NATURAL GAS AND CLIMATE CHANGE

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NATURAL GASANDCLIMATE CHANGE

• Paul Wilkinson
• American Gas Association
• Financial Forum
• May 4, 2008

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NATURAL GAS HAS BECOME THE DOMINANT SOURCE OF NEW
GENERATING CAPACITY
Source Henwood Energy Consulting
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NATURAL GAS DEMAND WILL INCREASE SIGNIFICANTLY
WITH CLIMATE CHANGE LEGISLATION
Source Natural Gas Council
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2005 U.S. GREENHOUSE GAS EMISSIONS ANDS.2191
ALLOWANCE DISTRIBUTION
Millions of Metric Tons/Allowances
ALLOWANCES
EMISSIONS
IND
EG
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DISTRIBUTION OF ALLOWANCE AUCTION REVENUES
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U.S. Greenhouse Gas Emissions by Sector
1990-2005(Tg CO2 Equivalent)
Source U.S. Environmental Protection Agency
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CHANGE IN ANNUAL U.S. GREENHOUSE GAS EMISSIONS
BY SECTOR1990 - 2005
MMT CO2 Equivalent
Source U.S. EPA
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Natural Gas Utilities and Electric Utilities are
Significantly and Fundamentally Different

• Gas utilities dont control combustion
• R/C emissions not growing
• Gas use per customer declining
• Gas meets essential human needs

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Residential Natural Gas Consumptionand Average
Number of Customers 1970-1979 vs. 2000-2006
Millions of Customers
Bcf/Yr
Average Annual Consumption
Average Number of Customers
NOTE Greenhouse gas emissions are directly
proportional to volume of natural
gas consumed.
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AVERAGE ANNUAL CHANGE IN NATURAL GAS USE PER
RESIDENTIAL CUSTOMER
Annual Change
1980-2001
2004-2006
2000-2006
2004 AGA Energy Analysis Patterns in
Residential Natural Gas Consumption, 1980-2001
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Big GHG Differences in Small Applications
Tons of CO2/Year
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SUMMARY

• Increase Supply
• Increase New Generation Diversity
• Increase Direct Use
• Increase LIHEAP
• Increase Recognition of Gas Electric
  Differences
• Increase Conservation Efficiency

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AGA Cap-and-trade recommendations

• R/C gas covered, but not capped
• Significant progress made
• Gas demand for generation
• Price impact on all gas customers
• Limited availability of low-carbon generating
  options
• EPA recommendation to Congress in 2020
• Continue R/C progress?
• Natural gas market conditions?
• Availability of low-carbon generating options?
• LDCs would be point of regulation for R/C if
  required
• Industrial and electricity generators also point
  of regulation

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• THANK YOU!