Washington, D.C.-The Subcommittee on Clean Air, Climate Change, and Nuclear Safety held a hearing today on natural gas supply, demand and pricing issues and the use of natural gas in electric generation in the context of multi-pollutant legislation.


Below are some of the highlights from witness testimony that focus on: 1) the benefits of Clear Skies in reducing power plant emissions without seriously impacting fuel markets; 2) the built-in flexibility of Clear Skies, which allows companies to pick the pollution reduction strategy that best meets their needs; and 3) why massive fuel switching to natural gas, which alternative multi-pollutant approaches encourage, is bad for manufacturing.


Kyle McSlarrow, Deputy Secretary, Department of Energy:


“Flexibility of compliance choices, maintenance of fuel diversity, and the cost savings passed on to consumers through lower electricity prices are among the benefits of the approach taken in Clear Skies, particularly when compared with other proposals that support more stringent targets, shorter compliance periods, or command and control regulatory approaches. The cap-and-trade system of emission reductions used in S. 485 should translate into reduced impacts on fuel markets-in particular, coal and gas-than equivalent emission reductions achieved through other approaches.


“Clear Skies helps maintain coal as an important fuel source, thereby avoiding excessive pressure on natural gas prices.”


“The Clear Skies Act substantially expands one of the most successful Clean Air Act programs - the Acid Rain Program - and reduces the need to rely on complex and less efficient programs. Power plants would be allowed to choose the pollution reduction strategy that best meets their needs (e.g., installing pollution control equipment, switching to lower sulfur or mercury coals, buying excess allowances from plants that have reduced their emissions beyond required levels).”


Joel Bluestein, President, Energy and Environmental Analysis:


“Although we see continued growth in new gas-fired generation, we do not expect massive switching from coal to gas under any 3-P regulatory scenario currently being discussed.”


Jim Krimmel, President, Zaclon Inc:

“To maintain a competitive advantage in today’s tough global marketplace, it is essential that Zaclon and Ohio’s other manufacturers have access to dependable, low cost energy sources. But in recent years, energy, and more specifically natural gas, has been anything but low cost. And fuel switching related to compliance with ever tightening air regulations coupled with inadequate exploration and drilling for natural gas is a major factor in this unprecedented run-up and volatility in natural gas prices. As the manufacturing economy improves and as more fuel switching occurs, the problem will only get worse. The high price and volatility of natural gas has threatened and continues to threaten the very existence of small and medium sized manufacturers like Zaclon.”