Why the natural gas lobby is wooing the clean power industry

A representative from a natural gas trade group showed up at a renewable energy conference in San Francisco on Thursday to promote this message: you need us and we should be friends.

Seeing someone from the American Gas Association on a panel at the Renewable Energy Finance Forum was surprising. The worlds of fossil fuels and renewable energy typically don’t mix — at least not at a clean power conference.

“The takeaway here is that the AGA is doing an outreach effort,” said Nancy Floyd, managing director of Nth Power and the moderator of the panel that included the AGA rep, after the panel discussion. “You can’t ignore what’s happening with natural gas.”

In recent years, the natural gas industry has successfully positioned itself as the more environmentally friendly form of fossil fuel, mostly because using natural gas to generate electricity produces less greenhouse gas emissions than burning coal. Coupled that with Obama’s energy policy to embrace oil and gas development – energy independence and job creation are two powerful election-year slogans – and there has been a surge of natural gas exploration that includes the controversial use of fracking to extract it.

Renewable energy proponents generally aren’t too pleased with this new love affair with natural gas because they worry that this abundance of natural gas and its cheap price will make renewable energy less attractive. Cheap fossil fuels means there won’t be price pressures to help promote the development of alternative energy sources, from biofuels to solar tehnology.

Natural gas developers and distributors are expecting a significant growth in their market for years to come. Even though prices are low for natural gas now, they should go up along with an increase in production, said Paula Gant, vice president of policy with the American Gas Association, on the panel. The association represents utilities, distributors, pipeline owners and marketers.

Where might the growth come from? In addition to using natural gas at conventional power plants, the fuel can power cars and generate electricity through fuel cells. The Obama administration is funding research and development on compressed natural gas passenger cars. Fuel cell developers such as Bloom Energy are seeing a strong interest from businesses, such as Microsoft and Apple, that want reliable, onsite backup power generation for their data centers (some companies want to use biogas but will need natural gas pipelines to get it).

Apple’s massive solar farm in North Carolina

“In our view, we don’t think abundant and affordable natural gas precludes the development of renewable energy in this country,” Gant said.

She listed natural gas, renewable energy and energy efficiency as three “domestic resources” that will create jobs, deliver cleaner forms of energy and address climate change. Gant also pointed out that natural gas power plants complement solar and wind farms and help utilities manage the health of the electric grid. Solar and wind energy production is intermittent, but the grid can run along smoothly only when there is a balance of supply and demand (or else there will be blackouts). Utilities can crank up production at natural gas power plants when solar or wind energy production slows down.

Gant said natural gas and renewable energy companies should work together on issues such as renovating and building new natural gas pipelines. The natural gas industry expects a tough fight against environmental groups over pipeline construction, and it wants an ally to woo state and local policy makers.

Paul Detering, CEO of Tioga Energy, which develops solar power projects located at businesses and government agencies, said working with the natural gas industry is a practical approach, particularly since energy storage technology has yet to become cost effective enough to help deal with the intermittent issue of and solar energy generation.

“We can’t take the approach of ‘if I win then you lose’,” Detering said after speaking on the same panel as Gant. “In the next 20 years, there won’t be enough renewable energy to become the main base-load power. I think natural gas is a lot better than other brown fuels.”