President Obama has had a string of rotten luck on energy. In the spring of 2010, he offered a grand bargain in an attempt to pass a huge climate-change bill: combining the cap-and-trade plan that liberal Democrats want with the new offshore drilling that Republicans crave. It might even have worked — until the Deepwater Horizon rig exploded in the Gulf of Mexico, frying its political prospects. A year later, Obama tried again, backing a deal to tie production of wind and solar energy to an expansion of nuclear power. Just a few months later, Japan's Fukushima Daiichi nuclear plant vaporized the president's hopes. And, of course, new clean-energy initiatives were kneecapped when Solyndra, the federally backed solar manufacturer, went bankrupt.
Now Obama may have finally caught a break. Thanks to the plummeting price of natural gas — a fuel that produces only half the carbon pollution of coal — energy companies say that it will be cheap, easy, and nearly painless to comply with the controversial climate-change regulations that the Environmental Protection Agency is expected to roll out in the coming weeks.
The rules, expected for more than a year, will make a big economic, environmental, and political impact: They will likely restrict pollution from coal-fired power plants, which produce about half the nation's electricity and about a third of its carbon pollution. But the administration's ingenious move piggybacks on preexisting market forces that have made natural gas so cheap. Instead of forcing companies to retrofit dirty old facilities, the EPA regulations will affect only new plants, steering power companies toward the natural-gas future they had already devised for themselves.
Republicans (and a slew of conservative interest groups and super PACs) had been plotting an assault on the rules, both on Capitol Hill and on the campaign trail. GOP ads are still expected to call them "job-killing regulations" that will force energy companies to close plants, lay off workers, and boost electricity bills. But the industry says it shouldn't have a problem complying with the expected rules. The vast new reserves and falling prices mean that power companies forced by the regulations to cut their carbon footprint have an easy substitute for coal in natural gas, which can produce the same amount of electricity as coal with half the carbon pollution.
The rules won't hurt power plants, lift prices, or cause layoffs — at least before the general election. (Green groups say they expect Obama to regulate existing polluters after November.) "The new climate rule is in line with market forces anyway," says Jim Rogers, CEO of Duke Energy, which provides electricity to the Carolinas, Indiana, Kentucky, and Ohio. "We're not going to build any coal plants in any event. You're going to choose to build gas plants every time, regardless of what the rule is." None
Until recently, that wasn't the case. Domestic natural gas was thought to be in short supply; the fuel, although clean, had a history of price volatility. But now, thanks to advances in the controversial drilling technique known as hydrofracking, energy analysts predict that the United States will have abundant natural gas for decades — enough for energy companies to reverse the dominance of heavily polluting coal for economic reasons, rather than environmental ones.
To be sure, there's no guarantee that natural gas will stay quite so cheap. Once the economy improves, so will energy prices — even for gas. And like oil and nuclear energy, natural gas comes with its own risks: Environmentalists fear that hydrofracking could contaminate drinking-water supplies. One major fracking accident could freeze Obama's embrace of natural gas the way the BP spill froze offshore oil drilling and Fukushima froze a nuclear renaissance. But if energy companies sour on gas in the future, the new climate rules will prevent them from returning to the old ways of burning coal. They'll have to choose renewables, nuclear power, or new coal technologies such as carbon capture and sequestration, experts say.
If things continue as they are now, the Energy Department projects that by 2035, thanks to the low price of natural gas, the share of electricity generated from coal will fall from nearly 50 percent today to 39 percent; the share from natural gas will grow from 24 to 27 percent; and the share from renewable will grow from 10 to 16 percent. Frank O'Donnell, president of the environmental group Clean Air Watch, said, "Natural-gas prices make it easier and cheaper for companies to steer away from the biggest greenhouse-gas polluter. The Obama administration has had its share of bad luck on energy, but they were due for at least some good luck."