Energy & Technology

Coal Initiative Series: Coal in China: Resources, Uses, and Advanced Coal Technologies

 

Coal Initiative Series White Paper:

Coal in China: Resources, Uses, and Advanced Coal Technologies

Download the full white paper (pdf).

Prepared for the Pew Center on Global Climate Change
March 2010

By:
Guodong Sun, Energy Technology Innovation Policy Group, Kennedy School of Government, Harvard University, Cambridge, MA

 

China’s energy-development pathway has increasingly become a topic of international attention, particularly as China has become the largest national source of annual greenhouse gas emissions. At the forefront of this pathway is a reliance on coal that has spanned many decades. In a world faced with increasing environmental pressures, China must develop ways to utilize coal more efficiently and more cleanly. Its ability to do so will be crucial for its domestic energy security, for its local environment and the well-being of its population, and for the future of the global climate.

Guodong Sun
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Clean Energy Conference Shows Efficiency Means Savings

April 12, 2010

By Eileen Claussen

This article originally appeared in Reuters.

While policymakers in Washington debate the best path forward for dealing with climate change, a growing number of U.S. businesses have discovered a simple technique that can lower costs, increase productivity, and slash greenhouse gas emissions.  What’s more, it can work for any business no matter what they make—whether it’s potato chips or computer chips.

 

It’s called energy efficiency, and a growing number of U.S. businesses are starting to get it. 

What does it mean to be efficient?  Seven habits of highly efficient companies as identified in the Pew Center’s new report From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, lists designating full-time staff to be accountable for energy performance, communicating externally the company’s successes in reducing energy costs and emissions and – perhaps most importantly – integrating sustainability as a core part of corporate strategic planning and risk assessment.

The results of this two-year study, featured this week at our Corporate Energy Efficiency Conference in Chicago attended by 260 representatives from 120 companies and universities, speak for themselves. 

Dow Chemical, which purchases as much energy in a year as Australia, estimates that its efficiency efforts have saved the company $8.6 billion since 1994 while avoiding about 86 million tons of carbon dioxide emissions.  The retailer Best Buy says that in 2008 its sales of certified ENERGY STAR products saved customers over $90 million in electric bills.

Why are they doing it?  For starters, higher and more volatile energy prices.

Energy experts at Toyota think of it as a treasure hunt for low-cost efficiency gains that equate to big cost savings. Like other innovative companies, Toyota empowers its employees to uncover and correct inefficient energy practices at their own plants and, in some cases, for their suppliers.  These efforts are in line with Toyota’s goal to reduce energy use per vehicle produced by 30 percent in 2011.

But concern about climate change, and growing customer and employee support for action on energy and environmental issues also matter, according to our corporate energy efficiency report.  In many cases, CEOs are personally spearheading efficiency efforts at their companies, reflecting the priority now given to energy saving measures.

“The most inexpensive items are generally improvements in energy efficiency, some of which are economic even without a price on carbon,” said Exelon CEO John Rowe at the conference. Exelon, one of the country’s largest electric utilities, cut energy use at its corporate headquarters by 50 percent by retrofitting it to meet LEED Platinum standards. 

The most effective companies are also looking outside their own walls to tap into even greater efficiency opportunities.  This means working with suppliers to adopt energy efficient practices, and designing products that allow consumers to share in energy savings. 

Earlier this year, Wal-Mart announced a goal to reduce carbon emissions from its global supply chain by 20 million tons, which is the equivalent shuttering six average-sized coal plants or taking 3.8 million cars off the road for a year.  United Technologies recently announced a goal to improve the energy efficiency of its products by at least 10 percent by 2010.

Energy efficiency also drives broader innovation, and the benefits go beyond dollars saved and emissions reduced. A focus on energy efficiency can lead to reevaluating business practices, often turning up improvements that increase productivity and enhance quality. 

Ambitious energy-savings targets forced Frito Lay to reexamine the way it bakes tortilla chips.  By installing new draft controls on ovens that reduced heat loss and evened out heat distribution, the quality of the chips improved.  At IBM, a focus on efficiency led to equipment upgrades that reduce energy use and improve reliability in semiconductor manufacturing processes. 

It is encouraging to see so many leading companies embrace energy efficiency as a win-win solution.  But energy efficiency isn’t just for businesses. 

We can all cut energy use, lower greenhouse gas emissions, and save money by taking simple steps like turning off the lights when we leave the room, adding insulation in our homes, and taking shorter showers.

