty to go around. Not to be outdone in environmental arguments, the coal lobby says its fuel is as clean as ever, and clean coal technology, which isn’t any further than test mode, could be as good as gas.

Both groups have the same goal: sell their fuel.

A rush to gas

Columbus, Ohio-based American Electric Power, which operates in 11 states, provides power to a large portion of Texas. Companywide, 66 percent of AEP’s generating capacity is fueled by coal, 20 percent is gas and the remainder is a mix of nuclear, wind and hydroelectric power. Its southern division derives much if its power from natural gas, while the eastern division is powered primarily by coal, which Appalachian states have produced for more than a century.

During the past decade, however, many companies opted to build new gas-fired plants in the east, but they ran into

trouble.

“[Utility companies] built the plants, and natural gas prices skyrocketed so many of the plants never ran,” said Pat Hemlepp, AEP’s director of corporate media relations. Then the economy moved into a recession, and while prices dropped, so did electricity demand.

With the plants offline, AEP moved in to purchase three of the newly constructed facilities and another under construction for “pennies on the dollar,” he said.

He cautions an overreliance on natural gas, saying all forms of energy are necessary.

“If there is a rush to natural gas, obviously there is an increase in demand for natural gas, which drives the price up,” Hemlepp said, “which not only increases the price for electricity, but also increases the price of heating the home and chemical production.”

Penn State University’s Frank Clemente, who studies sociology and energy policy and publishes the newsletter Energy Facts Weekly, said more than 90 percent of new plants built during the past decade rely on natural gas.

In other words, the rush to gas isn’t coming. It’s here.

“We’ve gone down the path of natural gas. What I’m arguing is I don’t think we should go much further,” Clemente said. He cautions against the heady praise bestowed upon natural gas, arguing it’s still too early to determine how much gas can be produced at what cost, with what effects on the environment, when it’s needed. “Suppose the shale gas doesn’t show up: what are you doing to do?

“If shale gas doesn’t come through with all the power plants we’ve got now,” he added, “we’re going to be using liquefied natural gas from overseas as a fuel.”

Coal stands ground

The American Coalition for Clean Coal Electricity (formerly known as Americans for Balanced Energy Choices) is a coal industry lobbying group funded by coal producers, utility companies, mining companies and railroads.

Coal accounts for 94.5 percent of electric power capacity in Wyoming, and 97.8 percent of capacity in West Virginia. As a result, the coal lobby says, the states have some of the cheapest electricity retail prices in the nation: Wyoming at $5.29 per kilowatt-hour and West Virginia at $5.34 per kilowatt-hour, according to AmericasPower.org, sponsored by the ACCCE.

Texas, where coal accounts for 36.3 percent of electric power capacity, has the 16th-highest average retail price at 10.11 cents per kilowatt-hour.

“Today, coal provides nearly half of the electricity Americans rely upon, which is roughly one-third the cost of natural gas,” said Lisa Camooso Miller, ACCCE vice president of media affairs, in response to a February Washington Post editorial endorsement of natural gas. “In the future, coal plants can meet the nation’s electricity needs and reduce carbon emissions by using advanced technologies that are being developed right now.”

Last month, a Washington Post business columnist called for the “decommission [of] about two-thirds of the electric-generating capacity fueled by cheap and plentiful coal,” and its replacement with “power generated from cheap and plentiful natural gas, which emits half as much carbon for each megawatt of electricity.”

That’s encouraging for ANGA members, who Amontree said “want to see broad recognition that natural gas is ready to serve this nation – right now – and can help our country and our communities achieve their economic, environmental and energy goals.”

In the column, the Washington Post columnist deems natural gas a “silver bullet.”

Penn State’s Clemente isn’t so sure.

“These silver bullets, sometimes they turn out to be duds,” he said.