Energy Bill has it wrong

If the real goal of the administration and congress is to reduce green house gases and other pollutants, then the American Clean Energy and Security Act is utterly faulty.

The most efficient way to significantly reduce green house gases and other pollutants is to shift more of the electricity generation away from coal and towards natural gas. Per the Energy Information Administration (EIA), the electricity generation in the U.S. through March 2009 is broken down as follows.



Coal			46.8%
Natural Gas		20.3%
Nuclear		        21.2%
Hydroelectric		6.5%
Petroleum		1.3%
Other Sources		3.9%
TOTAL		        100.0%


Focusing on the fossil fuels, the EIA reports the emission levels as follows.



Fossil Fuel Emission Levels
Pounds per Billion BTU of Energy Input
Pollutant		Natural Gas	Oil		Coal
Carbon Dioxide	        117,000		164,000	        208,000
Carbon Monoxide	        40		33		208
Nitrogen Oxides	        92		448		457
Sulfur Dioxide	        1		1,122		2,591
Particulates	        7		84		2,744
Mercury		        0		0.007		0.016


Natural gas is a plentiful, U.S. produced fuel that is very cheap on a BTU basis. For reference of costs, the following is the cost per unit of production for each of these fossil fuels.



			BTU		Cost
Natural Gas (Mcf) 	1,000,000	$3.51
Oil (Bbl)		5,800,000	$63.13
Coal (Ton)		22,400,000	$50.05


Therefore, on a price per MMBTU basis, the cost per fuel breaks down as follows.



Natural Gas		$3.51
Oil			$10.884
Coal			$2.234


Certainly, coal is still the cheapest fuel, however, natural gas is price competitive, plentiful, domestically produced, and significantly cleaner. With advances in drilling technology, estimates of recoverable, domestic natural gas reserves have grown considerably recently: LINK

The total Proved and Potential Natural Gas supplies in the U.S. are 2,074 trillion cubic feet at year-end 2008. This compares to estimates of 1,532 trillion cubic feet at year-end 2006 (35.4% increase). The majority of this increase comes from additional reserve estimates in the various shale plays.

Why is the administration trying to cram down a bill that will likely not reduce pollution but will increase the energy costs for consumers instead of promoting the increased use of natural gas as a fuel? Further, since it seems to me that this bill has no chance of getting through th senate, the entire process seems like a useless exercise.

Maybe I am missing something.

If 1 million cubic feet of natural gas produces 1 million BTU then it seems there is nowhere near enough natural gas to meet our needs. Basically 1 BTU/ft^3.

2.074 trillion cubic feet (total supply) equals 2 trillion BTUs.

So, 1 megawatt hour of energy requires 10 million BTUs to generate.

In 2007 we generated 4,157 million megawatt hours (cite). That is 41.57 quadrillion BTUs.

I must be missing something or screwed up my math by that 2 trillion seems way too low to meet our needs.

One thousand cubic feet (Mcf) equals one million BTU (MMBTU).

The supply is not 2.074 trillion cubic feet. It is 2,074 trillion cubic feet or 2.074 quadrillion cubic feet.

What makes you say that the energy bill won’t promote natural gas? The basic effect is to attach a price tag on carbon dioxide emissions, and since natural gas produces less CO[sub]2[/sub] per energy, it’ll therefore be effected less than coal by this bill. Of course, natural gas still produces more CO[sub]2[/sub] than, say, wind, so it’s possible that wind will end up even more favorable than natural gas.

Natural gas also has a big advantage in that natural gas power plants can start up or shut down quickly, on very short notice. This means that an increased reliance on natural gas will also make it practical to increase reliance on wind power (and eventually, solar), for which the main drawback is that it’s not completely predictable or controllable. When the wind happens to die down, you can start up the gas generator to replace it.

And not only propane, but propane accessories!

I tell you what.

I think you just don’t understand how the energy bill works, which is understandable given the paucity of administration messaging and the abundance of misinformation.

Why isn’t natural gas a more popular form of energy production now? Because we subsidize other fossil fuels by not holding their users responsible for the pollution they produce, making them marginally less expensive than natural gas. By pricing in the cost of pollution, the bill makes natural gas more competitive. As Chronos noted, the bill is a boon for any technology that emits less greenhouse gas, including natural gas, nuclear, and other technologies.

Most of what I wanted to say here could be summarized by the statement: “What Chronos says.”

I will only add that the whole point of cap-and-trade (or a carbon tax) is to put a price on CO2 emissions and let the market decide how best to meet the challenge, rather than let the government choose the winners. Otherwise, we can argue from now til doomsday whether it is better to achieve the reductions in CO2 through increased reliance on natural gas, nuclear, wind, solar, or reducing consumption through greater energy efficiency. Better to have the government just set the goal (reduced emissions of CO2) and let the market decide how best to meet it.

To: Chronos, Richard Parker, and jshore

Are you people seriously saying that this bill is simply causing the environmental costs of energy to be added in to the price of various fuels? You can’t be that hopelessly naïve and uninformed. Further, I like how it is all stated as if I’m the uninformed party.

Let me see, if the government isn’t throwing its weight behind certain administration favored energy sources and is instead letting the free market decide, please explain the following items.

