As expected, the bill is a mixed bag for natural gas utilities.   AGA is pleased to note that it includes proportional allowance allocation, and also recognizes that mandating that one-third of those allowances be spent on energy efficiency programs is not achievable. However, it does not meet other threshold criteria that AGA would like to see in any climate legislation, including end-use natural gas related research and development and carbon labeling for appliances.

AGA continues to point to the industry’s stellar emissions record –our customers have reduced carbon emissions by 40 percent over the last 40 years – as proof that our models are working, and working well.

For AGA’s full statement, click here.

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During the forum, which was sponsored by AGA, the American Gas Foundation and the Congressional Quarterly- Roll Call group, Sen. Murkowski said that any bill that fails to rely on natural gas to help lower emissions is “unacceptable.” She went on to tout the record of residential and commercial natural gas users in lowering total emissions over the last four decades.

The senator also pointed to natural gas as a backup for renewables, stating, “renewables need base load supply, and natural gas can be that supply.”

Others on the panel, including Kevin Book of ClearView Energy Partners, Sharon Buccino of the Natural Resources Defense Council (NRDC), Bill Cantrell of the Council for Responsible Energy, Vello Kuuskraa of Advanced Resources International and Dr. Robert Simon of the Senate Energy and Natural Resources Committee addressed such issues as access to domestic natural gas, hydraulic fracturing and natural gas vehicles.

Quoting the journalist Robert Bryce, Senator Murkowski concluded, “Wood was the dominant fuel source in the 19th century, and oil in the 20th century.  Natural gas should be the dominant fuel source in the 21st century.”

Visit this link to view a video of the forum.

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The $100 impact, from page 19 of the analysis, is all well and good, but policymakers would do well to read page 20 also, specifically the section titled “Sensitivities to Offset Availability.”

One big reason why costs are contained is EPA’s belief that offsets will be widely available at reasonable prices.  EPA writes that “all analyses that have looked at the issue have shown that the availability of offsets is one of the most important factors influencing allowance prices.”

Offset availability requires their processing and verification.  Regarding the United States’ ability to process and verify these offsets, EPA writes that “there are many institutional design issues, including the measurement, monitoring, reporting and verification requirements, surrounding estimates of offset availability.”

That is quite an understatement.  In Kerry-Boxer, these “institutional design issues” occupy almost 70 pages in Sections 731-744, and include (but are not limited to) the creation of an offset registry, quantitative modeling of additionality, leakage, reversals, a petition and approval process (including an appeals process), third party verification requirements, and a significant amount of inter-agency cooperation.  These 70 pages do not determine which offset projects themselves are viable; they only describe the process to determine whether they are viable.

The offset process is an essentially brand new government function, for which EPA simply “assumes that the institutions are put in place to process the domestic and international offsets needed to realize reductions on the magnitude shown in the analysis.”  All of the political, bureaucratic, and quantitative complexity of offset verification is assumed away.

If offsets are not available or are significantly delayed we can expect much higher costs.  EPA cites an MIT study and writes that “the allowance price in the medium offsets case was 193% higher than the allowance price in the full offsets case.”  These types of quantifications do not lend themselves to newspaper (or blog!) headlines, but there they are.

So remember, when you hear a low-cost estimate for Kerry-Boxer (or any other climate bill), ask yourself what is required for costs to be contained and whether those assumptions are realistic.

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1. Sen. Murkowski, Energy Leaders Point to Natural Gas as Large Piece of the Climate Change Puzzle




A great video on LIHEAP.

Vivian Lausevic, our LIHEAP guru, sent an email with more good news yesterday saying the Senate Labor, Health and Human Services and Education Subcommittee completed mark-up of the FY 2010 bill also providing full funding – $5.1 billion – for LIHEAP next year. The full committee is set to vote on the bill Thursday (tomorrow).

When we did LIHEAP Action Day back in February, there was real concern that this funding would drop. I’m glad to see it hasn’t. With the way the economy is, these funds will be critical in helping to keep many American families warm this winter.

Dave sums it up nicely when he says, “When the weather turns cold, families who are already struggling to make ends meet must struggle even harder or risk the ravages of living with little or no heat. With adequate funding, Congress can ease this situation and ensure these families stay on their feet financially, rather than fall into a dangerous downward spiral along with winter temperatures.”

LIHEAP is something that’s easy to get behind and the natural gas utilities do. Natural gas utilities provide more than $1.7 billion annually in program assistance to needy families.

Visit aga.org to read the full press release commending Chairman Obey and the U.S. House of Representatives.

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That’s really not the case.

Or at least that’s not the case when it comes to the part of the natural gas industry that AGA represents. AGA represents natural gas distribution utilities. To really understand what that means, check out Dave’s post on “Who is the American Gas Association.”

As Roger points out, AGA has had a detailed advocacy plan in place for years leading up to the current environment. The goals in that plan were largely accomplished in the latest legislation. Natural gas utility customers are not covered under cap and trade until 2016, four years after program begins. During that time natural gas will be getting 9 percent of allowances until 2025, which will mean hundreds and hundreds of millions of dollars to our customers.

Roger does a great job of explaining this during the interview and his last line is classic. He even gets a chuckle from Susan McGinnis, his interviewer.

Susan: “In general you would say the natural gas industry does not come out a loser…”

Roger: “How can we be a loser, we’re a nearly perfect fuel.”

There’s more great information in the interview so you should watch it yourself.  It’s a little over four minutes and embedded at the beginning of this post. You can also watch Roger’s interview on Clean Skies or on the AGA YouTube channel.

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Hold on, it’ll make sense in a minute.

