Power generation emissions have fallen dramatically because of American model, will fall more under Clean Power Plan

Barack Obama doesn’t often take advice from Big Oil, but the American Petroleum Institute has an idea ahead of the COP 21 conference in Paris next month that the President should seriously consider.

natural gasAs American Energy News reported last week, API President Jack Gerard issued a public call for world leaders to replace coal with natural gas power generation, just as many states are already doing – or soon will under Obama’s Clean Power Plan.

And he called upon Obama to promote the strategy in Paris.

“Where other nations have pledges, we have progress and results. America’s market-driven success should be the model for the Paris conference,” said Gerard.

Obama should seriously consider the Big Oil lobby group’s advice for five reasons:

One, there is no doubt the American model is a success. While other countries have struggled to bring down CO2 emissions, American levels are at their lowest levels in 27 years, dropping 12 per cent alone between 2008 and 2013. Not only does it reduce emissions, but if properly implemented will maintain grid stability and low electricity prices for consumers and businesses.

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Jack Gerard, president and CEO of the American Petroleum Institute. Photo: Handout.

The reduction was not caused by greater adoption of renewable energy. Instead, it was due almost entirely to substituting natural gas for coal, since natural gas has almost half the CO2 emissions of coal.

Under the Clean Power Plan, which takes effect in 2022, most states still using coal will replace it with a combination of mostly natural gas, with a smaller proportion of wind and solar. The hope is that as renewable energy cost curves continue to decline, wind and solar will become a higher percentage of the power generation fuel mix.

Two, if reducing CO2 emissions is the goal, the American model makes more sense than the Asian model, which is to build coal power plants – using inefficient 1950s technology – at a madcap pace. The International Energy Agency forecasts that coal consumption, largely driven by Asian demand, will increase to 9 billion tonnes a year in a short time.

Three, China and India have significant – though as yet undeveloped – shale gas reserves. Shale production has driven the American energy revolution, underpinning the shift from coal to natural gas, and there is every chance it can do so in Asia.

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President Barack Obama during a recent tour of Alaska.

Four, the US is the world leader in shale production technology and services. Obama agreed back in 2009 to help China gain access to American expertise. That agreement could be expanded to allow more American companies access to the Chinese market, thereby creating significant business opportunities for American producers and service companies.

Why not do the same for India?

Five, until efficient and cost-effective utility-scale battery storage is widely available, natural gas is the most logical method of providing electricity grid stability as countries add intermittent wind and solar generation.

The American model won’t be suitable for every country. Many won’t have access to domestic natural gas and will not be able to afford LNG imports.

But China and India, the two biggest coal culprits that together have well over 2 billion people, are probably good candidates.

President Obama needs all the good ideas he can get. His Clean Power Plan is already based upon – and, it could be argued, embeds the concept in federal and state policy – substituting natural gas for coal in power generation.

Now it’s time he heeds Big Oil’s advice and aggressively promotes the American model to other countries.