*Update* New York Bans Fracking, Releases Energy Plan that Calls for Increased Use of Natural Gas
UPDATE (9/23/15; 4:15 pm ET): Governor Cuomo recently announced the expansion of clean energy projects in New York – and it’s a plan that (ironically) relies heavily on natural gas.
The plan highlights 53 combined heat and power – also known as co-generation – projects across the state. Co-generation is a technology that typically uses natural gas to produce both electricity and heat to achieve greater energy efficiency. According to Gov. Cuomo’s press release:
“Examples of these systems can be found at sites across the state, from medical centers to universities and hotels. While most systems run on natural gas, other types operate on biogas produced through anaerobic digestion of waste water or organic farm waste, and a combined heat and power site at a landfill near Buffalo runs on landfill gas.” (Emphasis added)
Despite the hypocrisy of the Cuomo administration, this continued increased use of natural gas is a win for the environment and residents living in the state. The following were listed in the press release as benefits associated with the co-generation projects:
- Co-generation or combined heat and power uses on-site power generation to provide efficient and affordable energy often shaving 15 to 30 percent off existing energy consumption.
- The completed co-generation projects will offset more than 200 megawatts of grid power, equivalent to the energy needed to power more than 32,000 homes.
- In the event of wide scale electrical outages, combined heat and power will improve a systems ability to provide greater resiliency and reliability by acting as a main component of a community’s micro grid.
As EID recently highlighted, Americans across the country are already benefitting from huge reductions particulate matter, sulfur dioxide and nitrogen oxide as natural gas use has ramped up. Now, despite its ban on hydraulic fracturing – the process used to develop natural gas reserves – New York plans to take advantage of natural gas being developed in neighboring states to help meet its Clean Power Plan goal.
Governor Cuomo, wouldn’t it have made more sense to develop New York’s natural gas resources and create some economic development for the Southern Tier instead of importing it at a premium from neighboring states?
— Original Post July 2 2015 —
Just days before New York finalized its ban on shale development the state released its 2015 Energy Plan, which, ironically, calls for the increased use of natural gas over the next few decades.
According to the 2015 Energy Plan, New York already relies heavily on natural gas:
Natural gas represents 1,247 TBtu, or about 34 percent of New York’s total primary energy use. About 36 percent of the natural gas used in New York is used to generate electricity, which is distributed across all the customer sectors. About 32 percent of the natural gas used in New York is used on-site by residential customers (primarily for space heat), while about 24 percent is used on-site by commercial customers. About six percent is used by industrial customers. (emphasis added, Pg. 18)
Given that New York refuses to allow shale development within its borders it would be reasonable to assume that the state would look to move away from natural gas – or hydrocarbons altogether. Instead, the state is actually planning to increase its natural gas usage year-over-year, according to the Energy Plan:
Finally, based on electricity sector modeling performed for the State Energy Plan (see Electricity section of Volume 2: Sources), from 2012 to 2030, New York’s total natural gas use in the electricity sector is projected to increase from 420 trillion Btu to 554 trillion Btu, a total increase of 32 percent. This indicates power generation fueled by natural gas is expected to increase at an average 1.6 percent annual rate over this period. (emphasis added, Pg. 93)
And while New York used to have a rich history in oil and gas development, it appears that legacy will be just that: history. So the question remains, where will New York get the gas its residents demand? According to the State Energy Plan:
Approximately 97 percent of the natural gas supply required to meet the demands of New York natural gas customers is from natural gas supply production regions in other states. (emphasis added , Pg. 83)
New York is one of the largest natural gas consuming states in the nation with approximately 4.7 million natural gas customers, and the state’s wholesale electricity prices have been closely correlated to the commodity cost of natural gas. According to the State Energy Plan:
As a result, wholesale electricity prices have generally increased when natural gas prices increased, and have decreased when natural gas prices decreased. With natural gas expected to provide an increasing proportion of electricity generation, future wholesale electricity prices are expected to be even more closely correlated to natural gas prices. (Emphasis added Pg. 60)
Because of the increased natural gas production from neighboring states, New York residents have actually seen a decrease in their energy costs. And with continued natural gas production and a low price environment, New York will also see more environmental benefits from increased natural gas usage. From the State Energy Plan:
Lower natural gas commodity prices would also result in CO2 emissions being lower by 2.4 million tons, or about 7 percent and firm (energy plus capacity) power prices being lower by 20 percent. (Emphasis added Pg. 62)
In other words, the increased use of natural gas will, according to New York’s own Energy Plan, bring significant economic and environmental benefits, yet New York is also banning the very technology that makes these benefits possible.
This decision also prevents the creation of the thousands of jobs that would have come from shale development. As Fox News reported, “Cuomo’s decision risks up to 54,000 fracking-related New York jobs — jobs that don’t exist now since fracking is not allowed, but could have been generated with the approval of various projects in the future.”
States like Pennsylvania have seen a huge economic boost from shale development and after more than a decade of development, recent polls have shown continued support for development. It’s clear that New York’s Governor, Andrew Cuomo got it wrong when he banned hydraulic fracturing in the state – a decision that has been criticized and called “misguided” even by former New York City Mayor Bloomberg. Despite this decision, New York will continue to need a steady supply of natural gas, which states like Pennsylvania are happy to provide.