But I’ve been around long enough to know that we can’t rely exclusively on voluntary action to achieve our environmental goals.

We need a comprehensive national clean energy policy that puts a price on carbon. Legislation that establishes such a price would unleash hundreds of millions of investment dollars, deliver an adrenaline shot to our nation’s manufacturing sector, and create thousands of well-paying jobs.  Energy efficiency sits atop the list of low-carbon choices poised to deliver immediate results in a clean energy economy.

Leading corporations have shown us what is possible.  It is time we follow in their footsteps and embrace energy efficiency as something we can do right now to help create a safer, more prosperous future. 
Eileen Claussen is President of the Pew Center on Global Climate Change. 

Eileen Claussen is President of the Pew Center on Global Climate Change

by Eileen Claussen, President--Appeared in Reuters, April 12, 2010
Eileen Claussen
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Breaking the Ice on U.S. Clean Energy Opportunities

On Friday, March 12, we held a briefing on jobs and opportunities in clean energy markets.

Today, the President signed an Executive Order creating an Export Promotion Cabinet of top officials and an Export Promotion Council, a private-sector advisory body. This Executive Order serves to highlight once again how important American exports and competitiveness are to economic recovery and continued US economic strength.  While much hand-wringing has occurred over the potential for climate and energy policy to hurt the ability of U.S. firms to compete in international markets, the opportunity of such policy to enhance the competitiveness of U.S. businesses has received less notice. The irony is that even as the planet warms, the United States may be left standing out in the cold if it doesn’t choose to lead in the development of next-generation energy technologies.

Renewable Fuel Standard

Highlights

  • The renewable fuel standard (RFS) is a requirement that a certain percentage of petroleum transportation fuels be displaced by renewable fuels. RFS1 started with the Energy Policy Act of 2005. Congress updated the standard in the Energy Security and Independency Act of 2007 (EISA). This new renewable fuel standard is known as RFS2.
  • RFS2 is a renewable fuel standard for biofuels only that requires obligated parties to sell a certain amount of biofuels per year through 2022.
  • RFS2 contains a four-part mandate for lifecycle greenhouse gas emissions levels relative to a 2005 baseline of petroleum: for renewable fuel, advanced biofuel, biomass-based diesel, and cellulosic biofuel.
  • The EPA published the final rule for RFS2 on March 26, 2010.

Background

The Energy Policy Act of 2005 created a Renewable Fuel Standard (RFS1) in the U.S. that required 2.78 percent of gasoline consumed in the U.S. in 2006 to be renewable fuel. The EPA finalized this requirement for RFS1 in April of 2007.

Congress expanded U.S. renewable fuel usage with the Energy Independence and Security Act (EISA) of 2007. The Act included a provision for a new Renewable Fuel Standard (RFS2), which increased the required volumes of renewable fuel to 36 billion gallons by 2022 or about 7 percent of expected annual gasoline and diesel consumption above a business-as-usual scenario. The Act gave the EPA the authority to revise and implement regulations related to RFS2.

Figure 1: Renewable Fuel Standard requirements through 2022

The EPA issued a notice of the proposed rulemaking for RFS2 in May of 2009 and the final rule in March of 2010. Table 1defines the four categories of renewable fuel according to the EPA. In order to be classified under one of these categories, a fuel must meet the percentage reduction in life-cycle greenhouse gas emissions shown in the table. The EPA’s rule defined the renewable fuel volume requirements from 2008 through 2022. From Figure 1, one can see the RFS2 slowly ramps up advanced biofuels (cellulosic, biomass-based diesel, and non-cellulosic advanced) until they overtake conventional biofuels in consumption levels by 2022.

Table 1: Renewable fuel types in RFS2

Fuel

% reduction

from displaced gasoline/diesel

(2005 baseline)

Definition

Renewable fuel

 20%

Fuel produced from renewable biomass and that is used to replace or reduce the quantity of fossil fuel present in a transportation fuel.**

Advanced biofuel

50%*

Renewable fuel other than ethanol derived from corn starch.

Biomass-based diesel

 50%

Includes both biodiesel (mono-alkyl esters) and non-ester renewable diesel (including cellulosic diesel). It includes any diesel fuel made from biomass feedstocks. However, EISA included three restrictions. EISA requires that such fuel be made from renewable biomass. The statutory definition of “biomass-based diesel” excludes renewable fuel derived from co-processing biomass with a petroleum feedstock.

