Why Colorado Should not Replace Coal Power Plants with Natural Gas

The plan in Colorado to replace coal generation with natural gas fails the test of prudence because it is based on a monolithic and untested assumption, i.e. shale gas production in the U.S. will increase far beyond even the most optimistic projections of the U.S. Department of Energy and the cost of that production will be low and stable. But the proposed plan cannot answer five key questions relating to shale gas: (1) how much of this gas can be delivered in a timely fashion?, (2) how long can production be sustained?, (3) why will the chronically persistent higher prices and price volatility of natural gas not apply to shale gas?, (4) what will the environmental impact be? and (5) what are the consequences for Colorado's families, businesses and agricultural operations if shale gas production falls short of expectations? Despite the high rhetoric associated with shale gas, none of these questions has been even marginally resolved. Indeed, as the California Energy Commission has noted: "The infancy of the development of natural gas from shale formations creates many uncertainties and thus leaves many questions unanswered." If the answer turns out to be less shale gas than projected, Colorado will be just another one of the states risking their energy future on one of the most price volatile commodities in the world. These states would then be forced to enter the international liquefied natural gas market (LNG) a market in which they will be at the mercy of questionable suppliers since the OPEC nations and Russia own 75 percent of the world's natural gas and LNG is indexed to world oil prices.The proposed plan in Colorado flies in the face of DOE projections that gas production will decline 4% over the next decade even if shale gas meets expectations. The hyperbolic projections of shale gas production from the perpetually overly optimistic gas industry cannot prudently be the basis of any state's electricity plan, including that of Colorado. The industry is well known to over-promise and under-deliver (1998, 1999, 2003). For instance, in 2005 the American Gas Foundation declared: "6 Tcf per year … of liquefied gas is pointed toward U.S. markets". But the United States has yet to receive even one Tcf. Thus, AGF missed by more than two Gulfs of Mexico.Americans have paid dearly for heeding these excessively rosy projections. Upward of 90 percent of the power plants built in the last decade have been gas and we are building more. In fact, by 2013, the generating capacity of natural gas will be over 500 GW – more than coal and nuclear capacity combined. These new gas plants were the primary reason national electric rates increased 35 percent between 2002 and 2008. Now, the proposed plan would put Colorado out on that same limb by forsaking the relatively low-cost fuel (coal) that has kept electricity rates in the state 13 percent below average. Despite these realities, the proponents of Colorado's plan have not even attempted to empirically assess the socioeconomic and environmental impacts of replacing coal with gas. Instead, the rhetoric supporting the plan has been laced with vague and unfounded references to "jobs", "economic growth" and "a cleaner environment" – despite the reality that increased dependence on gas has already cost millions of jobs, stultified economic growth and now, with the rise of shale gas, is damaging the water, air and land environment from the Rocky Mountains to Louisiana to Pennsylvania. Further, scientific evidence has indicated that releases of methane, a powerful greenhouse gas, vitiate the argument that gas is "cleaner" than coal. Dr. Robert Howarth, Professor of Environmental Biology at Cornell University concluded" a complete consideration of all emissions from using natural gas seems likely to make natural gas ... not significantly better than coal in terms of the consequences for global warming" Careful analyses of "lifecycle" emissions are essential in assessing the true environmental impact of gas.Thus, far from being a bridge fuel to the future, an unquestioning acceptance of unrealistic shale gas projections may be leading us to waste precious financial resources by building a series of "legacy" gas plants that will not merely raise the price of gas and electricity but also require carbon capture and storage (CCS) far more expensive than that from coal. Climate change goals of an 80 percent reduction in carbon dioxide emissions by 2050, as enunciated by the Obama Administration, the European Union and the Intergovernmental Panel on Climate Change (IPCC), cannot be met by natural gas without CCS.Silver bullets are risky bets in the energy business. After all, at one time, nuclear power was deemed "too cheap to meter". Betting Colorado's electricity future on a "trust us" hypothesis from the gas industry is a risky path and one that would haunt the state for decades. Rather than blindly accepting gas industry rhetoric, policymakers, families and businesses in Colorado should be asking one single question: "And what happens to us if you are wrong again?"