Perry: Natural gas is Michigan’s energy future

Mark J. Perry

Utility companies across the country are transitioning away from coal power – long our electricity workhorse – and embracing greater use of renewable sources of energy and natural gas.

This overhaul of our electricity mix is the result of stringent new environmental regulations and, most importantly, the shale revolution. Michigan is at the intersection of this change.

In just a decade, the U.S. has gone from being an expected major natural gas importer to now being the world’s largest natural gas producer for the last several years. Abundant and affordable, natural gas is now increasingly being used to generate our electricity. As many of the nation’s coal plants edge towards retirement, or are forced that way because of EPA rules, natural gas plants are taking their place.

In Michigan alone, nine coal plants are slated to close in the coming decade.

Natural gas, which today is used to generate 14 percent of the state’s power, is expected to provide more than 25 percent of our power by 2025. To meet this rising demand for natural gas, we are going to need new pipelines from Pennsylvania and Ohio shale fields.

While construction of these pipelines should be a no brainer, we can expect opposition.

With any industrial project like new pipelines, there are siting concerns, preferred routes to be negotiated and regulatory hurdles to be cleared.

These predominantly local issues will sort themselves out.

Environmental activists often cite three reasons for opposing new gas pipelines: use of all fossil fuels must be phased out, new pipelines encourage further hydraulic fracturing to produce natural gas from shale, and greater use of natural gas reduces investment in renewable sources of power.

This fringe opposition is not only economically dangerous, it ignores the role natural gas is playing in reducing emissions and helping integrate wind and solar power onto the grid.

First, we need fossil fuels. Oil, natural gas and coal, along with nuclear power, are the primary energy sources that fuel our economic growth.

Affordable, reliable power has supported America’s standard of living.

Second, despite all kinds of claims to the contrary, hydraulic fracturing, better known as fracking, is safe.

More than a million oil and natural gas wells have been competed using hydraulic fracturing since it was first used in the late 1940s and we still don’t have one confirmed case where it caused groundwater contamination.

Third, the shale revolution has been one of the few economic success stories in the shaky years during and following the Great Recession. For example, employment related to the shale gas industry in Pennsylvania, home to the prolific Marcellus shale, is expected to top 200,000 by 2020.

In Southeast Ohio, where new jobs have long been few and far between, development of the Utica shale has transformed the local economy.

In the nine Ohio counties that make up the Utica shale region, the average unemployment rate fell from 16 percent in January 2010 to below 6 percent in April 2015.

Greater use of natural gas for electricity generation has been a tremendous environmental success story.

The shift from coal to natural gas, which produces just half the carbon emissions when used to generate electricity, has driven U.S. carbon emissions down in recent years to their lowest level since the early 1990s.

Rather than impede the introduction of renewables, natural gas generation is helping integrate them onto the grid.

The transition to a cleaner power mix is underway, and natural gas is the centerpiece of that effort.

Mark J. Perry is a resident scholar at The American Enterprise Institute and professor of economics at the Flint campus of the University of Michigan.