Latest posts by James Taylor (see all)
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Natural gas is the wave of the future in U.S. and global electricity production, with no other power source even close to matching natural gas’s potential over the next few decades. The United States is in perfect position to take advantage of this if American policymakers will remove government obstacles to natural gas production and export.
Michael Bastach points out in the Daily Caller that coal is likely to maintain its status as the global leader of electricity production through 2040. The reason for this is most countries – and especially rapidly developing countries – will continue to take advantage of the least expensive available power source. That energy source is coal.
However, a closer look at the numbers Bastach cites – taken from the ExxonMobil 2017 Outlook for Energy – shows that while coal will remain the leading power source, its share of global electricity production will fall from 40 percent today to 30 percent in 2030. This is because there is growing pressure in many countries to put the brakes on debilitating air pollution. That is where natural gas comes in. The Outlook for Energy anticipates dramatic growth in global electricity production, with natural gas providing the lion’s share of that growth. Coal will remain king, but it will lose substantial market share to natural gas.
Natural gas is an on-demand energy source that substantially reduces air pollution relative to coal. The Outlook for Energy projects a 45 percent increase in global natural gas production and use by 2040. Also, although the Outlook for Energy projects coal will hold a narrow edge over natural gas in terms of electricity production, natural gas will surpass coal by 2040 in terms of all energy uses combined. Coal is more confined to electricity production, whereas natural gas is valuable in a wider range of energy uses.
In the United States, natural gas is cost-competitive with coal. The global market is a different story. Natural gas has gained cost parity with coal in the United States because of our abundant natural gas resources and technological advances related to fracking. Globally, however, natural gas is not as abundant, nor are fracking technologies and production infrastructure on a par with those in the United States. The anticipated growth in global natural gas power is tied to its value reducing air pollution rather than an anticipated cost parity with coal.
Even though American energy companies can produce natural gas more cost-effectively than other nations, the ability of American energy companies to export natural gas is currently limited. Our federal government and politically blue coastal states foolishly impede the construction of natural gas export facilities. Build export facilities and American companies will be able to take advantage of the projected increase in global natural gas usage.
Exporting natural gas will not come at the expense of American coal production or American coal jobs. China currently produces four times as much coal as America. Also, Australia, Indonesia, and Russia each dwarf America in terms of coal exports. Rather than American natural gas exports cannibalizing American coal exports, American natural gas exports will supplant Chinese, Australian, Indonesian, and Russian coal.
The global growth in natural gas usage forecast in the Outlook for Energy is expected to be met by more natural gas production and export from Russia, China, and other nations. This can and should change. Allow lower-priced American natural gas to compete in this growing global market and America will reap the economic windfall.
American natural gas is so abundant and inexpensive that natural gas exports will do little to constrict supply here in the United States. Foreign money will pour into the United States as other nations purchase American natural gas, and Americans will still pay low prices here at home.
At the federal level, the Trump administration and the new Congress should reverse restrictive natural gas policy that recently blocked construction of a large new export facility planned in the state of Washington. At the state level, policymakers in blue states should recognize that natural gas exports not only bring revenue to their states and our nation, but natural gas exports will also improve global air quality. If coastal blue states fail to recognize this and fail to eliminate export restrictions, Congress can and should act to eliminate the ability of local obstructionists to impede interstate commerce. As broadly as courts have interpreted the Interstate Commerce clause to give liberal federal government policies preemption over state laws, a more conservative Congress and Trump administration should give the goose the same treatment as the gander. Conservatives should apply these same legal precedents to end coastal extremists shutting down interstate and international commerce opportunities from states with abundant natural gas production.
[Originally Published at Forbes]