I came across this article from Mark Gunther of the energy collective titled “Natural Gas: the Rodney Dangerfield of fuels.” After my initial chuckle, I thought “how true” and clicked on the link to read. Sure enough, “’We’re the Rodney Dangerfield of fuels,’ says Roger Cooper, executive vice president of policy and planning at the American Gas Association” is the opening to the second paragraph.




Really, I was just looking for an excuse to post some old Rodney video. Enjoy.

Of course, it’s Roger. I should have known. Roger has been pointing out to me ever since I got here that natural gas doesn’t get a lot of respect when you consider it meets 25 percent of our nation’s energy needs.

I’ll let you read the article yourself. It’s a good read and includes links to a lot of the different sides of the energy conversation. There’s even audio from the actual interview if you want it.

I will draw out some things that you should take note of though.

• A group called the Potential Gas Committee, which is based at the Colorado School of Mines, has just reported that the U.S. has about a 100 year supply of natural gas, assuming we continue to consume it at today’s rates. See our press conference here.
• Natural gas is now. Natural gas is here. Natural gas has a smaller carbon footprint than any other fossil fuel—burning natural gas produces 43 percent less CO2 than coal and 28 percent less than fuel oil. And this number could be going down. A company called Atlantic Hydrogen is developing a “patented plasma technology that removes some of the carbon from natural gas pre-combustion.” Look for more on this soon. In addition, nearly all of the natural gas burned in the U.S. is produced in this country or in Canada.
• Natural gas is very efficient. It takes less natural gas to serve 65 million homes today than it took to serve about half that number in 1970. Homes using natural gas generate on average fewer greenhouse gas emissions that homes using electricity. A typical all-electric home on average produces 10.8 tons of CO2 per year while an all-natural gas home produces 7.2 tons of CO2 per year.

The last thing I’ll point out here is an interesting observation from Mark, the author. “The DOE logo, [above here], includes an oil derrick, wind turbine, hydro and the nuclear symbol, but nothing about natural gas.” I’ll have to check on that one.

What do you think? Where is natural gas in our energy future?

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AGA noted the important step the House Energy and Commerce Committee took last night in reporting this climate change legislation and is looking forward to working with Congress as it considers this issue throughout the summer.

It is important to AGA that Congress pass legislation that will strive to improve our environment and energy security, while also encouraging the increased use of clean, abundant, domestic natural gas. As the cleanest fossil fuel, emitting only one carbon atom when burned, natural gas can play a major part in quickly reducing carbon emissions.

Since the House Energy and Commerce Committee action was covered extensively in the media, there are quite a few stories in the news today. Here are a few articles that I came across this morning:

The Washington Post reported the committee markup this week as, “a week of late-night debates that cemented the shift of climate change from rhetorical jousting to a subject of serious, if messy, Washington policymaking. ”

Here’s a story where the New York Times discusses the supporters and opponents of the cap-and-trade legislation. While some eagerly supported the bill, others were concerned that it was a burdensome tax on business that would drive companies and jobs overseas while doing little to address climate change.

The Wall Street Journal says that the Waxman-Markey legislation, “still faces significant hurdles, particularly in the Senate, where a similar proposal failed last year. But the committee’s action gives the measure a major boost in both chambers of Congress, because the panel is among the largest and most ideologically and geographically diverse in Congress, with members from Rust Belt, oil patch, farm and coastal states.”

After the Memorial Day congressional recess, several other House and Senate committees will address various aspects of the bill so the debate on this issue will likely continue throughout this summer.

What do you think about the Waxman-Markey legislation?

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Earlier this year, the American Gas Association (AGA) issued a release on the President’s proposed budget, which details AGA’s concerns about the budget’s potential negative impact on natural gas customers through higher energy prices. It looks like we’re not alone on this.

Here’s a story from the New York Times where John Felmy, chief economist at the American Petroleum Institute, says the impact of the budget on the industry will be to raise taxes on producers. The concern then being that most of this impact will be passed on to consumers in the form of higher fuel costs.

The Independent Petroleum Association of Mountain States believes that the budget tax increases are most harmful to small American energy companies that produce the clean, affordable and abundant American natural gas that we need to increase energy security, make renewable energy sources viable, and address climate change.

In another story from the Oil and Gas Journal, Barry Russell, the president of the Independent Petroleum Association of America, says that the budget “does not recognize that in order to decrease our reliance on foreign oil, we need to increase our own American supplies of natural gas and oil.”

These are just a few of the articles I came across. Many are concerned that the President’s budget would make it harder to develop America’s domestic natural resources by repealing existing tax provisions that encourage American production, as well as creating new excise taxes on offshore production and new user fees that will add to the overly complex and costly permit process.

By discouraging the production of America’s cleanest-burning, domestically abundant fossil fuel, this budget could ultimately tighten domestic supplies of natural gas; therefore, causing financial burden on consumers through higher energy prices, higher monthly natural gas bills, and higher unemployment through the loss of well-paying American jobs.

After reading those articles, are you concerned?

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The Natural Gas Council, comprised of the American Gas Association, the Natural Gas Supply Association, the Interstate Natural Gas Association, and the Independent Petroleum Association of America, pointed out to the senator that the mandate for new energy consumption reduction goals for natural gas customers seems to rely on large, after-the-fact penalties rather than incentives.  These penalties are tied to consumer behavior, which utilities can neither control nor dictate, but which monetarily punish utilities when customers fail to meet the reduction goals.  The Council is optimistic that this Congress will draft legislation that will help reduce the nation’s energy and carbon intensity through a mechanism that is clear and predictable, and one that takes into account its impact on those entities already working to increase energy efficiency.

Read what the group had to say here.

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