Natural Gas and Renewables: A Perfect Match or Misguided Concept?

Natural Gas and Renewables: A Perfect Match or Misguided Concept?
Dan Reicher, professor of the practice of law and executive director of the Steyer-Taylor Center for Energy Policy and Finance

STANFORD, Calif., January 21, 2011—Dan Reicher, executive director of Stanford University’s Steyer-Taylor Center for Energy Policy and Finance, delivered opening remarks at the Clean-Tech Investor Summit, for a panel he moderated titled, Natural Gas and Renewables: A Perfect Match or Misguided Concept? on January 19 in southern California.

The discussion focused on the interplay of natural gas and renewables—in the context of both electricity and transportation fuels.  The panelists were:

Andrew Littlefair, President and Chief Executive Officer of Clean Energy Fuels

Carl Pope, Chairman of the Sierra Club and its former Executive Director; and

Vik Rao, Executive Director of  the Research Triangle Energy Consortium and previously Chief Technology Officer of Halliburton

The following is a summary based on Dan’s opening remarks:

To set the stage, natural gas is an important but complicated fuel with:

  • Multiple sources—conventional and unconventional; domestic and international;
  • Multiple uses – in the power, industrial, residential, and transportation sectors;
  • And multiple uncertainties including:

—The ultimate size and production cost of the natural gas resource base in the U.S. and globally
— The evolution of international gas markets
— Greenhouse gas control measures that will be adopted in the U.S. and abroad
— And the broader energy technology mix, as determined by both the costs of different technologies over time and emissions policies

Globally, there are abundant supplies of natural gas, much of which can be developed at relatively low cost. And unconventional gas resources—particularly shale gas—will likely make a significant contribution to future U.S. energy supply with assessments of the recoverable volumes increasing dramatically in recent years.

A key issue to address is whether natural gas is an ally or enemy of intermittent renewables, particularly solar and wind.  One of the challenges with renewable energy is that the sun doesn’t always shine and the wind doesn’t always blow. One of the logical answers of course is to build massive and cheap storage capacity. Another—the primary focus of this panel—is that when the wind stops blowing or the sun stops shining, natural gas-fired generation—which is relatively simple, cheap, and clean—can take over. Seems straight forward doesn’t it?

Well, like so many things in the energy world there are an array of issues that, depending upon the facts—and your point of view—can make the marriage of renewables and natural gas look like “Ozzie and Harriet” or the “War of the Roses.”

Consider on the one hand:

  • If you’re in the natural gas industry you may not be so happy when large-scale solar kicks in on a scorching July day and takes market share that used to be the domain of flexible natural gas peaking plants
  • If you’re in the renewables industry you may not be so happy with rising natural gas supplies and falling prices as you grind your way down the cost curves for solar and wind
  • And if you’re in the environmental community you may not be so happy with the large-scale fracturing of rock that comes with the development of major shale gas fields in populated states like New York and Pennsylvania

On the other hand:

  • If you’re in the natural gas and renewables industries and the competition is coal and nuclear then maybe pairing intermittent wind and solar with flexible and modestly priced natural gas generation may start to look attractive
  • If you’re in the utility industry this may be exactly the package you want to take to your public utility commissioners—and the public who pays their salaries
  • And if you’re in the environmental community and you’re battling climate change this marriage between renewables and natural gas, although not perfect, may be one of the key components of accelerating growth in climate friendly electricity generation.

There is another element to the renewables/natural gas dilemma—and that is in the transportation sector.  There are a number of competitors in the race to replace gasoline and diesel in fueling our cars and trucks.  These include renewable fuels like ethanol, biodiesel, and biomethane. The transportation fuels wing of the renewable energy industry has been pushing these alternatives hard– witness for example the growth of the ethanol industry.

At the same time, the natural gas industry is making a play in transportation fuels with compressed natural gas—CNG; with liquefied natural gas—LNG; and with natural gas converted to methanol.

As in the electricity sector, there is an array of issues when it comes to the role of renewables and natural gas in transportation.

Some questions:

  • Will we succeed technically and economically in the transition to cellulose and algae-derived ethanol and thereby radically increase biofuel feedstocks?
  • How likely is it we will develop adequate infrastructure for massive deployment of CNG and LNG vehicles?
  • And of course what about the new kid on the block—the plug-in electric vehicle—that can piggy-back so nicely on the greening of our electricity supply with renewables?

Finally, any consideration of the interplay of natural gas and renewables—whether in the electricity or transportation fuels context—must consider the role of the ultimate “killer app” in clean energy technology that is here today and ready for massive cost competitive deployment. I refer of course to energy efficiency—from the Energy Star refrigerator to LEED buildings to the 60 mpg car.


Some news coverage of the panel: