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Gas industry pressing Senate for climate concessions

Help for coal and renewable power in climate legislation could hurt natural gas, an industry official said yesterday as the fuel continued its quest to gain political standing.

Natural gas will be caught in a "squeeze play" if there are subsidies for coal, solar, wind and other green sources and natural gas is ignored, Skip Horvath, president and CEO of the Natural Gas Supply Association, said at the U.S. Energy Association's annual State of the Energy Industry Forum.

"There's a false perception that natural gas will come out a winner in any climate change scenario because of its low emissions and reliable performance record," Horvath said. "The environmental benefits of natural gas will allow it to hold its own on a level playing field, but not if the field is dramatically tilted by subsidies for coal and overly rigid mandates for renewable sources.

"Our worry is the balance will become too heavily in favor of coal and renewables, which will squeeze us out of the mix."

Comments by Horvath marked the latest move by natural gas to win concessions in Senate climate legislation after it was largely ignored in the House climate bill.

The natural gas industry last summer said that it had failed to adequately lobby for help in the bill from Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) that passed the House in June. That bill created a cap-and-trade program where businesses would buy and sell permits for carbon emissions. It also gave away the bulk of those allowances in the early years, with a large portion going to utilities and coal-fired plants receiving help.

New lobbying group America's Natural Gas Alliance, an alliance of 27 independent natural gas companies, formed in March. Natural gas executives at a Denver meeting in July formed a strategy to influence rewrites in the Senate.

"Coal has done a better job in the past in lobbying Congress than we did," Horvath said. "That's stopped now. I don't think we're too late. The Senate hasn't voted yet."

In talking about subsidies for coal, Horvath meant the free allowances in the bill, a Natural Gas Supply Association spokesman said today.

Natural gas emits about half the carbon dioxide that coal does for the same amount of energy produced. In addition to pushing the message that natural gas is cleaner than coal, natural gas groups have run advertisements promoting new supplies of natural gas. Discoveries of the fuel in shale formations will mean supplies for years to come, the industry has said.

Since the summer, natural gas has surged in political popularity, with many lawmakers now mentioning it in speeches as a means of producing domestic energy that has lower carbon emissions.

At the event yesterday, natural gas officials noted those achievements.

"It's very clear that the natural gas abundance message really took hold last year," said Donald Santa, president of the Interstate Natural Gas Association, who noted that the Center for American Progress examined how to make natural gas part of the solution to energy needs in the face of climate change.

What is needed, Santa said, is natural gas playing a bigger role in the "policy prescriptions."

A coal industry spokesman, however, criticized Horvath's comments.

"They're trying to use the climate debate to increase their market share," said Luke Popovich, spokesman for the National Mining Association.

With China and India building coal-fired power plants at a rapid pace, Popovich said, there needs to be more overall research into ways to capture and sequester carbon emissions.

"This whole fight" that natural gas "wants to start between coal and gas doesn't take us down the road toward effective technology development" that is needed to address worldwide carbon emissions, Popovich said.

Natural gas proposals

Natural gas is looking for "equality" in any climate bill, Horvath said. He said that subsidies for "clean coal" have gone heavily to coal, even though four of the five carbon capture and sequestration plants operating in the world run on natural gas.

Some help for renewable power sources is needed, as they are new, Horvath said. But an aggressive renewable portfolio standard, or requirement that utilities generate a certain amount of power from green sources, would pinch natural gas, he said. A requirement of 25 percent by 2035, which some lawmakers have suggested, is "pretty steep," he said.

"That would be pretty aggressive and put a squeeze on natural gas," Horvath said.

The Natural Gas Supply Association yesterday offered a list of proposals that climate legislation should include.

If there is a renewable portfolio standard, natural gas argues, it should not force utilities to pick only fuel sources with no carbon emissions such as wind or solar. Instead, utilities should be allowed to pick fuel sources that reduce their greenhouse gas emissions. That would allow natural gas as an option.

Climate legislation should not favor one energy source over another if it gives free allowances in any cap-and-trade program where businesses are forced to buy credits for carbon emissions, the natural gas industry argues.

Any benefits for research into carbon capture and sequestration should be "fairly" dispersed between coal and natural gas.

Popovich said natural gas already is succeeding.

"If they've got all that supply and they can deliver it reliably and effectively, then why do they need all that help?" Popovich said. "Why are they asking for more subsidies from Congress if shale gas is the game changer?"

Horvath's comments came as the heads of trade groups for wind and solar said that they were partners with natural gas and had been working together for the past year.

"Our association at the beginning of this year really reached out to the natural gas industry to have us really work together as a team," said Denise Bode, president and CEO of the American Wind Energy Association, at the forum, during the same panel at which Horvath made his comments.

Officials from the wind and solar trade groups did not immediately respond to requests for comment on Horvath's statements.

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