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The recent headline was damning: “Cold snap makes New England the world’s priciest [natural] gas market.”
As the temperature fell precipitously in late December, demand for gas rose sharply, causing a scary spike in spot market prices. That drove up wholesale electricity prices, which precipitated a flurry of op-eds in local media (see here, here, here and here, for example), all of which pointed the finger at the proximate cause of the crisis: the region’s failure to expand gas pipeline capacity.
And those pieces were stinging. They noted that instead of burning gas from nearby Pennsylvania, power plants were forced to use pricey liquefied natural gas shipped in from distant locales like Trinidad and even Siberia. When that became prohibitively expensive, power generators switched to fuel oil, which is substantially more polluting than gas. We could painlessly solve the problem and lower our energy bills, said all those pundits, simply by building new gas pipelines to serve the region.
To a climate activist, these natural gas advocates sound like a drug addict declaring that he’s really got to find himself a more reliable dealer. A closer look at the facts is in order.
The existing pipelines, including one completed quite recently, easily get the job done most of the time. In 2015, a year with an extended polar vortex, oil-fired generation accounted for less than 2 percent of the region’s electricity. In 2016, a major pipeline project was abandoned because the developer was unable to secure commitments from major customers to buy the gas, i.e., there wasn’t sufficient demand to warrant the federal permits and the multibillion-dollar expense that would ultimately be absorbed by the ratepayers. Looking forward, the New England grid operator expects electricity demand will steadily decline over the next decade.
And during the next decade, there’s no guarantee that gas will be as cheap as it is today. Volatility is a hallmark of fossil fuel markets — gas is a global commodity, subject to a range of geopolitical influences. Natural gas producers in the U.S. are aggressively expanding the export market, which will further tighten domestic supplies.
Massachusetts may currently have among the highest electricity prices in the nation, but it's way down at 33rd (2015) among the 50 states in energy expenditures per capita. That’s mainly because the state ranks — not coincidentally -- no. 1 in energy efficiency. A short supply may lead to higher prices, but higher prices are balanced by conservation and innovation. As reported in the Worcester Telegram, local manufacturers have made capital investments in more efficient equipment, worked with utilities to reduce demand at times of peak load, and opted to generate some of their own power with solar technology and clean biofuels. If gas were cheap, would the companies have taken these measures to maximize their future competitiveness?
We must level the playing field and give carbon-free energy every opportunity to flourish.
The overarching question concerns what our energy mix will look like in 2050. Nobody believes that we’ll still be generating half our electricity with natural gas. The commonwealth, the nation and the world are moving inexorably toward economies in which carbon-based fuels will play a much-diminished role.
Pipeline advocates respond that gas is a “bridge fuel” — cleaner than oil or coal — which must satisfy our energy needs until solar and wind have matured. But this argument fails on at least two counts.
More importantly, a gas pipeline built today has a 40-year lifespan from an investor’s standpoint, pushing its service well beyond the point in time when renewable energy must achieve dominance in order for the state to comply with laws put in place to fight climate change. Expanding the infrastructure now would establish long-term structural suppression of gas prices, making it harder for renewable energy to gain market share even as the costs of wind and solar are steadily falling.
In a properly functioning market, investing in infrastructure to ensure future market share would be a reasonable course. But a market that ignores the tremendous externalized costs of greenhouse gas emissions unfairly advantages fossil fuels. In the absence of a stiff carbon tax, we can’t afford the risk of creating market conditions that could perpetuate the supremacy of fossil fuels into the indefinite future. We must level the playing field and give carbon-free energy every opportunity to flourish.
With the New Year’s cold snap behind us, natural gas prices in New England have dropped back into the seasonal range. But the debate between pipeline lobbyists and climate activists remains unsettled. The long view says we’re better off staying our course toward a clean energy future.
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