Natural Gas Council study says Lieberman-Warner would increase demand for natural gas

Bill Bush | 202.682.8069 | bushw@api.org

WASHINGTON, June 3, 2008 – A new report issued by the Natural Gas Council (NGC) estimates that the Lieberman-Warner climate change legislation would increase U.S. demand for natural gas.  An API-commissioned study issued last month, which did not look at demand impacts, says the legislation would likely reduce U.S. natural gas production.

“Taken together, the two studies raise troubling questions,” says API policy analyst Lou Hayden.  “The high cost of allowances could lead to less U.S. production of clean-burning, low-carbon natural gas just when consumers are demanding more.  The legislation appears designed to work at cross purposes.” 

The NGC study, which used the National Energy Model System created by the federal government and employed realistic assumptions on technology cost and growth rates, estimates that U.S. demand for natural gas could grow between 7 and 30 percent by 2030, depending on the amount of carbon offsets allowed.

API’s study, conducted by ICF International, estimates the cost of allowances could produce a decline in U.S. natural gas production of 12 percent by 2030.  The study also estimates a shift overseas of three million barrels per day of petroleum refining capacity.

According to Hayden, “Lieberman-Warner fails to meet the criteria essential to a sound national climate policy:  balancing reasonable cost burdens; encouraging low-carbon technologies; providing a uniform national policy; and finding the most cost-effective ways to reduce emissions without choosing winners and losers.”