(Source: OECD/NEA)
Increasing the nation’s natural gas power generation could be the first big step in reducing America’s dependence on fossil fuels in its electricity sector in the coming years. According to a study by the Massachusetts Institute of Technology, the natural gas industry should start backing a price on carbon emissions, which would incentivize electricity generators to use natural gas rather than coal when the carbon price reaches a certain level.
The report confirms previous estimates that the United States has about one hundred years of accessible gas reserves, a figure that has been boosted in the last two years by the rapid deployment of technology in shale gas recovery. Due to these advances, natural gas consumption will play a greater role in the nation’s energy portfolio, with usage doubling by 2050. Currently, gas provides 21% of the country’s electricity, and only emits half the emissions as coal per unit of power output.
Also, if a price is placed on carbon emissions along with a target to reduce emissions 50% from 2005 levels, gas consumption will double by 2040, rather than 2050, to comprise 40% of total electricity generation. At that time, newer technologies such as wind and solar power will gain more market share as they become more efficient and scalable, phasing out both gas and coal generation. The study claims that “a carbon dioxide price for all fuels without long-term subsidies or other preferential treatment is the most effective way” to leverage abundant domestic gas supplies to lower greenhouse gas emissions. This carbon fee will help energy markets account for the pollution and efficiency of various technologies, without explicitly favoring one clean technology over another. Therefore, electricity producers will be able to choose their method of greenhouse gas reductions based on whichever is most cost-effective, minimizing the premium for green technologies, while maximizing the environmental benefits.