Cellulosic biofuel

 60%

Renewable fuel derived from any cellulose, hemicelluloses, or lignin each of which must originate from renewable biomass.

* EPA could have exercised the 10 percent adjustment allowance provided for in EISA for the advanced biofuels threshold to as low as 40% but did not do so. ** Transportation fuel includes gasoline, diesel, heating fuel, and jet fuel. It can also include electricity, natural gas, and propane if it can be determined that the source of the fuel is renewable and the fuel is used for transportation. Source: Federal Register. (2010, March 26). Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program: Final Rule. 74(99). Washington: National Archives and Records Administration.

RFS2 Impacts

  • On petroleum consumption, energy security, and fuel costs:
    • RFS2 will displace about 13.6 billion gallons of petroleum-based gasoline and diesel fuel in 2022; this represents about 7 percent of expected annual gasoline and diesel consumption in 2022.
    • RFS2 will decrease oil imports by $41.5 billion, and will result in additional energy security benefits of $2.6 billion by 2022.
    • By 2022, gasoline costs should decrease by 2.4 cents per gallon and diesel costs should decrease by 12.1 cents per gallon because of the increased use of renewable fuels.
  • RFS2 will reduce greenhouse gas emissions by 138 million metric tons in 2022; this is equivalent to taking about 27 million vehicles off the road.
  • Agriculture sector and related impacts:
    • RFS2 will increase net farm income by $13 billion dollars (or 36 percent) in 2022.
    • RFS2 will decrease corn exports by 8 percent and soybean exports by 14 percent in 2022.
  • RFS2 will increase the cost of food $10 per person in 2022.

Changes from RFS1

  • RFS2 peaks at 36 billion gallons of renewable fuel by 2022 instead of 7.5 billion gallons by 2012
  • RFS2 set volume requirements for newly defined renewable fuel types; see Figure 1.
  • RFS2 goes beyond gasoline replacement by also including biodiesel.
  • Added greenhouse gas reduction thresholds for different fuel types (see Table 1) and takes into account indirect land use change. From C2ES’s report, Reducing Greenhouse Gas Emissions from U.S. Transportation, “[i]f land is converted to another agricultural use to produce biofuel, this will tend to raise the price of the agricultural commodity displaced. The higher price will encourage land somewhere in the world to be converted to agricultural use. If the land is cleared, carbon sequestered in the biomass and in the soil will be released to the atmosphere. The release of sequestered carbon will offset some of the potential GHG benefit of biofuel use.”
  • RFS2 limits fuel from corn starch to 15 billion gallons by 2022; there are no limits from corn stover (waste).

Final EPA Analysis

  • Released in February, 2010.
  • Indirect land use change assumptions defined such that almost all corn ethanol qualifies for program as a conventional biofuel feedstock (see Figure 2).
  • Under the final rule, EPA must reduce the cellulosic biofuel requirements if there is insufficient supply. EPA did so for 2013 for the fourth year in a row (see Table 2).
  • Grandfather Clause: According to the final rule, renewable fuel from existing facilities, which commenced construction on or before December 19, 2007, is exempt from the percent reduction from displaced gasoline/diesel for “renewable fuel” defined in Table 1. Ethanol plants that use natural gas or biodiesel for process heat, which commenced construction on or before December 31, 2009 are also exempt.

Figure 2: Fuel Pathways from EPA in 2022

Source: Federal Register. (2010, March 26). Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program: Final Rule. 74(99). Washington: National Archives and Records Administration.

Final EPA Requirements

Table 2: RFS Ethanol-Equivalent Volume Requirements, 2011 – 2013 (billion gallons unless noted)

 

Cellulosic biofuel

Biodiesel

Advanced biofuel

Total Renewable fuel (Including Ethanol)

2011

6.6 million

0.8

1.35

13.95

2012

10.45 million

1

2

15.2

2013 (Proposed)

14 million

1.28

2.75

16.55

Note: Volumes are ethanol-equivalent, except for biodiesel, which is actual volume, Source: EPA, Renewable Fuel: Standards and Regulations,  http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm

Compliance Details

Obligated Parties

Refiners that produce gasoline or diesel as well as importers of gasoline or diesel in the lower 48 states and Hawaii are the obligated parties for RFS2. Parties that add renewable fuel to gasoline or diesel (blenders), the state of Alaska (which can opt in), small refiners (whose exemption could expire on December 31, 2010), and gasoline exporters are exempt from RFS2.

