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Cutting the Cost of Cleaner Air

As new regulations on power-plant emissions seek to combat air pollution, the shale-gas rush is providing cover for the pocketbooks of American consumers.

As new regulations on U.S. power-plant emissions seek to combat air pollution, the shale-gas rush is providing cover for the pocketbooks of American consumers.

Vast stores of natural gas are being unlocked from underground shale-rock formations, thanks to recent breakthroughs in horizontal drilling and hydraulic fracturing technologies. As a result, U.S. natural gas supplies have soared, as prices have fallen to historic lows.

 

The arrival of cheap, abundant natural gas in the midst of a long-term push by U.S. regulators to require coal-burning electric utilities to install expensive new emissions controls has prompted many plants to switch from coal to cleaner-burning natural gas as their fuel of choice.

For the first time ever, electricity output from natural gas-fired plants rose to equal that of coal-burning plants in April of 2012, according to the U.S. Energy Information Agency.

This changeover from coal to gas has allowed U.S. electricity consumers to enjoy the benefits of cleaner air without paying significantly higher electric bills.

 

"Natural gas allows us to provide electricity to power more than 600,000 homes in a way that's cleaner and more efficient than ever," said manager Tony Tramonte, manager at Georgia Power's Plant McDonough-Atkinson, which switched from coal to gas in October 2012.

The coal-to-gas shift is the primary reason energy-related carbon dioxide emissions in the U.S. fell 3.8 percent in 2012, the EIA announced on Oct. 21. It was the fifth time those declined in seven years, putting them at the lowest level since 1994. The shift is also why power-plant emissions have decreased 10 percent since 2012, according to the Environmental Protection Agency.

Despite efforts by the Obama administration EPA to clamp down on power plant emissions, which many warned would make electricity more expensive, the retail price of electricity has remained essentially flat over the last five years, according to EIA data.

That likely wouldn't be the case without shale gas. Growing reliance on affordable, abundant natural gas has pushed retail electricity costs 10 percent lower than they otherwise would be, according to a 2011 study by IHS Global Insight. That means that American households will have gained about $926 in disposable income on average from 2012 to 2015—a figure expected to rise to more than $2,000 in 2035.

"It's difficult to overstate the shale revolution's profound contributions to the U.S. economy," Chris Lafakis, senior economist with Moody's Analytics, told USA Today in September.

EPA Administrator Gina McCarthy recently acknowledged the critical role natural gas plays in both reducing emissions and ensuring the health of the energy sector.

"Responsible development of natural gas is an important part of our work to curb climate change and support a robust clean energy market at home," McCarthy said Aug. 14 in a speech in Colorado.

The EPA unveiled new regulations Sept. 20 that would tighten limits on greenhouse-gas emissions from new power plants. The new regulations are a key component of President Barack Obama's climate-change plan to cut greenhouse gases 17 percent by 2020.

"Because these standards are in line with current industry investment patterns, these standards are not expected to have notable costs and are not projected to impact electricity prices or reliability," the EPA has stated.

Some dispute those cost estimates. What's not in dispute, however, is the significant downward pressure that shale-gas exploration is having on electricity prices—and on total U.S. greenhouse emissions.

The U.S. has already made progress in its goal of reducing its carbon footprint, as Energy Secretary Ernest Moniz explained during an Aug. 26 question-and-answer session at Columbia University.

"In these last years, the natural gas revolution, shall we say, has been a major contributor to reducing carbon emissions," Moniz said. "The president has a goal, as I mentioned, of 17 percent by 2020. We are about halfway there, and about half of that is because of the substitution of natural gas for coal in the power sector, essentially driven by market forces."