Cooking with Gas: Natural Gas and National Energy PolicyCommentary by Pete du Pont
April 16, 2003
National energy policy is a more prominent issue now than at any time since the "energy crisis" of the 1970s. Indeed, the House and the Senate are currently attempting to agree on energy legislation in an attempt to address concerns raised by electric industry deregulation; rising, wildly fluctuating energy prices; deteriorating relations with energy exporting countries; war with Iraq; and various environmental concerns.
Lowering barriers that prevent the development of new natural gas fields and the expansion of the natural gas pipeline network is central to a sound national energy policy. Why? The Department of Energy estimates that electricity demand will rise by more than 45 percent over the next 20 years. Natural gas is the fuel of choice for new power plants. Indeed, natural gas fired power plants could account for nearly 95 percent of new electric generation capacity.
Natural gas has several environmental advantages over other energy sources. When compared to wind and solar power plants, natural gas powered utilities require less land and raw materials to construct and maintain. They also cause less visual blight and deliver a reliable supply of electricity, whereas wind and solar power require back-up conventional power supplies. Compared to other fossil fuels, natural gas produces more power per unit of input, has much lower emissions of various pollutants, and it emits less CO2 - which many environmentalists fear is contributing to climate change.
While demand for natural gas is increasing, U. S. production is declining - down about 10 percent in the last two years. Unless something changes, experts predict that production will continue to decline.
Unfortunately, while North America has an abundance of potential natural gas fields, environmental politics is interfering with their development and use. The North Slope of Alaska and Canada have more than 200 trillion cubic feet of proved and estimated reserves combined. Although development is not banned, there is no pipeline to transport the natural gas to market.
Two potential routes for a Trans-North American natural gas pipeline are vying for governmental approval. The Northern route would travel along the shore from Alaska's Prudhoe Bay to Canada's MacKenzie Delta and down the MacKenzie River valley to Edmonton and southern markets. The Alaskan route, on the other hand, would require two sets of pipelines. One would run from Prudhoe Bay across a mountainous region of Alaska to Fairbanks, then along the Trans-Alaskan Highway to Northeast British Columbia, and from there into Alberta where it would connect to a set of lines running from the MacKenzie Delta down the MacKenzie river valley and on to Edmonton.
Whereas the Northern route is expected to produce a profit of more than $24 billion, the Alaskan route would require tax subsidies in excess of $15 billion to get it built. In addition, at only 1,700 miles long the Northern route would be less than half that of the 3,500 mile long Alaskan route. Because it requires fewer miles of pipelines and avoids environmentally sensitive areas, the Northern route is considered environmentally and economically preferable.
For all of these reasons politically diverse public interest groups, including the American Conservative Union, Taxpayers for Common Sense and the National Environmental Trust, have asked that subsidies not be used to build an Alaskan natural gas pipeline. Unfortunately, in deference to powerful Alaskan lawmakers, the current energy bill prohibits the Federal Energy Regulatory Commission (FERC) from granting permits for building the Northern route and instead reduces regulatory barriers to the construction of the Alaskan route and expedites its approval. These provisions make neither economic nor environmental sense.
On environmentally sensitive lands, where the benefits of opening public lands to natural gas production exceed the potential costs, development should be allowed with appropriate environmental safeguards. In addition, at a time of rising national deficits, energy price fluctuations, supply shortages and fear of terrorist attacks on energy infrastructure, the national energy policy should allow the route most likely to deliver natural gas supplies at the lowest cost, in the least amount of time, and in the most secure and environmentally prudent manner - that's the Northern route.