Renewable Fuel Requirements and Penalties

Each year, the EPA must determine how much renewable fuel an obligated party must sell in order to meet RFS2. The EPA does this by determining the percentage of each of the four types of renewable fuel (see Table 1) that must be in the entire market in order to achieve the volume required by the standard for that year. It then requires each obligated party to own RINs (see box below) representing the same percentage of each of the four types of renewable fuel (known as renewable volume obligations or RVOs). See Appendix A for a description of the formulas the EPA uses to calculate obligation requirements. A provider may acquire these RINs either through producing the biofuel or through purchasing RINs on the open market. Most obligated parties are not biofuel producers so they would be expected to meet their obligation through the purchase of RINs. Thus, RFS2 establishes a credit trading system to attain the lowest possible cost of compliance.

In order to track renewable fuel sold into the market, the EPA requires renewable fuel producers and importers to assign unique Renewable Identification Numbers (RINs) for each batch of renewable fuel sold where a batch is any amount less than 100 million gallons per month, unless the producer or importer processes less than 10,000 gallons per year.

If an obligated party is out of compliance, the EPA may impose fines up to $32,500 as specified under sections 205 and 211(d) of the Clean Air Act for every day the entity is in violation and the amount of economic benefit or savings resulting from each violation.

References

EPA. 2010. EPA Finalizes 2011 Renewable Fuel Standards. November. Accessed June 9, 2015. http://www.epa.gov/oms/fuels/renewablefuels/420f10056.pdf.

Federal Register. 2010. "Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program: Final Rule." Vol. 74. no. 99. Washington: National Archives and Records Administration, March 26.

Greene, David, and Steven Plotkin. 2011. Reducing Greenhouse Gas Emissions from U.S. Transportation. Arlington, Virginia: Pew Center on Global Climate Change.

Press Release: Pew Center Briefs Point to Clean Energy Jobs, Detail Carbon Market Oversight

Press Release
February 17, 2010
Contact: Tom Steinfeldt, (703) 516-4146


MARKET-BASED SOLUTIONS CAN GROW U.S. CLEAN ENERGY ECONOMY
Pew Center Briefs Point to Clean Energy Jobs, Detail Carbon Market Oversight

WASHINGTON, D.C. – The Pew Center on Global Climate Change has released two timely publications that make the case for market-based clean energy and climate solutions.

Clean Energy Markets: Jobs and Opportunities, a new brief, explains how investment in clean energy technologies will generate economic growth and create new jobs in the United States and around the world. Comprehensive, market-based national policy that attracts investment in clean energy markets can help create these economic benefits.

A second brief, Carbon Market Design & Oversight, assesses the opportunity now before Congress to create the optimal design and oversight mechanisms to ensure a viable, transparent, and robust carbon market.

“It’s in our economic self-interest to ramp up development and deployment of U.S. clean energy technologies so that we can compete in the rapidly growing global clean energy markets,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “It’s not too late for the U.S. to position itself as a global clean energy leader, but we must act now. Passing comprehensive climate and energy legislation that prices carbon will give businesses the certainty needed to unleash millions of dollars in clean energy investments that will create U.S. jobs and expand economic opportunities.”

Worldwide, clean energy markets are already substantial in scope and growing fast, explains the Clean Energy Markets brief. Historically, regions where an industry gains an initial foothold are more likely to become a major center of growth for the industry. In the United States, comprehensive climate and energy policy can give nascent clean energy industries this initial start by attracting investment in clean energy markets and helping to create homegrown jobs.

In crafting sensible, market-based climate and energy policy, lawmakers should build on best practices and lessons from a number of existing markets to create the optimal carbon market design and oversight mechanisms. The Carbon Market brief provides policymakers a thorough yet concise assessment of the key considerations involved in establishing a sound, transparent U.S. carbon market. These include:

  • Roles and rationales of exchange-based and over-the-counter markets;
  • Options for improving oversight of these markets;
  • Assessments of potential regulatory agencies for a U.S. carbon market; and
  • Comparisons of carbon market oversight provisions in legislative proposals.

“Effective carbon market oversight will be critical, but it is fundamental and achievable,” said Claussen.
For more information about global climate change and the activities of the Pew Center, visit www.c2es.org.

