IMO I would say that this specific action will result in no significant difference in the next year or two, but after that point it will exert an upward pressure on prices that will accelerate as we bet more and more of the farm on natural gas. I guess in rethinking it more I think that this action, without a serious and quick increase in the share of nuclear and renewable fuels, is a strategy which also makes power prices much more volatile, with much wider swings of prices in the summer and winter months, even if the net annual increase is modest.
Except for CO2 (which is the driver here for this specific legislation) given money coal plants can be made very clean for SO2, NOx, SO2/acid gas, mercury and heavy metals, particulates, water runoff and water disposal, etc. For CO2 we just don’t have the long-term utility-scale proven performance of amine, chilled ammonia, or other carbon dioxide capture systems, let alone the sequestration infrastructure nor ability in the first place.
I’m more interested in the long game being played here if you have any thoughts on this. Supposing that wild price swings do occur, What then? Certainly many elderly and the poor, working poor, and possibly even the lowest rung on the self sufficient won’t be able to make those bills. Given the choice, they will either go without or simply not pay until service is shut off. After a few related deaths, the states will have no choice but to step in. Is this a sort of long run play for nationalized, or subsidized energy?
Certainly if the demand rises and no new plants are built, the consumer price will rise. But I don’t see why it should become more volatile. Can you explain?
MfM
No doubt what you propose would make sense, but obviously trying to do that has not happened. And of course actually monetizing the implicit costs of fossil fuels would also raise consumer prices (even if it saves us all in the longer term.)
So here is the current circumstance: Una, as a representative of those doing things like running the spreadsheets for the industry, is clearly aware that an energy production portfolio excessively reliant on NG runs the risk of severe price volatility in a moderate term, and is potentially going to run into significant longer trend price increases as supply gets excessively exploited by great demand. One highly doubts that she is the only consultant in the industry who recognizes those risks.
Here is the question: Accepting the above, and given the lag time to build new plants (some sorts much longer than others) will the industry hedge and still invest in a diversified non-coal, non-NG generation portfolio? (Or I guess conceivably smaller coal biomass co-firing, or even CC theoretically?) Or do they not look that far ahead and leave themselves unprepared with options when NG supplies no longer significantly exceed demand like they do for right now?
Replacing coal plants with natural gas plants is likely to make things worse, if the intent is to reduce greenhouse gas emissions (i.e., renewables need to replace existing fossil fuel generation).
(Why? Methane has 30 times the warming effect of CO2 on a century timescale, and over 100 times on a decadal timescale, and leakages occur)
Although it would reduce emissions of other stuff like mercury and SO2 (note also that aerosols currently mask around half the warming that should have occurred so far, so a global shift to cleaner, but still mostly fossil fuel, energy sources would also increase warming).
This is a stick, but we also need a carrot at the same time. At the same time as we’re stopping the coal plants, we need to also be making it possible to build more nuclear plants. We have the technology; the barriers are all political.
More fiscal. They just don’t make economic sense right now. Doesn’t mean they won’t in the future, but new nuke does not right now.
Una,
How would this impact “garbage gas”-fired turbine power plants, if at all? I’m sure you’re aware of these types of plants, which run off of the methane produced by a city’s landfill.
Also - how did we get to CO2 being a “greenhouse” gas? I mean, I get that it’s a greenhouse gas, what I mean is, why is it a big bug-a-boo? Pretty much everything that isn’t a plant fucking EXHALES it!
Yes, but animals who exhale it get the carbon from the food they eat, which ultimately comes from plants pulling it back out of the atmosphere. As long as it’s just living things taking part in the carbon cycle, the amount of CO2 in the atmosphere stays pretty much constant. It’s becoming a problem now because now, it isn’t just living things: We’re also releasing a lot of carbon that was locked up in fossil fuels, and that’s causing the amount of CO2 in the atmosphere to rise very significantly, and very rapidly.
I’m not sure I understand where your “but creeping back upward” comes from. Natural gas futures closed at $2.15 today. If anything it is still creeping downward on its way to a 1-handle.
There is just no way that one really bad winter causes $8 gas. We’re so far away from that from a storage standpoint. Realize that we still have significant inventory of drilled (to retain leases) but not yet on production gas inventory. Gas goes up to $5 and you will see massive producer hedging activity to support massive increases in production that will move prices right back down. Also, which of these states are endanger of banning hydraulic fracturing: Texas, Louisiana, Arkansas, Pennslvania, West Virginia? The answer, as I’m sure you’d agree is none, and those are the states that matter most from the natural gas production standpoint.
Prices can and will move up, but talk of $15/mmbtu is just not reasonable at this point.
At the level of increased demand that significant transition to NG for the lion’s share of power generation, how long do you predict it will be until demand outstrips regional supply and prices do rise somewhat dramatically?
(Personally this is one area of speculation in which I defer to experts, and the best we got here for this area does seem to be Una)
It depends on a couple of things.
This regulation impacts power stations greater than 25MW (“utility-scale” as it is sometimes called) and therefore most of the landfill gas plants, being quite a bit smaller than that, don’t fall under the regulation.
If however you had a landfill gas source that could support more than 25MW, I doubt it would be built, because given the low production rate I don’t think there is a payback period with a super-efficient simple-cycle or combined cycle plant.
However, I’m wondering what the regulation would do if you drew from the same source landfill gas, but built, say, a 20MW and a 10MW plant side by side, each under 20MW…I haven’t read the details that closely to see what sort of bubbling might come into play.
Um…that’s a bigger question than I can answer here, and it’s been well-addressed by numerous other Dopers, some of them answering it much better than I can.
My understanding is not only are New York and New Jersey seriously considering complete bans, they are also considering taking action to prevent fracking within X miles of their borders under a theory of high-motility aquifer aquifer pollution. Sounds crazy in a way. Things like the (Princeton?) study claiming there is a medium-term net increase in GHG emissions from fracking due to high methane leakage are starting to get a lot of press, and the Sierra Club, trying desperately to hope everyone forgets about the Chesapeake Gas Money scandal, is getting much more vocal against gas, esp. fracking. I think they may be able to exert some influence in Arkansas and WV. Texas and Louisiana…not so much.
I know a bit about your background, and I personally defer to your knowledge on gas pricing - what I’m posting as “this is how bad things can get” is from several studies people in my group, who do nothing right now but study energy markets and futures in the US and abroad, are developing.
Correct me if I am wrong, but aren’t new coal power plants few and far between already? I know the Sierra Club has shifted its focus from stopping new ones to shutting down existing ones because there just aren’t that many new ones to fight. Isn’t this equivalent to banning the manufacture of horse-drawn carriages?
Longhorn Dave has an excellent knowledge of the oil and gas industry which is better than mine AFAIK. A lot of what I’m relying on in my speculation in the OP is from my own experts I hire; I’m not an energy futures expert in anything really except coal. My hope was this would be a debate, rather than any pronouncement from on high from anyone, myself especially noted, as I personally think the entire issue and the potential risk involved is incredibly volatile in the medium-long term. I’m hoping to learn from what folks here have to say and throw out as ideas.
Ah nevermind, you addressed this already. Missed it first time around, sorry.
Edited: n/m