Analysis: The Natural Gas Industry Is Trying To Deny How Affordable Renewable Energy Is

Analysis: The Natural Gas Industry Is Trying To Deny How Affordable Renewable Energy Is
Photo by American Public Power Association / Unsplash

Fossil fuel industry supporters and climate deniers are pushing a new climate falsehood when it comes to renewable energy: that natural gas offers a more affordable future. And they’re focusing their misinformation campaign on New Jersey.

Rather than denying the existence of climate change, the industry has switched to trying to delay the energy transition to clean energy — a transition that New Jersey’s energy master plan, introduced in January 2020 by Governor Phil Murphy, hopes to achieve. The Energy Master Plan (EMP) aims to transition the state to 100 percent clean energy by 2050.

In response to this plan, some groups are trying to convince the public that clean energy is unaffordable — despite solar power now being the cheapest form of energy, according to the International Energy Agency’s World Energy Outlook 2020 — while also claiming that natural gas (methane) is a “clean” form of energy.

These attacks on the New Jersey energy master plan are being led by Affordable Energy New Jersey (AENJ), a coalition of labor, business, and energy groups. The AENJ, launched last February, claims that “the EMP will drive those [energy] costs up substantially higher.”

In October 2020, the AENJ released a report attacking the plan, claiming it would lead to “astronomical” energy costs.

Momentum has built since then. Last month letters to the editors in the New Jersey press were published from a public relations professional and a state politician, both continuing these attacks.

But their arguments appear unable to stand up against the economic reality unfolding around the world. New England, for example, chose a battery storage project over natural gas just this month. And tests conducted by international utility company National Grid comparing battery storage versus gas powered peaker plants (which typically only run at peak energy demand) showed batteries reduced costs by 40 percent compared to gas peaker plants.

The UK electric grid authority pitted gas turbines against batteries. Batteries won: they were the cheaper way to ensure reserve power.

— Clark Williams-Derry (@ClarkWDerry) February 11, 2021

Climate Science Deniers Are Now Economics Deniers

This current campaign focused on the costs of renewables versus natural gas is the latest form of denialism stemming from the oil and gas industry. Despite being a new angle, however, it’s the same players pushing the message.

In October 2020, AENJ announced it had teamed up with Jonathan Lesser, an adjunct fellow at the Manhattan Institute, a group which has claimed that climate science was “muddled.” The AENJ promoted Lesser’s new report in a press release that predicted a grim future for New Jersey under the state’s Energy Master Plan.

Lesser’s report promoted “clean, affordable natural gas” and warned of “the astronomical cost increases” that will occur if New Jersey achieves its 100 percent clean energy goals under the Energy Master Plan.

Lesser’s previous work includes attacks on electric vehicles, including a 2018 opinion piece for Politico that argued “widespread adoption of electric vehicles nationwide will likely increase air pollution compared with new internal combustion vehicles.” (Emphasis in original.)

While continuing to regularly publish articles attacking renewable energy for the Manhattan Institute (which has received funding from ExxonMobil, the American Natural Gas Alliance, and various Koch foundations), Lesser completed this latest report that AENJ is now pushing in his role as president of the consulting firm Continental Economics. But based on the website for Continental Economics, Lesser is both the president and only employee at the firm. And the organization’s most “recent work” appears to be a publication from 2014.

Despite Continental Economics being a one-person endeavor with an outdated website, it gives the veneer of being done by an independent economic consulting firm to lend credibility to Lesser’s claims. In late January, in a letter to the editor published in the USA Today network, Mike Butler, the Mid-Atlantic director of the Consumer Energy Alliance (CEA), cited Continental Economics’ work to support his claim that the New Jersey Master Plan would “trigger sky-high electricity rates.” The CEA is listed on the Partners page of the AENJ website.

The Consumer Energy Alliance (CEA) is an oil and gas industry funded front group founded by Republican lobbyist Michael Whatley of HBW Resources. CEA has received financial support from a wide range of fossil fuel companies including Exxon, Chevron, and BP. HBW Resources is a public relations firm that has been fighting clean energy standards and pushing oil industry interests for the past decade.

Prior to working for the Consumer Energy Alliance, Butler also worked for HBW Resources.

Effectively, what’s happening is that front groups like the Consumer Energy Alliance and Continental Economics are referencing each other’s work in order to push misinformation about the costs of renewable energy. This long-worn tactic provides a veil of legitimacy so that publicists like Butler can publish their opinions as being backed-up by reports from a seemingly unrelated third party. In reality, those reports are just another piece of propaganda paid for by industry.

DeSmog was unable to reach AENJ and the Consumer Energy Alliance for comment by time of publishing. Lesser’s Continental Economics did not responded to request for comment.

These attacks, however, can be very effective in creating the appearance of controversy as they continue to be given plenty of coverage in the press and opinion sections of the media.