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The Pew Center was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Regulatory Uncertainty Hinders Business in Alaska and Nationwide

ANCHORAGE - Alaska is a big state, with big mountains, big wildlife, and big development projects.  It’s also a place of big changes: the state has warmed more than 4 degrees, creating tremendous pressures on the natural environment and society.  But in a place where the people are always looking for the next big economic driver, like a $40 billion Alaska natural gas pipeline, uncertainty about carbon regulation is an Alaska-sized problem.

Nuclear Waste Commission, Yucca Mountain, and Loan Guarantees

Recent news has cast a spotlight on nuclear power. We’ve blogged before about nuclear power and its potential to play a large role in decarbonizing the electricity sector.

First among the big news items related to nuclear power is the official naming by the Obama Administration of a much-anticipated Blue Ribbon Commission on America’s Nuclear Future to recommend a safe, long-term solution for used nuclear fuel and nuclear waste. The commission, announced on January 29, will issue its final report within 24 months. Energy Secretary Chu noted that the commission is not tasked with recommending a site for a long-term waste repository.

Building an Electric Vehicle Here in the USA

In tackling climate change, a diverse transportation sector can contribute greatly to reducing greenhouse gas (GHG) emissions. In 2008, the transportation sector accounted for 28% of U.S. GHG emissions, according to the EIA. In achieving the goal of reducing emissions, transportation policy must reduce GHG emissions from travel without compromising the mobility of Americans. To that end, electric vehicles provide a much-needed alternative to gasoline and diesel powered cars.

Carmakers are responding to this challenge by designing plug-in electric vehicles (PHEVs) and all electric vehicles (EVs). Nissan’s Leaf, a new electric vehicle, is slated to hit showrooms throughout the U.S in late 2010. One of two Leafs seen in public was on display last week at the Washington Auto Show where the Green Car Journal named the Leaf its 2010 Green Car Vision Award winner.

Nissan Leaf

At first, Nissan will likely place prospective buyers on a waiting list, but it anticipates ramping up Leaf production at a factory it is retooling in Smyrna, Tennessee. The company secured a $1.4 billion loan from the U.S. Department of Energy (DOE) last week to prepare the plant to manufacture the vehicles and the advanced batteries that will power them. DOE points out that the facility will “create up to 1,300 American jobs and conserve up to 65.4 million gallons of gasoline per year.” The 150,000 vehicle-per-year factory positions the U.S. as a leader in the next generation of low-emissions vehicle manufacturing.

At the DC auto show, the Nissan representative shared details about the vehicle along with the company’s program to distribute it worldwide. Nissan is partnering with Better Place, an innovative electric vehicle services provider, to sell the Leaf in Denmark and Israel in 2011. The company intends to make modifications to the Leaf’s chassis to support Better Place’s battery switch stations. The Leaf will also meet SAE’s J1772 standard for electric vehicle charging. Lastly, by laminating the lithium-ion battery packs in order to make them self-cooling, Nissan solved a complex technical problem without using a computer control system. More information about the Leaf is available on Nissan’s website.

The L.A. Time reports Nissan hints at a sticker price of less than $30,000, before accounting for the $7,500 federal tax credit for plug-in hybrid vehicles and electric vehicles provided in the Recovery Act. No pricing information was available at the auto show. 

The three most important issues to Americans today are the economy, jobs, and terrorism according to the Pew Research Center for the People & the Press. If one makes the logical connection between protecting against terrorism and promoting energy security, Nissan is timely in releasing the Leaf in 2010. With the Leaf, the company will create American jobs to manufacture an affordable vehicle that lowers U.S. dependence on foreign oil.

Nick Nigro is a Solutions Fellow

We Need an Innovation War, Not a Trade War

In a letter to Secretaries Clinton, Geithner, and Locke, Attorney General Holder, and US Trade Representative Kirk, 19 business groups, including the National Association of Manufacturers, argue that new “indigenous innovation” programs are designed by the Chinese government to find “national champions” of industry that can be advantaged in a variety of sectors, including green technology, and create "barriers to competition."  The Hillicon Valley technology blog over at The Hill notes that this concern comes in the context of rising trade conflicts between the United States and China. 

This attention comes on the heels of increasing concern over China’s leadership in clean energy technology. As noted in this weekend’s New York Times piece on the subject, the country has become the world’s largest manufacturer of wind and solar generation equipment.  Through industrial policy, China is trying to take advantage of the growing export market for power sector equipment of all types, especially clean energy.

