The US Supreme Court鈥檚 decision to halt implementation of the Clean Power Plan (CPP) is unlikely to curb rising demand for natural gas or investment in natural-gas infrastructure, FC Gas Intelligence has been told. Matt Stanberry, Vice President of Market Development for Advanced Energy Economy (AEE), a national business organization promoting clean energy, said low prices have kept demand for natural gas high, and that trend is expected to continue throughout the period of CPP litigation.
鈥淲hile the stay could create some near-term uncertainties around energy investments, our analysis shows that existing market forces are already driving natural-gas pipeline expansion that would likely be sufficient to meet most of the natural-gas needs under the Clean Power Plan. While there are many factors that will affect the role of natural-gas generation under the Clean Power Plan, assuming it is ultimately upheld by the Court, the stay is not one of them,鈥� he said.
A recent AEE report found that ongoing changes in the US natural gas market 鈥� independent of the CPP 鈥� were driving increases in pipeline-gas infrastructure, prompted by dramatic growth in new gas supplies from areas like the Marcellus and Utica shales. The report found that compliance with the CPP, even under an unlikely 鈥渟tress test鈥� scenario of unexpectedly high gas usage, would only increase gas-infrastructure needs by 3% to 7%.
Economic factors more significant
The Supreme Court voted 5-4 in February in favor of a request by 27 states and several major business groups to halt the CPP. The decision means the regulations cannot be implemented until its legality is resolved. The Obama Administration鈥檚 plan aimed to lower CO2 emissions from power generation by 32% in 2030 compared to 2005 levels. Increased generation from existing natural gas combined-cycle (NGCC) units was named as one of four 鈥渂uilding blocks鈥� toward emissions reduction.
Although the decision took many in the energy sector by surprise, various sources pointed out to FC Gas Intelligence that other trends were having a greater impact on energy policies. 鈥淓conomic factors have been and continue to be more significant than environmental regulations,鈥� said Marcia Blomberg, spokesperson for ISO New England, the regional transmission organization serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
鈥淭he New England states have generally had environmental regulations that were more stringent than federal requirements, and their current carbon policies, as well as potential changes to RGGI requirements [set under the Regional Greenhouse Gas Initiative by a grouping of states in the northeastern US and provinces in eastern Canada], appear to continue that trend, Blomberg said.
For its part, ISO New England will continue to provide support to the New England states as they develop their clean-energy policies, she added.
The Midcontinent Independent System Operator (MISO), serving much of the Midwest and South, predicted in a November 2015 analysis of the CPP that legal or political challenges to the rule would result in partial CPP implementation 鈥� but the delays would have no effect before 2022. Emissions reductions in the MISO regions would be identical in a partial CPP future, CPP future, or accelerated CPP future, through to 2022. From there the paths would diverge, with the partial CPP future seeing a 17% emissions reduction, compared to 34% and 43% respectively in the other two scenarios.
–—By Nadav Shemer Read more at: http://analysis.fc-gi.com/power-generation/natural-gas-marches-despite-supreme-court-cpp-ruling?utm_campaign=FCG%2009MAR16%20Newsletter.htm&utm_medium=email&utm_source=Eloqua