2010: The Year for Natural Gas

Energy Strategist (01/20/2010)
"Natural gas is set to become a far more important fuel in the global energy mix in coming years. Gas is cheap, abundant and clean, making it an ideal solution to energy security, price and environmental concerns.

In addition, producing power from gas is a developed and efficient technology; integrating more gas-fired power capacity to the grid is a lot simpler than adding wind or solar capacity, making it an ideal bridge fuel.

The world faces major energy challenges, rooted in two basic issues: the rising cost of energy and concerns about the environmental impact of our energy consumption. Depending on political and economic views, one might argue that one of these concerns is more important than the other. However, I suspect few investors would argue that these issues aren’t central to the energy debate.

The American Clean Energy and Security Act includes a mandate for a renewable energy standard (RES). The bill states that retail electricity suppliers must meet at least 20% of electricity demand via renewable energy sources such as wind, solar, waste-to-energy and geothermal power. Implementation of the RES ramps up quickly in 2012. The bill not only requires companies to reduce greenhouse gas (GHG) emissions but also mandates how they'll accomplish the task.

Unfortunately, many renewable energy technologies, such as solar and wind have become synonymous with attempts to limit emissions of CO2, sulphur dioxide, nitrous oxides and other pollutants.

This could be the year when the consensus on renewable energy begins to break down in favor of simpler and cheaper interim solutions. Specifically, I expect natural gas and nuclear power to garner much more attention this year as so-called bridge fuels. Both address environmental concerns, cost and independence issues. Although renewable energies have a certain cachet as high-tech solutions to the world's energy problems, they're also impractical in the near term. On the other hand, gas and nuclear are proven, economical technologies."

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