Increased focus on energy efficiency measures and renewable energy both locally and nationally could cut natural gas prices 10-20%, saving consumers $15 billion/year nationally or about $96 per year for an average residential household, according to a new study prepared by the American Council for an Energy-Efficient Economy (ACEEE) and Arlington, VA-based energy consulting firm Energy and Environmental Analysis Inc. (EEA).
“The United States is in a transition from almost exclusive dependence on North American natural gas supplies to greater dependence on global markets for natural gas,” noted David Wooley, vice president of the Energy Foundation, which commissioned ACEEE to prepare the study. “That transition means that the era of inexpensive natural gas is coming to a close… Longer term, conventional sources of natural gas will not be adequate to meet future demand.
“The conclusion from our report is that there is indeed something we can do about the natural gas supply and price problem in the short term, and that there are actions we can take quickly and that can have a dramatic impact to reduce natural gas prices.”
Neal Elliott, industry program director at ACEEE and co-author of the study, said the comprehensive Energy Bill as currently written “does some good things, but for the most part doesn’t address many of the opportunities that we have identified out there. This is an area that the conferees need to take a look at, to see about expanding and beginning to incorporate in some of the elements [we recommend] such as a national [energy efficiency] program that could actually put serious dollars on the ground in the various regions of the country.”
The National Petroleum Council later this month is expected to release a major report on natural gas supply options, but a lot of the options available on the supply side “generally take many more years to have an effect on supply and price,” said Elliot. “There is a lot we can do on the demand side to reduce natural gas prices and make the supply of gas more secure.”
The study claims that a number of relatively simple enhancements to the current utility-based incentive programs nationwide for boosting energy efficiency as well as small increases in the levels of renewable energy could save U.S. natural gas consumers $75 billion from 2004 to 2008. The study’s authors said it also could mean a $100-150 billion reduction in total energy spending if these proposed measures are adopted.
“The fastest, surest way to give gas and electricity consumers relief from spiking energy prices is to enact state and federal policies to expand renewable power generation and to help consumers install more efficient electric and gas appliances, heating and cooling systems,” said Wooley.
Specific policy solutions outlined in the study include: update state and federal appliance efficiency standards; require electric utilities to use more renewable power generation; expand rebates and grants to consumers to improve equipment efficiency and install clean on-site power generation; expand federal research and development support for emerging efficiency and renewable generation technologies; and establish tax credits for efficiency and renewable energy investments.
Elliot said the energy efficiency measures the study refers to are “modest, similar to what has been achieved on a more local level through many of the energy efficiency programs that are out there. These are not heroic efforts; these are efforts that…are readily achievable. To put it in context, the results that we would project are actually going to be less aggressive than were achieved in California in responding to the 2001 blackouts.”
He noted that California had a statewide campaign after the blackouts that included expanded funding for energy efficiency programs across the state. It was able to deploy a program in about six weeks that resulted in about 6.7% reduction in electricity consumption across the state for the year.
“A lot of this is not exotic stuff. It’s just getting money out there into the hands of the energy efficiency program administrators and empowering them to do what they already are doing on a limited basis,” said Elliot.
He said the largest contributor to the natural gas consumption and price reductions targeted in the study is a reduction in electricity demand through greater energy efficiency and more renewable energy. “A significant portion of the natural gas generation out there in the marketplace is what we call on the margin, and so if we reduce the electricity demand and price a little bit what we are able to do is drop a disproportionate share of natural gas-fired generation.”
One of the keys to the policy program presented in the study is a “call to action” by national and state leaders. The study also recommends an expansion of renewable portfolio standards, the development of a national renewable portfolio standard (currently part of the energy bill) as well as an extension of the existing renewable tax credits, which are slated to expire at the end of this month unless they are extended by the energy bill now under consideration.
Wooley said that even if gas consumption was reduced through greater energy efficiency and renewable use just in the Northeast region, there would be 7% reduction in gas prices in 2004 and a 9.3% reduction in gas prices by 2008.
Dow Chemical’s Peter Molinaro said that leaders in the public and private sectors “need to do everything they can to spur investment in more efficient insulation, appliances, motors, heating and cooling systems, lighting, and clean on-site generation.”
The analysis shows that natural gas expenditures by electric power generators would decrease by $6.2 billion in 2004 and by as much as $10.4 billion by 2008 if certain policy provisions are adopted.
Energy efficiency and renewable energy investments also could help employment in the manufacturing sector and at the same time help prevent futures blackouts like the one in the Northeast and eastern Canada in August.
“Energy efficiency and distributed renewable generation lower peak demand on the electric transmission system and reduce the risk of system failures,” said Wooley. “They make our electric supply more secure without increasing our dependence on fossil fuel imports.”
A copy of the summary report can be downloaded at https://aceee.org/energy/EFnatgas-study.htm
The Energy Foundation is a partnership of major foundations interested in sustainable energy. It was launched in 1991 by The John D. and Catherine T. MacArthur Foundation, The Pew Charitable Trusts, and The Rockefeller Foundation. ACEEE is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection.
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