Fossil fuels may be unfashionable but they’re still the backbone of the nation’s energy supply. Almost half our electricity comes from coal. Oil remains the dominant transportation fuel and will be for the foreseeable future, even if current prices make us wish otherwise. It’s pretty much the same around the world.

A third fossil fuel, natural gas, is increasingly in the spotlight. In addition to home heating and cooking, more natural gas is now burned to keep your lights on amid steadily growing electricity demand.

“Natural gas-fired power plants are presently an easier option than building a coal or nuclear plant,” says John Holt, senior principal for generation & fuel at the National Rural Electric Cooperative Association (NRECA). “You can manufacture the parts for gas turbines quicker and site and build a facility more rapidly—and with less opposition. If other types of generation are ruled out, as is becoming commonplace, natural gas becomes the only alternative left for a reliable base-load power supply.”

Tradeoffs as Usual

By 2012, it’s anticipated that more than 35,000 megawatts of new generation will come on line nationwide, according to the U.S. Energy Information Administration (EIA). Natural gas will generate more of that power as plans for coal-fired plants are challenged. But the risk with gas is that it’s increasingly expensive.

Natural gas emits about half as much carbon dioxide as coal when burned—1,135 pounds of CO2 for every 1,000 kilowatt-hours generated, versus 2,249 pounds.

Because of that and the relative ease of building a natural gas-fired plant, more than half the 21,000 megawatts co-ops expect to add over the next decade will be gas-fired. Modern gas plants are similar in size to their coal-fired cousins. The average U.S. coal-fired plant has a 600-megawatt capacity; the average new, combined-cycle gas plant is roughly comparable at about 500 megawatts.

Last spring, Associated Electric Cooperative scrapped three years of planning for a 660-megawatt coal plant. A Springfield, Missouri-based generation and transmission (G&T) co-op serving other G&Ts and distribution co-ops in three states, Associated saw project costs ratchet up 30 percent while permits were being processed, due to skyrocketing prices of basic materials like concrete and steel.

“The timing was unfortunate,” says Roger Clark, Associated Electric’s director of member services and corporate communications. “Our resource plan now focuses on natural gas alternatives.”

Closer to home, Dairyland Power Cooperative’s natural gas situation reflects the cost and difficulty of building pipelines in western Wisconsin’s undulating terrain. Dairyland has natural gas-fired combustion turbines at Elk Mound producing slightly less than 100 megawatts. The remainder of the co-op’s gas-fired capacity is from renewable, methane-producing facilities: three landfill-gas sites and three on-farm manure digesters yielding a total of about 13 megawatts.

When the La Crosse-based G&T sold its coal-fired Stoneman generating plant at Cassville to a utility connected with Green Bay’s WPS Resources in1996, the buyers hoped to refire it with natural gas, but they dropped the plan because of pipeline construction costs. (Sold again this summer, the plant will be converted to burn wood waste.)

With eastern Wisconsin’s greater pipeline capacity, Milwaukee-based WE Energies this spring brought the second of two 545-megawatt gas-fired units on line at Port Washington, completing the conversion of a 70-year-old coal plant on the site.

The result more than triples the site’s generating capacity while dramatically cutting its emissions. The tradeoff is that a large power plant burns enough natural gas to meet all the other gas requirements of a fair-sized city.

Convenience—at a Price

Simple gas-fired turbines can be built in about 18 months. A combined-cycle unit that creates steam for extra generation can be operating in two years. And because a natural gas plant can be “fired up” quickly and operates more cheaply than generators using diesel fuel, they’re the choice for “peaking plants” called on during high electricity use to supplement base-load coal and nuclear facilities.

In the mid- to late ’90s, Holt says, “Co-ops put in more gas turbines in five years than they had during the previous 60 years of the rural electrification program. It met their needs for peaking power. However, the problem with relying on gas for base-load power is its price volatility and expense.”

As electricity demand surges, fuel-cost concerns plague natural gas. Those costs turn an otherwise quick fix into more of a gamble. The price has tripled since 2002 and jumped 93 percent since August 2007.

There’s more of that coming if a balance of fuel options isn’t maintained, according to a government report this past spring. Opposition to coal-fired plants and uncertainty over adding nuclear capacity are combining to threaten a near-term generation shortage “in many areas of the country,” the U.S. Department of Energy (DOE) said in a white paper titled Natural Gas and Electricity Costs and Impacts on Industry.

Since 1990, real natural gas prices have risen by a factor of four, the DOE said, adding that competition from coal and comparatively mild winters in two of the past three years have prevented even bigger natural gas price increases.

The DOE paper projects electric generation capacity deficits exceeding 10 percent for the Midwest by 2016 if no new coal or nuclear plants are added. “Policies that encourage the use of natural gas to substitute for coal in power generation could very well lead to spectacular price increases for households and industry,” the paper concluded, adding that opposition to base-load power (defined in this context as coal) in anticipation of federal climate legislation “will have serious and damaging implications for the reliability of electricity supply and the viability of the U.S. economy in the initial, costly period of adjustment to a carbon control paradigm.

Price fluctuations in natural gas come down to a matter of what’s available compared with what’s being used. In 2006, the U.S. used 21.6 trillion cubic feet (Tcf) of natural gas, with 29 percent going to electric power, according to EIA. Of that amount, 19 percent was imported, mostly via pipeline from Canada.

EIA has pegged U.S. natural gas reserves at 211 trillion cubic feet. British Petroleum (BP), which also keeps tabs on global resources, gauges the figure at 209 Tcf. If those numbers prove realistic and consumption continues at current rates with no increased imports, domestic reserves could be tapped out within about 10 years.

That would leave future supply hinging on imported liquefied natural gas (LNG), essentially methane cooled for efficient long-distance transport. The majority of our LNG imports currently come from Trinidad in the Caribbean, Qatar in the Middle East, and the African nations of Egypt, Algeria, and Nigeria.

Those imports will have to increase if natural gas is substituted for new coal and nuclear plants over the coming decades. And a nation already restive over dependency on imports for transportation fuel and accustomed to daily rhetoric about energy independence will surely feel added uneasiness about trusting yet another big energy requirement to foreign suppliers.

“LNG from overseas would account for 30 percent of U.S. electricity generation,” says Mike Ganley, NRECA director of strategic planning & analysis. “From a political standpoint alone, this sets the stage where supply disruptions could dramatically impact electricity prices.”

Not All Gloom

Thanks to a combination of late-1990s technological advances and current high prices making it economically attractive to tap natural gas locked in shale deposits, domestic reserves could prove far greater than previously estimated.

In mid-August, The Wall Street Journal reported U.S. gas production was up 8 percent this year. The downside is that if increased supply pushes the price below $8 per million British thermal units (it closed at $8.24 the week before the Journal story), recovering the huge gas reserves from difficult, unconventional sources like shale may make less economic sense and supplies could tighten again. The Journal reported that the gas industry “has cranked up its lobbying to boost long-term demand for natural gas” so that increasing production will continue to be financially rewarding.

Electric cooperatives are addressing local generation problems with the available resources, bridging the gap until hoped-for advances in low-emissions technologies open up more options. Natural gas will help, though to what extent remains a weighted question with potentially far-reaching impact.

“We have some tough decisions to make in the next 10 years,” says Associated Electric’s Roger Clark. “How we get through this is going to make a huge difference.”—Scott Gates, National Rural Electric Cooperative Association, and Dave Hoopman, WEC News

If big surprises were notably absent from this summer’s final report by Governor Doyle’s Task Force on Global Warming, its core recommendation, at least, is a sobering one: Carbon dioxide emissions originating in Wisconsin from activities such as electricity generation, transportation, manufacturing, and agriculture—call them the exhaust gases of human commerce—should be reduced by 2050 to no more than one-fourth their levels of three years ago.

Near-term targets include cutbacks to 2005 emission levels within the next six years and to 1990 levels by 2022.

The Details

The recommendations rely heavily on energy conservation and efficiency, calling for an expanded Focus on Energy program using “substantially increased funding” to reduce natural gas and electricity usage.

Among the more ambitious recommendations is a requirement that Wisconsin obtain 25 percent of its electricity from renewable sources by 2025. Whether that requirement can be met by 2025, or ever, depends on how it’s defined. If it’s 25 percent of total electricity usage, it’s theoretically possible, though the target will continually move because energy use is expected to grow year after year. If it’s defined as generation capacity, hitting the target might be arithmetically impossible because renewables—meaning mostly wind in Wisconsin—require backup generation of equivalent capacity ready to go when the wind stops blowing or blows too hard.

Also recommended: Upgrades of the transmission network to better deliver renewables from the usually remote areas where generation takes place to population centers where the greatest demand is located; distributed generation, the flip side of transmission upgrades, seeking to locate smaller generating facilities at or very near the point of use; and a requirement that utilities develop greenhouse-gas inventories and voluntary greenhouse reduction goals.

Sure to be controversial, though evidently much less so than in the recent past, is the recommendation to repeal Wisconsin’s 25-year-old moratorium on construction of new nuclear power plants. Building one is not among the recommendations; allowing state regulators to consider it is.

The report looks favorably on a “cap-and-trade” system, requiring emitters to stay under a set limit but permitting them to exceed their “cap” by buying credits from other emitters able to achieve cutbacks beyond those required of them. The report notes that a nationwide cap-and-trade system is preferable, but it recommends Wisconsin “continue to actively participate and provide leadership” to help develop a regional cap-and-trade program.”

Not Without a Price

A cover letter to the governor from task force co-chairs Tia Nelson (Wisconsin Public Land Trust) and Roy Thilly (Wisconsin Public Power, Inc.) took note of concerns about economic disruptions associated with implementing the recommendations.

“Careful attention also has been paid to mitigating the potential costs of the recommended policies on consumers and Wisconsin’s industrial base,” Nelson and Thilly wrote.

At least three task force members apparently weren’t convinced the precautions would be adequate. Voting against the package were the representatives of Brillion-based Ariens Corp., General Motors-Janesville, and NewPage, an Ohio-based paper company.

Two of the three, GM and NewPage, have dramatically cut back Wisconsin operations this year, with rising energy costs a major if not decisive factor.
If the dissenting task force members were motivated at least in part by worries over accelerating the climb in energy costs, Co-chair Thilly took a different view of the economic implications. From his optimistic perspective, the recommendations “help keep Wisconsin competitive and create new jobs, while preserving our environment for future generations.”
Thilly said the group had identified “an aggressive multi-sector strategy to address global warming that will put Wisconsin on track to being a leader in meeting one of the most significant challenges of our time.”

Utilities on Board

All five of the state’s investor-owned utilities held seats on the 29-member task force, and all five were recorded as voting in favor of the package.

Though other gases have greenhouse properties that may contribute to warming, the primary focus will be on carbon dioxide emissions from coal-burning electric utilities.

Reaction from the Legislature, where a significant share of the recommendations would need to win approval, was sparse. A search of the week following the task force report turned up only one lawmaker issuing a public statement: State Rep. Jim Ott (R–Mequon), formerly a meteorologist, said implementing the recommendations would provide “no appreciable benefit to the global climate” and that the impact on the state’s economy would be “disastrous.”

Outside the Legislature reaction was similarly—and surprisingly—muted. The same day the report was released, the Nature Conservancy weighed in favorably, noting that it had used its position on the task force to successfully advocate for conservation of forests and prairies.

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