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It is no secret that the environmental movement is trying to do to coal what it did 35 years ago to nuclear power — kill it off entirely in the name of saving the planet. The surprise is that fossil fuel energy producers and some Republican politicians seem intent on helping them. Not content to let the marketplace guide decisions about what fuel sources our electric utilities should use, some natural gas interests are aligning with environmentalists to press for “incentives,” regulations and mandates for fuelswitching from coal to natural gas.
It is a classic case of what economist Bruce Yandle calls a “bootleggers and Baptists” coalition. In dry counties in the Bible Belt, Yandle explains, bootleggers who depend on their wares remaining illegal to make a profit would support the Baptist politicians who voted to keep alcohol illegal.
In the case of energy, natural gas interests are happily fulfilling the bootlegger role to the environmental fundamentalists who demand low-carbon moral purity from our energy supply.
The trouble is that even at its current low prices, natural gas-fired electricity is still about twice as expensive as coal-fired electricity, which is why gas-fired power plants are typically used as “peakers” (used during demand spikes such as summertime) while coal provides the baseload electricity.
Mandating or subsidizing fuelswitching from coal to natural gas will increase consumers’ electric utility rates along with their household natural gas prices, which are typically twice the price utilities pay for natural gas.
The green-gas coalition has already scored one important victory at the state level in Colorado, where outgoing Gov. Bill Ritter pushed through a bill to tilt the playing field against coal and toward natural gas.
The Colorado Oil and Gas Association backed the bill because it would “increase the use of natural gas and renewables in power generation and transportation [and] stabilize natural gas prices at a fair value.”
The latter phrase is a dead giveaway: “fair value” in this case means “a higher price than we’re likely to get in an open, competitive marketplace.”
The battle to get government to put its thumb on the scales in favor of natural gas over coal has switched to Texas. Natural gas lobbyists are swarming in Austin, and Republican Lt. Gov. David Dewhurst is calling for “financial and regulatory incentives to get utilities to use more gas,” in the words of the Dallas Morning News. Consumers should reach for their wallet, before it gets picked.
This kind of consumer-unfriendly market intervention proposed in Texas flies in the face of the state’s otherwise sterling economic policy. An even greater irony is that Texas would consider doing to itself what it is valiantly fighting to keep Washington from doing to it through the Environmental Protection Agency.
Why bother fighting against the EPA’s coming anti-coal regulations if you’re going to turn around and impose them yourself?
The green-gas coalition is another example of the short-sightedness of industry. Climate orthodoxy requires about a 50 percent reduction in natural gas use if its ambitious target for the year 2050 is to be met.
Natural gas interests are likely to find that in the fullness of time they will become the next target of environmentalist opposition once coal is interred next to nuclear power.
The “bridge” of natural gas will turn out to be a drawbridge, which environmental opposition will seek to draw up and close off, strangling or stranding many investments.
Steven F. Hayward is a Resident Scholar at AEI.
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