Natural gas will be the clear winner whether you vote for
Hillary Clinton or Donald Trump in the upcoming presidential
election. While their proposed energy plans are widely
different—Clinton is calling for major investments in
renewable energy, and Trump would rescind the Clean Power
Plan—both candidates are promoting policies that would boost
the development of gas infrastructure through pipelines and
gas-fired electric generation. Each plan could have varying
implications for utilities and consumers.
With several caveats—elected officials, even at the level of
the presidency, cannot always effectuate their plans, and we are
relying here on the candidates' stated goals, which could
differ from their actual agendas—the following represents our
learned speculation on what the natural gas landscape will look
like under President Clinton or President Trump.
The Plans
Both Clinton and Trump have touted the environmental and economic
benefits of domestically produced natural gas. Clinton says it has
been critical to reducing emissions of carbon dioxide and other
pollutants, and Trump has suggested that current limits on U.S.
production of natural gas have led to increased fossil fuel
production in nations with lower environmental standards. Both say
increased domestic production would generate more jobs.
Numerous aspects of Clinton's plan would promote gas
infrastructure development, including her proposal to work with
states to encourage expanded use of natural gas combined-cycle
power plants to enable increased integration of variable renewable
resources. She would provide grants to cities and states to phase
down fuel-oil consumption, and financing tools for new gas pipeline
investments to support that objective. She would also seek to
increase the deployment of natural gas-fueled vehicles through
federal standards and infrastructure investments.
By 2025, Clinton envisions a nation that will have met the Obama
Administration's goal of reducing methane emissions by as much
as 45 percent below 2012 levels. She proposes a new "pipeline
partnership" among federal regulators, pipeline companies,
local utility commissions and others to help cities and states
repair and replace pipeline equipment "by leveraging big data,
predictive analytics and innovative testing procedures to more
quickly and effectively find and fix pipeline leaks."
To expand natural gas infrastructure, Trump proposes to streamline
the federal permitting process for energy projects, including for
gas pipelines and liquefied natural gas export facilities. He
believes that current restrictions have resulted in blocking or
abandoning billions of dollars of private infrastructure
investment, and he has criticized Clinton's methane emissions
position, contending that it will drastically increase the cost of
natural gas.
Trump would also open more federal lands and offshore areas for
gas production. Clinton, by contrast, would increase royalty rates
for gas leases on federal lands, and she has expressed opposition
to gas development offshore in the Arctic and Atlantic
oceans.
Emails recently published by WikiLeaks indicate that Clinton is
unlikely to seek a tax on greenhouse gas emissions, also known as a
"carbon tax." Further, Clinton purportedly told a
building trades union that activists who seek her pledge to ban the
production of all fossil fuels should "get a life."
According to the meeting transcript, she spoke favorably of gas
infrastructure development: "I want to defend natural gas. I
want to defend repairing and building the pipelines we need to fuel
our economy. I want to defend fracking under the right
circumstances."
Impact
Regardless of who wins the presidential election, the
next administration will work to promote the shale gas revolution
and encourage increases in natural gas-fueled electric generation.
The advances under Clinton's plan would be tempered by the
boost in renewable energy resources, while increases in coal
extraction under the Trump plan could mitigate natural gas gains.
Under either plan, however, natural gas will continue to play a
prominent role in the generation mix, despite its deemphasized role
in the Clean Power Plan.
On the gas utility side, local distribution companies (LDCs) should
expect further opportunities to obtain supply from nontraditional
sources as the development of new pipeline infrastructure
continues. Even if the focus of the policy is on the use of natural
gas for electric generation, LDCs can take advantage of the
developments. Recent history shows that pipeline projects that are
geared toward serving electric generation, including those
providing flow-reversals, have attracted LDC shippers as additional
beneficiaries. Under Clinton's plan, LDCs would also have the
potential to increase their customer bases through her proposed
grants for local infrastructure investments and her natural gas
vehicle deployment plan.
Interstate gas pipelines will continue to seek recovery of costs
necessary to meet environmental and safety standards, including any
aimed at reducing methane emissions. Pipeline companies will impose
these expenses on customers by using "modernization"
trackers under the Federal Energy Regulatory Commission's new
policy permitting such recovery mechanisms, or through general rate
cases. Either way, the costs will ultimately be passed on to the
retail customers of electric and gas utilities. On the other hand,
reductions in leaks due to improved equipment will reduce lost and
unaccounted-for fuel costs, which will have a moderating effect on
any gas transportation rate increases.
Further Information
Natural gas is, of course, only one part of the candidates'
stated energy policies. The ultimate role of natural gas in energy
production, and its effects on consumers, will be determined by
broader economic forces and by how extensively various parts of the
new president's policy are implemented.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.