In 2009, unconventional shale gas emerged as the dominant driver in North American natural gas markets. Rapid increases in shale gas production and shale-driven upward revisions to the U.S....
Clear Skies for Gas
Unconventional sources brighten the U.S. supply outlook.
is increasing Congressional support for legislation promoting NGV use and mandating the availability of public refueling stations by Rep. Rahm Emanuel (D-Ill.), who was chairman of the House Democratic Caucus, and chosen for White House Chief of Staff, and Sen. James Inhofe (R-Okla.). 9 This legislation would expand current tax credits for NGVs to both natural-gas-fueled vehicles and bi-fuel vehicles to ensure that by 2018, 10 percent of new vehicles would be NGVs. The latter requirement is the objective of the New Alternative Transportation to Give Americans Solutions Act, introduced by Rep. Rahm Emanuel and Rep. Dan Boren (D-Okla.).
The Emanuel Bill also would double the tax credit for installing home refueling stations from $1,000 to $2,000. Moreover, it would require that service stations owned by major oil companies must install natural gas fuel pumps by 2018 or face an annual fine of $100,000 per station. However, the Emanuel Bill includes an increase in the refueling property tax credit for the installation of natural gas fuel pumps and $2.6 billion of Energy Security Tax Credit Bonds to provide low or no-interest loans to service stations up to $200,000 per station.
In view of the growing constraints on CO 2 emissions from power generation, it is vitally important that the least-cost solution be used, which is replacement of inefficient (30-32 percent) coal-fired steam-electric plants. These still supply more than one-half of U.S. power demand and emitted about one-third of U.S. carbon emissions in the form of CO 2 of 1,607 million metric tons (mmt) in 2006. 10 This least-cost solution is replacement of the existing 311 gigawatts of coal-fired steam-electric capacity with efficient natural-gas-fired combined-cycle plants that emit only one-third as much carbon in the form of CO 2 at a heat rate of about 6,300 Btu/kWh, which is equivalent to a lower heating value efficiency of about 60 percent. According to a December 2000 interim report on a study sponsored by the U.S. Department of Energy and the Electric Power Research Institute, the investment cost of natural-gas-fired combined-cycle plants was only $496/kW 11 and is undoubtedly somewhat higher by now, but still by far the least-cost source of low-emission power, especially at natural gas prices in the $5.00 to $6.00/million Btu range and $500/KW investment cost. This would make the busbar cost—at a 70 percent annual operating factor—about 4.9 to 5.5 cents/kW-hour. This is substantially less than the estimated busbar cost of new nuclear (but totally emission-free) capacity, or of the modified Integrated Coal Gasification Combined Cycle (IGCC) process in which an intermediate catalytic water gas shift step (CO+H 2O -> CO 2 + H 2) converts the entire product of pressurized steam-oxygen coal gasification into essentially pure hydrogen after removal of the CO 2 and its sequestration in suitable underground formations. The investment cost of modified IGCC, excluding the cost of CO 2 sequestration, is now estimated to be well in excess of $2,000/kW. In an article by the author entitled “Coal No More: What If?” 12 it is estimated that just the conversion of the existing