March 10, 2015

Today's Rush to Natural Gas Could Mean Higher Energy Bills Tomorrow

New Report Shows Diversifying Electricity Mix With Renewables, Energy Efficiency Can Limit Risks of Natural Gas Overreliance

WASHINGTON (March 10, 2015)—Homes and businesses across the country are becoming increasingly vulnerable to higher electricity bills as utilities rely more and more on natural gas to generate electricity, according to a report released today by the Union of Concerned Scientists (UCS). Ramping up energy efficiency and renewable energy resources like solar and wind power would help insulate consumers against these economic risks, while also diversifying the power mix and reducing climate risks by cutting heat-trapping carbon emissions.   

The report, The Natural Gas Gamble, shows that the power sector is leading us into a danger zone by favoring natural gas over renewables and energy efficiency options.

“There’s a well-documented history of volatility in natural gas prices,” said Jeff Deyette, senior energy analyst at UCS and report co-author. “Increasing demand, extreme weather events, and uncertainties about available gas supplies can cause prices to spike dramatically. For example, last winter when the Polar Vortex brought bitter cold to much of the U.S., prices in some regions jumped 10- to 12-times higher than recent lows. Despite the recent surge in natural gas production, these trends could continue and leave consumers that rely on natural gas paying the price.”

Further, the UCS analysis found that if renewables made up a much greater share of the U.S. electricity mix and were combined with investments in energy efficiency, electricity prices would stabilize and consumers would ultimately pay less for their energy. With a limit on carbon emissions and strong renewable energy and energy efficiency policies, by 2040 renewables could make up nearly 40 percent of the electricity mix and consumers would see an annual net savings of $59 billion (in 2013 dollars).

“Businesses and shareholders may also see their bottom lines negatively affected if utilities continue to expand natural gas in their electricity mix,” said Deyette.

Given limited financial resources and growing climate threats, prioritizing investments in renewable energy infrastructure over natural gas pipelines would involve less risk for consumers and businesses alike. The natural gas industry’s own data shows it would cost $313 billion to build the national infrastructure to transport, store and process the amount of natural gas the U.S. would need through 2035 if gas use continues to grow along the current trajectory. As the U.S. cuts carbon emissions as part of a global effort to limit climate impacts—such as sea level rise, increased forest fires and prolonged drought—this natural gas infrastructure may become a “stranded asset.”

“Cleaner-burning natural gas can help in the transition away from coal to cleaner electricity generation sources,” said Deyette. “However, simply substituting dependence on one fossil fuel for another is a dead end that ultimately limits our ability to slow climate change and safeguard consumers.”

In addition to creating carbon pollution, the process of extracting, distributing and combusting natural gas also results in methane leakage, which is 34-times stronger than carbon dioxide at trapping heat. On the other hand, relying on renewable energy and energy efficiency to reduce fossil fuel emissions would not only help address climate change, but also benefit public health and the environment. The net societal benefits of a nationwide carbon standard in combination with renewable and energy efficiency policies add up to almost $36 billion by 2020 and nearly $170 billion in 2040 (in 2013 dollars).

The UCS report concludes that as the nation moves away from coal, enacting a breadth 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—would protect consumers’ pocketbooks and the environment. Smart and effective measures that can be employed include: placing a limit on carbon emissions for power plants or using other carbon pricing programs, strengthening renewable electricity standards, improving energy efficiency resource standards, and tightening regulations for fugitive methane emissions and hydraulic fracturing.

“The report underscores how important it is that the EPA’s Clean Power Plan encourages a stronger role for renewable energy and energy efficiency, rather than reinforcing an overreliance on natural gas,” said Deyette. “While natural gas can be an important fuel source in a diverse electric grid, it’s important for states to ensure that it plays a more balanced role. This means ramping up other affordable electricity options, such as solar and wind, instead of depending so much on natural gas.”

The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with people across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.