5. The overbuilding of natural gas combined cycle plants starting in the mid-1990s presents a significant opportunity for near term reductions in CO2 emissions from the power sector. The current fleet of Natural Gas Combined Cycle (NGCC) units has an average capacity factor of 41 percent, relative to a design capacity factor of up to 85 percent. However, with no carbon constraints, coal generation is generally dispatched to meet demand before NGCC generation because of its lower fuel price.
Modeling of the ERCOT region (largely Texas) suggests that CO2 emissions could be reduced by as much as 22 percent with no additional capital investment and without impacting system reliability by requiring a dispatch order that favors NGCC generation over inefficient coal generation; preliminary modeling suggests that nationwide CO2emissions would be reduced by over 10 percent. At the same time, this would also reduce air pollutants such as oxides of sulfur and nitrogen.
6. In the transportation sector, the study found a somewhat smaller role for natural gas. The use of compressed or liquefied natural gas as a fuel for vehicles could help to displace oil and reduce greenhouse gas emissions, but to a limited extent because of the high cost of converting vehicles to use these fuels. By contrast, making methanol, a liquid fuel, out of natural gas requires much less up-front conversion cost and could have an impact on oil usage and, thus, improve energy security, but would not reduce greenhouse gases.
7. A global “liquid” market in natural gas in which supply sources are diverse and gas prices are transparent, set by supply and demand with price differences based on transportation costs, is desirable for U.S. consumers.
There are currently three regional gas markets – North America, Europe and Asia – which have very little integration and which rely on completely different pricing structures. Modeling suggests that the integration of these markets would result in substantially lower consumer prices for US consumers.
The study makes many recommendations regarding the role of natural gas in a carbon-constrained world, suggesting that policy makers should consider supportive policies in the following areas:
- Require disclosure of all components of hydraulic fracture fluids.
- Require integrated regional water usage /disposal plans for unconventional gas production.
- Support renewed DOE R&D program weighted towards basic research and “off-budget” industry-led program weighted to technology development, demonstration, and transfer. Programs should be designed to optimize gas resources and ensure that they are produced in environmentally sound ways.
- Pursue displacement of inefficient coal generation with natural gas combined cycle generation.
- Develop policy and regulatory measures to facilitate natural gas generation capacity investments concurrent with the introduction of large intermittent renewable generation.
- Remove policy and regulatory barriers to natural gas as a transportation fuel.
- Support polices to foster an integrated global gas market, including the integration of natural gas issues into the foreign policy apparatus, with strong involvement of the Executive Office of the President, supported by a strengthened natural gas policy apparatus at the Department of Energy.
- Export U.S. knowledge in unconventional gas characterization and production to nations that can advance U.S. strategic interests.
While the new report emphasized the great potential for natural gas as a transitional fuel to help curb greenhouse gases and dependence on oil, it also stresses that it is important as a matter of national policy not to favor any one fuel or energy source in a way that puts others at a disadvantage. The most useful policies, the authors suggested, are ones that produce a truly “level playing field” for all forms of energy supply and for demand reduction and, thus, let the marketplace, and the ingenuity of the nation’s researchers, determine the best options.
Illustrating the role of natural gas as a bridge to a low carbon future, the study’s authors stressed that it would be a mistake to let natural gas crowd out research on other low- or no-carbon energy sources, but it would also be a mistake to let investments in such alternatives crowd out the expansion of natural gas resources in the near term, particularly for the purposes of CO2 emissions mitigation.
The study received support from the American Clean Skies Foundation, Hess Corporation, Agencia Nacional de Hidrocarburos of Colombia, and the Energy Futures Coalition and the MIT Energy Initiative. The report issued this week is a preliminary overview of a more detailed report that will be released later this year.
“In a carbon-constrained world, natural gas will become a larger part of the energy mix,” Moniz said. But in the longer term, it will be necessary to shift to “essentially zero-carbon” sources so “we better not get mesmerized by gas either. We need to do the hard work of getting those alternative technologies ready to take over.”
The complete preliminary report can be accessed on MIT Energy Initiative (MITEI) website at http://web.mit.edu/mitei/research/studies/naturalgas.html
Source: MIT Press Release dated June 25, 2010