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It’s here to stay: Natural gas will remain important part of energy picture

The U.S. natural gas industry has enjoyed a great run over the past 10 years. It has contributed to the U.S. economy by creating new jobs and materially reducing households’ and businesses’ energy bills. This was particularly important during the Great Recession when a boost from a major industry mitigated further downward spiral of the economy.

Natural gas also benefited the environment by accelerating the retirement of coal plants. The shift from coal to natural gas was a major factor in lowering U.S. energy-related CO2 emissions from power generation by 28 percent between 2005 and 2015.

Even after accounting for methane emissions, the most credible studies show that switching from coal to natural gas has mitigated global warming. Added to this, natural gas emits less air pollutants, like sulfur-dioxide, mercury and nitrogen oxide, than coal.

Because of its abundance of shale gas, the U.S. expects to be a net exporter of natural gas. Until this decade, the concern was that the country would be importing increasing amounts of natural gas from vulnerable areas of the world.

The environmentally prudent development of natural gas resources – highlighted by advanced technology for hydrocarbon extraction like 3D seismic, horizontal drilling and hydraulic-fracturing stimulation – positions this fossil fuel for a bright future. About two-thirds of U.S. natural gas production comes from “fracking” techniques applied in shale formations, whereas just 11 years ago this percentage was virtually zero.

Until about five years ago, most environmental groups viewed natural gas favorably in facilitating the transition to a low-carbon environment. Today, these groups have radically altered their perspective of natural gas. They now view natural gas as a barrier to achieving climate-change targets that, in their minds, will help assure against catastrophes.

Some interest groups propose to phase-out, in the quickest time possible, the use of natural gas in electricity generation and to include in the energy future mandates or inducements to have residential and business customers switch from natural gas to electricity in meeting their demands for space heating, water heating, and other end-uses. This is referred to as “electrification.”

But policymakers should never lose sight of the fact that, for most of the country, natural gas is the most economical energy sources for homes and businesses. A movement to electrification would carry a high economic cost, especially when artificially stimulated by governmental subsidies and other distorted policies.

Another benefit of natural gas, relative to energy sources, is its diverse use: In 2016, 35 percent of natural-gas consumption was for power generation, 28 percent for industrial use, 17 percent for residential use, and 12 percent for commercial use.

This means that premature phase-out of natural gas could drive up the energy bills of different consumers, thereby slowing down the economy.

Society’s preferred policy is to continue relying on natural gas for electric generation and other uses for the next two decades and probably even longer. During that time, the U.S. can also grow the penetration of zero-carbon technologies, like renewable energy and nuclear power, to satisfy the growth in demand for electricity and replace coal-fired power plants.

In the interim, natural gas offers the country an abundant, relatively low-cost energy source that it can depend on for a long time.

A rational energy policy, in fact, should encourage the expansion of natural gas for different uses rather than its suppression. A proper balancing of economic and environmental considerations would champion such a policy.

Those who advocate shrinking the share of natural-gas in our energy future skew their finding by giving deficient weight to the economic effects. Their fixation on the urgency of controlling climate change, no matter the cost, has no place in the energy dialogue. Climate change concerns should certainly be a factor in developing energy policy, but not the sole or even overriding factor.