On January 31, just days after Butler published his letter to the editor, Republican state Sen. Anthony M. Bucco of New Jersey’s 25th Legislative District wrote a letter citing CEA’s recent report. The letter was published with the headline “Murphy’s energy plan will create big tax for NJ residents.”

Echoing Coal Industry’s Failed Efforts

The arguments being made for natural gas by groups like AENJ are the same arguments that the coal industry voiced in the past. In 2015, the National Coal Council was promoting coal as a reliable and inexpensive energy source.

A little over five years later, the U.S. coal industry is in a death spiral and the reason is simple: Coal is no longer the cheapest way to generate power. Natural gas, which has helped replace much of the coal capacity in the U.S., is now facing the same potential future as coal. Renewable energy costs have fallen rapidly in the past decade; one recent analysis estimated the cost of solar power declined 89 percent from 2009 to 2019 and the cost of onshore wind power declined 70 percent in that time. In 2009 both wind and solar were significantly more expensive than coal, in 2019 both were significantly cheaper.

The marketplace has a significant role in deciding the future of power generation in the U.S.

A recent analysis on the Southwest power market by the Institute for Energy Economics and Financial Analysis(IEEFA), a think tank that examines issues related to energy markets, trends, and policies, shows that wind has now overtaken coal as the top power generation source in the Southwest power market, which spans states from North Dakota to Oklahoma. Quite notably, gas falls behind both, according to the report.

The IEEFA analysis concludes that the introduction of so much low-cost renewable power into the market has caused a situation where “market revenues do not support going forward costs for coal revenues” which means that it costs more to produce power with coal than the market is willing to pay for that power.

In the Southwest power market — which does benefit from having the most wind power potential of any market in the U.S. — wind power has been replacing the declining use of coal much more than gas. A report released this month by Morgan Stanley predicts that renewables will replace coal power in the U.S. by 2033. The gas industry therefore has a good reason to be scared of the future for this region.

A Future With No Gas

In late January 2021, Salvatore Bernabei, the CEO of Enel Green Power — the renewables division of global utility company Enel — made a statement that helps explain the oil and gas industry’s current attacks on renewables: “We have a net-zero target for 2050. That’s clearly a future where there is no gas.”

Natural gas isn’t clean energy, and it is losing out to renewables in the economic race. In this light, the efforts by AENJ and the wider fossil fuel industry to criticize renewable energy makes sense — it’s a fight for survival.

As DeSmog has previously reported, the U.S. natural gas industry faces a very real problem when it comes to competing economically with renewable power generation and battery storage. The reality facing the natural gas industry is that natural gas prices have to go up at the same time as renewable energy becomes less expensive.

The reason for this is that the industry is currently getting record low prices for natural gas, which has resulted in big losses. The Energy Information Administration reported that the average price for U.S. natural gas of $2.05 per million British thermal units was the lowest in decades. 

One industry executive stated that “the industry really needs $3.50 gas over the next five years to really generate that return on capital employed.” Based on this, gas prices would have to rise over 70 percent from the 2020 average for the industry economics to work.

Economically it is a no-win outlook for the natural gas industry because, as prices inevitably rise to the level required to sustain the industry, natural gas is then no longer competitive with renewable energy prices.

Two years ago, before groups like AENJ existed, DeSmog wrote that due to market forces, “Natural gas seems poised to join coal as another fuel that just couldn’t compete with renewables.” This reality is now playing out.

Image: 2021 planned new power generation in U.S.  Credit: Energy Information Administration

The Energy Information Administration is already predicting lower gas consumption in the U.S. in 2021 “due to rising costs” and that “The decline in total U.S. consumption reflects less natural gas consumed for electric power as a result of higher natural gas prices compared with last year.”

In an effort to save itself in the face of a dire financial situation, the oil and gas industry is ramping up efforts to scare the public into thinking renewable energy is expensive.

The economics of power generation have shifted to favor renewable power and battery storage over traditional fossil fuel sources. It has already had a dramatic impact on the U.S. coal industry. It is now happening to natural gas. No amount of industry marketing campaigns can change what makes the most economic sense.

While the oil and gas industry has lost the argument on climate change (it is happening and is caused by humans), that doesn’t change the fact that it was still very successful at influencing public perception of climate change for decades. It is now trying to delay the success of renewable energy by misleading the public about the economics of the energy transition.

In 2020, AENJ supported plans for a new natural gas power plant in New Jersey. The proposal was opposed by a coalition of groups in New Jersey and the plan was abandoned in October 2020 in favor of renewable options. New Jersey withdrew its permit for the proposed plant in January 2021.

The good news is that as the coal industry found out, the marketplace doesn’t care about industry propaganda, it just cares about money. And the smart choice for business — and the climate — is renewable energy.