The natural gas industry needs to be better prepared for a future that could see a drop in demand, according to a report released today.
The Institute for Energy Research (IER) estimates that, if gas prices remain at current levels, natural gas could decline by 10 percent or more by 2040, and that could have a negative impact on demand, employment and overall economic growth.
The report, released today by the Institute for Natural Gas and Electricity, recommends a wide range of measures that should be taken to address the threat of a drop.
The key recommendations include:Increasing energy efficiency: The Institute for Clean Energy & Energy Security (ICES) recommends that the federal government, state governments and private businesses work together to address climate change and the threat posed by carbon emissions, and to develop better energy efficiency measures.
The agency also recommends that states adopt measures to ensure that natural gas-fired electricity is used for electricity generation at the lowest possible energy costs, such as reducing the number of transmission lines and the use of carbon capture and storage technologies to capture CO2.
Regulating natural gas: The IER also recommends the development of a comprehensive regulatory framework that will ensure that all gas-producing states comply with federal and state laws governing natural gas and the production and distribution of natural gas.
These laws include rules for emissions standards and limits on emissions from electricity generation, transportation and other sectors, and for the use and distribution and storage of natural energy resources.
The federal government has the power to regulate natural gas as well, but the IER says it’s up to states to determine whether or not to do so.
States can use existing laws to establish their own regulatory frameworks for natural gas production, transmission and distribution, and the IES recommends that those frameworks should include provisions that address climate issues and provide incentives for utilities to meet them.
A state’s ability to regulate can vary from one state to another, and some states have had the opportunity to develop regulations in the past.
The IES found that states in the western United States, where natural gas is relatively cheap, are the most likely to implement regulations.
States in the northeastern United States and Canada are the least likely to develop regulatory frameworks and may not have the experience to take on this role.
States should also develop policies that ensure that utilities and consumers understand the costs and benefits of natural resources and their impacts on society, the report says.
The recommendations include making sure that regulations for natural resources are based on facts and not politics, ensuring that the regulatory framework is clear and transparent, and setting a minimum price that is reasonable for natural resource use.
For more information, see: http://www.iirst.org/news/2012/07/federal-government-is-looking-at-natural-gas-supply-demand-drops-report-report