We should have expected that China would be a strong competitor in the clean energy sector.  Regardless of the outcome of continuing international climate negotiations, countries from Europe to most U.S. states to China itself have already made unilateral policy choices to increase the use of clean energy technology in the coming decades for a multitude of reasons.  The demand will be tremendous for the manufacture of clean energy technologies, and there is potential for fortunes to be made in their export.

What should the appropriate policy response be?  As the authors of the letter suggest, the US should promote fair access for American goods and services in foreign markets.  Protectionist responses and trade wars have never helped any country grow its economy and create jobs.

But reducing protectionism is not enough to regain the American lead in the clean energy sector.  The US needs to have a policy of its own that encourages innovation and gives the right incentives for US companies to compete globally.  America is a land of innovation, and we should be the ones taking advantage of these new and growing markets, not ceding them to competitors.  Part of the answer is for the US to put a price on carbon. Doing so would encourage innovation in the private sector and provide regulatory certainty for companies to make investments here in clean energy technologies.  American ingenuity is second to none, and Congress needs to work on a climate and energy bill that provides the right framework for our businesses to flourish.

Michael Tubman is a Congressional Affairs Fellow

Natural Gas and Our Energy Future

We just added a brief on natural gas to its Climate TechBook that helps to explain why natural gas is unique among fossil fuels. Natural gas is both a contributor to climate change (natural gas combustion accounts for about 16 percent of total U.S. greenhouse gas emissions) and an option for reducing emissions since natural gas is less carbon-intensive than coal and petroleum. The United States could actually reduce total greenhouse gas emissions by burning more natural gas if it’s displacing other fossil fuel use (this is particularly the case for fuel switching from coal to gas in power generation).

Like coal, but unlike petroleum, natural gas is primarily a domestic energy resource, with net imports of natural gas constituting only about 13 percent of U.S. consumption and about 90 percent of imports coming from North America. Unlike coal (93 percent consumed for electricity generation) and petroleum (more than two thirds used for transportation), natural gas consumption is more evenly split across the electric power, industrial, residential, and commercial sectors.

The past few years have seen a “revolution” in the outlook for natural gas supply. Until recently, experts thought that the United States would become increasingly dependent on expensive imports of liquefied natural gas (LNG) from overseas, but the recent boom in domestic “unconventional” gas production (driven by shale gas) and the dramatically increased estimate of U.S. gas reserves have led to projections of increasing domestic natural gas production and declining imports.

Natural gas is receiving a lot of attention in the discussion about U.S. climate and energy policy. The gas industry is pressing for favorable treatment in possible climate and energy legislation, with a specific set of policy priorities recently put forth by a major industry lobby group.

While some tout natural gas as a “bridge fuel” to a low-carbon future others fear that a “dash for gas” (i.e., fuel switching by electric power generators) could increase demand for and the price of natural gas, thus negatively impacting manufacturers that rely on natural gas for energy and as a feedstock.

Recent analysis by the U.S. Energy Information Administration (EIA) of the climate and energy bill passed by the House in June 2009, illustrates how the projected role of natural gas in reducing U.S. greenhouse gas emissions depends in large part on the use of offsets under cap and trade and the relative cost and commercial availability of low-carbon technologies (e.g., wind, solar, carbon capture and storage, and nuclear power). When low-carbon technology deployment and offsets are constrained, EIA finds a much heavier reliance on natural gas for electricity generation under cap and trade, but the new outlook on U.S. natural gas supply means that even this pessimistic scenario does not lead to major increases in projected natural gas prices.

A new modeling analysis from Resources for the Future (RFF) sought to quantify the implications of the dramatically expanded U.S. natural gas supply. RFF researchers found that without new energy and climate policy, more abundant and less expensive natural gas could actually mean slightly higher U.S. greenhouse gas emissions in 2030 than would otherwise be the case (as cheaper natural gas competes with non-emitting energy sources and increases total energy consumption).

This last point brings us back to the overarching importance of implementing a policy that puts a price on carbon, as a greenhouse gas cap-and-trade program would do. Putting a price on carbon would harness market forces to drive the deployment of a portfolio of low- and lower-carbon technologies and fuels, including increased natural gas use to the extent it can cost-effectively reduce emissions.

Steve Caldwell is a Technology and Policy Fellow

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