October 13, 2015

Gambling With Natural Gas: Will Your State Play Its Cards Right?

New Report Finds Consumers in At Least 16 States at High Risk of Natural Gas Overreliance

WASHINGTON (October 13, 2015)—A national shift away from using dirty coal-fired power plants to generate our electricity is already underway. However, some states are in danger of relying too much on natural gas rather than turning to affordable renewable energy sources like wind and solar power, according to a new analysis.

The analysis, Rating the States on Their Risk of Natural Gas Overreliance, released today by the Union of Concerned Scientists (UCS), examines each state’s natural gas past, present and future to determine its risk of natural gas dependency and found that at least 16 states are at high risk of over-relying on natural gas, which could have significant financial consequences for electricity consumers.

“Natural gas has been important for moving the country away from coal, but substituting our dependence on one fossil fuel for another isn’t going to pay off in the long run, and poses problems for consumers now and later,” said John Rogers, senior energy analyst at UCS and report co-author. “States and utilities are the ones gambling on natural gas, but consumers will ultimately pay for bad bets.”

In many cases, utilities are replacing portions of their coal fleets with new natural gas plants due to high coal costs and low natural gas prices. But while they may be low now, natural gas prices are historically volatile, with price swings tied to increasing demand, extreme weather events, and uncertainties about available gas supplies.

Relying too heavily on natural gas can also expose consumers to higher costs in several ways beyond simple prices swings. For example, in addition to exposing consumers to the rising costs of carbon pollution, natural gas infrastructure is likely to be under-utilized or even abandoned as renewables continue to outcompete gas in affordability, posing additional financial risks.

“Consumers in states that rely too heavily on natural gas will feel these negative economic impacts more acutely than those in states with a more diverse energy supply that includes larger percentages of solar, wind and energy efficiency,” said Rogers.

The UCS analysis examines five factors indicating risk of natural gas overreliance:

  • How much of a state’s electricity generation comes from natural gas
  • How much a state has increased its use of natural gas for in-state electricity generation in recent years
  • How much of a state’s electricity generation capacity being built is relying on natural gas
  • How much of a state’s electricity generation capacity is expected to be fueled by natural gas in the near future
  • How much carbon pollution a state’s power plants emit

States were given low, moderate or high designations for each of these five categories. While 34 states rated as “high risk” in at least one category, 16 states were classified as “high risk” in three or more of the categories. The analysis also showed eight states—Alaska, California, Delaware, Florida, Massachusetts, Mississippi, Nevada and Rhode Island—relying on natural gas to fuel over half of their in-state electricity generation, which could alone indicate considerable risk of natural gas overreliance. 

An earlier 2015 UCS study titled “Natural Gas Gamble” showed the value, as the nation moves away from coal, of enacting a range of policies to ensure a diverse supply of low-carbon power sources—made up primarily of renewable energy and energy efficiency, with a more balanced role for natural gas. Such policies would protect consumers’ pocketbooks, and decrease environmental impacts such as water and air pollution, as well as methane leakage. For consumers, UCS noted smart and effective measures that can be employed including strengthening renewable electricity standards, improving energy efficiency resource standards, and placing limits on carbon emissions from power plants or using other carbon pricing programs.

“Nationally, we have already taken an important step toward limiting the role for natural gas by adopting carbon pollution limits and giving states incentives to favor renewables over natural gas,” said Rogers. “There’s still more that states and the federal government can and should do, though, to protect all of us from the pitfalls of natural gas overreliance.”

Click here to view a related blog post by Rogers describing the methodology and findings of this report.