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....
Natural gas as a near-term CO2 mitigation strategy.
heavily dominated by gas or coal generation won’t be able to fully effectuate this switch without compromising electric power availability, absent upgrades in transmission capacity. Fully quantifying this limit requires a more detailed analysis of the electric power grid. However, as a first approximation, consider a map of the United States ranking states only by the ratio of their gas-coal generation capacity (see Figure 5) .
A high ratio ( e.g., green states depicted in Figure 5 ) implies that a state is dominated by gas, and therefore likely to run into overvoltage problems if it increased local gas generation. By contrast, a very low ratio ( e.g., the light orange states) implies the state is dominated by coal, and therefore unlikely to be able to bring in gas-fired generation to maintain grid stability if it were to shut down coal plants.
A gas-coal switch is unlikely to be realized in the coal-dominated Appalachian and Montana-Utah regions, nor in the gas-dominated Northeast and California regions. But for much of the country, it does appear viable. Interestingly, the states with a particularly high coal or gas concentration comprise a fairly small fraction of the total coal fleet.
States with extreme concentrations of coal or gas-fired electricity— e.g., greater than 90 percent—represent less than 20 percent of the total coal fleet. Thus, it would appear on first glance that gas and electric transmission constraints are unlikely to reduce this opportunity by more than 20 to 30 percent—and even that limit theoretically could be addressed with transmission system upgrades.
Third, long-term and demand considerations will affect the coal-to-gas transition. There are two obvious limitations of this analysis:
• It doesn’t address the question of what will be built in response to carbon pricing, only how to change operation of existing assets; and
• It’s a supply-side assessment that assumes no change in current electricity demand.
Note that both of these limitations would, if factored in, give greater significance to energy efficiency, both with respect to more efficient new generators ( i.e., the lowest cost source of new generation) and with respect to demand-side measures that would lower the total demand. By reducing the relative demand for upstream fossil fuels, the inclusion of such measures would make it easier to achieve the transition described herein.
Finally, political constraints play a significant role; indeed, perhaps the most important factor. The current climate debate again has proven the political aphorism that “losers cry louder than winners cheer.” As E&E Daily reports, coal-fired utilities spent $35.1 million lobbying Congress in the first quarter of 2009 alone, while the entire gas industry spent just $3.3 million during the same period. 3 Indeed, the gas industry trade associations publicly have all but conceded that they were non-players during the Waxman-Markey negotiations.
This political reality is unlikely to change much, even as the gas industry raises tens of millions of dollars for a more robust lobbying and public relations effort. The coal industry knows exactly how much it stands to lose, and can be expected to play an