Direct Use of Natural Gas: Unshackle Efficiency from Obama’s ‘Deep Decarbonization’ (Part 1)

By Mark Krebs and Tom Tanton -- June 7, 2017

“What Secretary Perry has yet to recognize is that the same hostile forces behind the ‘war against coal’ are now focused on eliminating the direct use of natural gas…. By taking a fresh look at the economic importance of natural gas direct use, this path can be changed; assuming the political will exists to do the right thing by consumers.”

Nationwide, natural gas is distributed to over 73.5 million homes and businesses for a wide variety of uses, such as cooking, water and home heating. [1] In doing so, it delivers 38% more energy [2] for 15% of the costs of electricity. [3] Natural gas energy losses are only about 10 percent of its usable energy from the point of wellhead extraction to the consumers’ utility meter. For electricity, about 70% of initial energy content is lost by the time it reaches consumer’s electric meters.

Additionally, direct use of natural gas represents approximately a two-thirds reduction in overall energy use and emissions, even when including the expanded use of natural gas in electricity generation.  The direct use of natural gas also saves consumers an estimated $479 billion per year in utility costs relative to electricity while alleviating unnecessary expenses for “improving” the electric grid.

These savings are expected to increase as electric utilities increase rates; in large part, due to the addition of high-cost renewable resources and grid investments to market these resources.

In spite of its benefits, the direct use of natural gas has been targeted for replacement by electricity under the unproven and illogical assumption that renewable energy can do it all; and do it affordably. However, natural gas consumption would still be required for electric utilities to back-up and balance intermittent forms of electricity provided by wind and solar.

Since the beginning of the Obama Administration, starting with his first State of the Union address, his energy policies were myopically focused upon “clean energy” with no apparent concern for affordability or economic impact.  If natural gas was used to generate electricity, it was considered “clean” since it enabled use of renewables.

However, if natural gas was used directly by consumers, it wasn’t “clean” regardless of providing nearly 3 times the overall efficiency.  Towards the end of the Obama Administration, “clean energy” policies gave way to even more radical theories of “deep decarbonization” that would basically end consumer use of natural gas, among other outcomes, by electrifying everything.

With the Trump Administration, there is now an increased emphasis on an “all the above” energy policy, and interest in affordability and reliability. But so far, “all the above” is mainly being applied to the diversity of energy sources for electric generation; or so at least it appears. If diversity of energy sources to generate electricity is desirable, so should energy alternatives to electricity be desirable.

Regardless of how diverse generation is, there is still only one way to deliver electricity. The vast majority of electrical outages experienced by consumers ae due to problems with transmission and distribution wires, not generators. That will not change with a push towards more renewables. Just as biological diversity strengthens ecosystems; energy diversity, including delivery mechanisms, strengthens economic systems.

Review of Trump Energy Policies … 

On April 14, 2017, the Department of Energy’s (DOE’s) new Secretary, Rick Perry, issued instructions for a study titled “Examining Electricity Markets and Reliability.” Almost immediately, the “loyal opposition” representing renewable energy took offense and engaged their propaganda machine. ThinkProgress was among the first to react and stated this study “was clearly meant as a swipe at wind and solar energy resources.”

On April 19, 2017, Secretary Perry spoke at a meeting of the National Coal Council and succinctly reiterated the rationale for the study: “The experience is we’re seeing this decreased diversity in our nation’s electric generation mix.”  In other words, the purpose of this study is to ascertain if electric generation diversity is being compromised by too much renewables.

On April 25, 2017, Secretary Perry spoke at the Bloomberg New Energy Finance summit and further elaborated: “These politically driven policies —driven primarily by hostility toward coal—threaten the reliability and the stability of the greatest electrical grid in the world.”

What Secretary Perry has yet to recognize is that the same hostile forces behind the “war against coal” are now focused on eliminating the direct use of natural gas.  The purpose of this article is to examine what brought our country to the precipice of an all-electric energy monoculture and why this leap of faith should be rejected. By taking a fresh look at the economic importance of natural gas direct use, this path can be changed; assuming the political will exists to do the right thing by consumers.

… vs. Obama Energy Policies

The first glimpse of President Obama’s bias against natural gas direct use was revealed in his first State of the Union Address.  In it, natural gas was deemed “clean energy” when consumed in electric power plants to generate electricity.  Apparently, however, if used directly by consumers, such consumption was not considered “clean,” thus the “clean energy” moniker did not apply, thus strongly implying natural gas direct use was not “clean.”

On March 19, 2015, President Obama Issued Executive Order (EO)13693; titled “Planning for Federal Sustainability in the Next Decade.” As the name implies, this EO basically ordered Federal Agencies to get on board with Obama’s “clean energy” agenda. This EO, which has not been overturned by President Trump, calls for phasing out fossil fuel consumption in a manner that holds natural gas direct use to a much higher standard than electricity. This occurs at Section 3 (a) (i) of the EO as follows:

(i) reducing agency building energy intensity measured in British thermal units per gross square foot by 2.5 percent annually through the end of fiscal year 2025, relative to the baseline of the agency’s building energy use in fiscal year 2015…

As it pertains to DOE’s Office of Energy Efficiency and Renewable Energy (EERE), EO 13693 only reinforced what EERE has been doing for decades; favoring electricity.  This has been done even at the expense of increases in fuel use brought about by those very policies.

What the Obama Administration failed to realize is that our nation fares much better when the federal government places an emphasis on clean, affordable, and abundant energy; while keeping out of the business of picking winners and losers.  Executive Order 13693 is another opportunity for President Trump to eliminate an Executive Branch anti carbon-based (and biased) policy. Tomorrow’s post will expand on this theme, that the direct use of natural gas delivers economic, energy and reliability benefits to the American consumer, in line with the President’s America First Energy policy:

 The Trump Administration is committed to energy policies that lower costs for hardworking Americans and maximize the use of American resources, freeing us from dependence on foreign oil.

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[1] Per the DOE’s Energy Information Administration (EIA), for 2015, the three major sectors of gas consumers consisted of 67,873,861 residential consumers, 5,449,180 commercial consumers and 188,585 industrial consumers for a total of 73,511,626 consumers.

[2] Source:  EIA Annual Energy Outlook 2017, Energy Consumption in 2015

[3] Source:  EIA Electric Power Annual Table 2.3, Revenue from Sales of Electricity to Ultimate Customers

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Mark Krebs, an engineer by training, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of energy-efficiency filings, which he summarized in a Public Utilities Fortnightly article, “It’s a War Out There: A Gas Man Questions Electric Efficiency” (December 1996).

Tom Tanton is Director with Energy and Environmental Legal Institute. Mr. Tanton has 40 years in energy and environmental policy, focused on enabling technology choice and economic development. Mr. Tanton has testified to numerous state Legislatures and Congress as an expert on energy policy. He formerly served as Principal Policy Advisor at the California Energy Commission.