Link

Link

My point is that if the government is going to be favoring certain energy sources over others, as this bill clearly does, then it should favor energy sources that will make a realistic difference such as natural gas. Unless you live in fairy tale land, we’re not all of a sudden going to replace coal with solar.
Further, quit acting like the only thing holding renewables like solar, wind, geothermal, and ethanol back is that the fossil fuels are artificially too cheap. If anything, I would say that with the massive subsidies those renewables are currently getting, they more than offset any supposed benefits the fossil fuels are getting by having some of their costs unaccounted for.

If the Administration wants an effective bill, it will be one that promotes realistic alternatives such as natural gas, nuclear, and even wind to some extent in order to curb the use of coal.

Finally, if Congress really was neutral regarding natural gas and wanted the free market to decide, then why the introduction of the FRAC Bill, which was introduced almost simultaneously with the Energy Bill and does effectively nothing other than increase the cost to fracture stimulate shale gas wells.

I think energy secretary Steven Chu mentioned that ushering in more fuel efficient refrigerators has had more of an impact on fossil fuels than all the alternative energies (not counting nuclear) combined. I wonder if a bigger difference could be made by retrofitting buildings to be greener, introducing new appliances, increasing public transportation, etc. as opposed to subsidizing wind/solar. But then again, if some real technological breakthroughs could happen to make those sources more than a few percentage points of energy generation, they will probably need the funding and research happening now.

A miscommunication. Most of the discussion over this bill has concerned its primary feature: the institution of cap and trade. You’re right that it also expands on subsidies for renewable energy, which could instead be put toward natural gas.

I think your opinion is reasonable, but I disagree. I do think the primary thing holding renewable energy back is the implicit subsidization of pollution, and that renewable energy is ultimately preferable to natural gas.

This is where your language causes us to think you don’t understand the bill. It does promote all of those things, which you understand, right? What you mean to say is something like “one that promotes realistic alternatives above and beyond the support provided as a result of the marketable permits.”

It favors particular energy sources exactly to the extent that those particular energy sources are less carbon-intensive. Natural gas is less carbon-intensive than coal, so it favors natural gas over coal, and wind and solar are less carbon-intensive than natural gas, so it favors wind and solar over gas. Now, it may be that natural gas’s other advantages are enough to outweigh the carbon dioxide it produces, in which case it will be the winner. And it may be that the other advantages aren’t enough, in which case it shouldn’t be the winner. That remains to be seen.

I guess I must be an idiot then. Please explain to me how the administration and congress through this bill and other related legislation is promoting natural gas? From where I sit, I see the energy bill as increasing the cost on consumers to use natural gas and I see the FRAC bill as increasing the cost to produce natural gas. That sounds like the exact opposite of promoting it to me. Also, $90 billion in subsidies are going to renewables in the energy bill (hell, $3.4 billion went to coal in the stimulus package). Where were the subsidies to natural gas?

I think your trying to use some warped logic that because increased costs to natural gas may be less than to other fossil fuels, then they are promoting it. That doesn’t count as promoting something to me. Throwing subsidies and requiring mandates on how much power generation will come from a certain fuel is promoting it. That is what the energy bill is doing with renewables.

For some data points: 1) the Renewable Electricity Standard in the Energy Bill requires that 20% of electricity be generated by renewables by 2020; and 2) $90 billion in additional subsidies will go toward renewables as part of the Energy Bill.

Really? They must be geniuses then. Tell me, have they released this magic formula that determines how exactly they treated all of these different fuels in a fair method? I mean, you did say that they are favored exactly to the extent that they are less carbon intensive, right?

Isn’t it just slightly possible that this bill isn’t really to the exacting standards that you make it out to be?

You’re not an idiot. Indeed, I specifically said, “I think your opinion is reasonable, but I disagree.”

I define “promote” as this: if after the passage of the bill, someone in need of energy is more likely to choose natural gas, then natural gas is promoted by the bill. Or, if you prefer, as a direct result of this bill, natural gas will occupy a larger part of the US energy portfolio. This will be true even though the bill may* make natural gas more expensive.

Consider two cars that are manufactured without seat belts, A and B. As it stands, A is slightly less expensive than B, and enjoys a substantial market share. But adding seatbelts to A will increase its cost because the manufacturers have to redesign the whole thing since right now the passengers stand up while the vehicle is in motion. In order to add them to B, the manufacturer merely need attach them to existing seats. Consequently, if both cars must have seatbelts, B will become cheaper than A, even though both cars will go up in price. Does a law that requires all cars to be built with seatbelts promote car B?

    • in practice, it will depends on the allocation of permits.

It does to me. Does that make me warped? I mean, more warped than usual.

Let’s use a quick analogy. Let’s say there are 6 different types of energy A through F. Here is the cost effect of the bill on these different types of energy.

A - increase by $15
B - increase by $10
C - increase by $8
D - decrease by $1
E - decrease by $5
F - decrease by $10

You would seriously look at that and say that the bill is promoting C?

As far as I can tell, none of the permits are being given away to natural gas power generators. Of course, in order to get enough passing votes, they did amend the bill to give away permits to coal power generators (they’re also giving away permits to oil refineries).

I haven’t seen any kind of list or report on allocation, but I’ll take your word for it. This thing will probably die in the Senate because coal jobs trump the environment, and I think that would be true even without the renewable energy subsidies.

It’s promoting it more than A and B, and promoting D, E, and F more than it.

The actual final effect, of course, would depend on what the prior costs/profits are for each alternative. Supposing that the current profits of each thing are:

A - $10
B - $12
C - $12
D - $25
E - $30
F - $50

…then I would expect C to benefit the most.