How can the expansion of natural gas development help reduce greenhouse gas emissions? During today's OnPoint, Eileen Claussen, president of the Center for Climate and Energy Solutions (C2ES), discusses a new report highlighting the short- to midterm greenhouse gas benefits of natural gas development. She discusses the policy, regulatory, environmental and investment challenges facing the industry and explains how the industry can overcome barriers to expanded natural gas use.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Eileen Claussen, president of the Center for Climate and Energy Solutions. Eileen, always great to have you on the show.
Eileen Claussen: Well, it's wonderful to be back.
Monica Trauzzi: Eileen, C2ES has just released a report on leveraging natural gas to help reduce greenhouse gas emissions. So much of the focus here in Washington has been on cost, the economics of LNG exports, domestic natural gas prices. Is the conversation misguided or not broad enough, perhaps, to include this greenhouse gas element?
Eileen Claussen: I think it is. I mean, the main reason we decided that we should look at the greenhouse gas implications of all the natural gas that we've found is because no one was looking at it and no one was saying anything about it. Naturally, it can make a significant difference.
Monica Trauzzi: What is the danger of the school of thinking that natural gas is a silver bullet? There are lot of people who think that.
Eileen Claussen: Well, I mean, in the short term, it's helpful, is the way I would put it. I mean, if you look at our greenhouse gas emissions over the last couple of years, they're down, largely because natural gas has substituted for coal. If you go out to the medium term or the long term, it isn't a silver bullet. I mean, natural gas is a fossil fuel, burning it gives off greenhouse gas emissions. We can't use only natural gas, otherwise, all of our emissions will be coming from natural gas. It's a good bridge. If we were actually able to do something like carbon capture and sequestration, it could have an even longer life, but without it, you really need to be looking at other things in the mix.
Monica Trauzzi: One of the elements here is methane; it's a major component of the extraction and production of natural gas. How can the U.S. minimize the impacts of methane?
Eileen Claussen: Well, I mean, I think the technology is there. The challenge is getting people to actually use it, which might raise the costs a little bit. If you raise the cost too much, people will start to move back to coal. There are all kinds of balancing issues, here, but I think it's not a technology issue. We have to be serious that we really want to reduce direct leaks of methane, and then we have to just do it.
Monica Trauzzi: Does that mean that industry will be looking towards the government for some kind of signal?
Eileen Claussen: Well, I think some of industry might be looking toward the government. There are some who probably would prefer to do it the way it is, because it keeps the price down.
Monica Trauzzi: The report talks about the importance of maintaining fuel diversity in the power sector. What kind of regulatory certainty does the utility sector need to sort of diversify and put their money towards lots of different new sources of energy?
Eileen Claussen: Yeah, I'm not sure you need certainty for that. I think if you talk to almost any CEO of any utility, they're gonna tell you that they want to have a diverse supply, because they don't have to be totally reliant on one particular thing, because there are all kinds of issues. If you rely only on natural gas, you might be subject to sort of volatile prices, not good for you or for the consumer. If you relied only on coal, not so good; maybe there's a regulatory future there that you might not like. I think all CEOs of utility companies really want a diverse supply, which would include renewables, nuclear, coal, gas. I don't actually think you need certainty about that. I think that's every CEO's instinct.
Monica Trauzzi: And so the report argues that natural gas and renewables should really be sort of complementing each other?
Eileen Claussen: Well, I think they do. I mean, if you look at it in an abstract way, it should, right? I mean, natural gas prices could be volatile, renewables would not be, renewables could be intermittent, natural gas would not be, it's a natural match. We've got to get the state regulators to see it that way, which is a whole 'nother issue that we really need to confront if we're gonna see a lot more use of natural gas.
Monica Trauzzi: When a clean energy standard was being discussed in Congress during the last session, there was a lot of debate over whether natural gas should even be included.
Eileen Claussen: Mm-hmm.
Monica Trauzzi: Has the conversation shifted enough, today, that natural gas would be included in a CES?
Eileen Claussen: I think probably it might be discounted some, which is probably reasonable, because it's not greenhouse gas free, it's not a zero source. I think it has, I think the issues that you're now dealing with on natural gas are not actually the ones we dealt with in the report, which really says, "You can achieve real reductions if you shift to natural gas and away from oil or from coal," but the issue is surrounding fracking, and so there are a lot of people who are sort of caught up in that and not seeing the full picture. Because I think, from a climate point of view, this is a good thing, at least for a while.
Monica Trauzzi: Infrastructure. FERC has been criticized for not approving new gas pipelines quickly enough. We've even seen legislation in the house introduced that would expedite the process. What needs to happen in terms of policy and funding on infrastructure?
Eileen Claussen: Yeah, we really do need infrastructure. I mean, one of the big uses of natural gas that is a positive, other than straight, sort of power sector use, is household use. You know, space heating and water heaters and appliances, where you, off the top of your head, you wouldn't think this would be significant, but actually, it is really significant. Because you lose a huge amount when you go with an electricity system and you use, you know, you could lose, I think, two-thirds of the energy when you use an electricity system before it gets to the house; with natural gas, it's about 8 percent. It's much more efficient, and if everybody used natural gas, you could really save a lot, but I think less than half of the new houses that are being built actually have hook ups to natural gas, so we have a really big infrastructure problem. We have to find ways to finance it. We have to find ways to get consumers to understand that this is in their interest as well, and I'm not sure that, as a society, we've done a good job of explaining that to consumers, either.
Monica Trauzzi: Tom Farrell of Dominion, and AGA's Davie McCurdy are part of the unveiling of this report.
Eileen Claussen: Right.
Monica Trauzzi: What has the industry reaction been to the report?
Eileen Claussen: Well, it's a mix. I mean, they obviously like certain parts of it. When we say methane, then they're not too excited about that. When we say short to medium term, they probably would like to think of it as short, medium, and long term, but by and large, I think it's been a positive response.
Monica Trauzzi: It looks like the Senate's lead efficiency bill will no longer include funding for the federal government's use of natural gas and electrical vehicles. You talk about transportation in the report, how critical of a component is expanding natural gas in the transportation sector? You talk about how individual use of natural gas vehicles is not really gonna have a big impact on greenhouse gas emissions.
Eileen Claussen: I think that's right for a number of reasons, but of course, you need huge infrastructure changes to have it be single automobiles, but for fleets or for trucks, it actually could be a savings. It's not a huge savings. It's not as big as combined heat and power or the power sector generally or even household use, but it's not nothing. In the end, dealing with climate change is gonna require a lot of small things, all added up they could make a difference. We see it having a future for trucks and for fleets, but not for individual cars.
Monica Trauzzi: All right. An interesting report. Thank you for coming on the show.
Eileen Claussen: My pleasure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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