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Solar chief argues for natural gas exports

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With a huge fight heating up over whether to allow exports of U.S. natural gas, California solar executive Arno Harris argued that allowing exports would help the solar industry and reduce global carbon emissions.

The U.S. shale-gas boom (fracking) has up-ended global energy markets, lowering energy costs in the U.S. and promising to make the U.S. a net energy exporter, instead of a dependent on Middle East oil.

Cheap natural gas “is wiping coal off the map,” said Harris, CEO of San Francisco-based Recurrent Energy, which builds large-scale solar plants that sell electricity to utilities.

That’s a big plus for climate change, because natural gas has about half the carbon emissions of coal. But cheap natural gas also threatens to undercut green energy.

But Harris argued in an interview that solar costs are plummeting too, and that the industry can remain competitive.
“Everybody knows we’re in this cheap gas environment,” Harris said. “Gas-fired electricity today is probably five cents or six cents per kilowatt hour, wholesale.” But new solar plants that Recurrent Energy is building will sell power to utilities as low as seven cents a kilowatt hour, he said.

“There’s no longer this giant gap like there used to be a few years ago,” Harris said. “What Americans aren’t aware of is in fact how narrow that gap gotten, just as gas is at historically low prices, wind and solar are at historically low prices as well.”

Gas exports are a rare case where Republicans and the Obama administration agree. The Dept. of Energy set off a ruckus with a study saying gas exports would provide a “net economic benefit” to the United States. Sen. Ron Wyden, D-OR, called foul. Democrats want to keep gas prices low. Environmentalists oppose exports because they oppose the fracking that allows the gas to be reached; they also fear that low gas prices will undercut cleaner energy.

Harris favors gas exports because they could help boost the price of gas, making solar and wind more competitive.

“I’m making the argument to my friends in the environmental and climate community that they shouldn’t make this knee jerk reaction about exported gas,” Harris said. “In fact export of gas is the best step we can take to bring order back to energy markets and raise the price a little bit.” Gas has gotten so cheap that utilities are under intense pressure to build gas turbines and decrease their use of renewables.

U.S. natural gas exports could also reduce U.S. exports of coal to Europe, Harris argued.

Paradoxically, the U.S. gas boom has encouraged coal exports to Europe, where U.S. coal is cheaper than natural gas from Russia, which controls most of the gas supply to Europe. The price shift has made it more difficult for European countries to meet their carbon emissions targets.

“That coal is still coming out of the ground, it’s just all going to Europe,” Harris said. “They are switching from Russian gas to American coal, so overall, even though we’re keeping the natural gas here, it is still resulting in a big uptick in carbon emissions because we’re still pulling all that coal out of the ground. We’re just not burning it here.”

Harris is on the board of a new trade group, AEE, or Advanced Energy Economy, which wants to add a pro-business voice to counteract forces who argue that alternative energy is not viable without subsidies. (Harris argued that fossil fuels are “all permanently subsidized in the permanent tax code” as opposed to temporary breaks for renewables.)

There’s a lot at stake in the coming fight over corporate tax reform, although more may be happening in state legislatures. California’s incentives, including its renewable portfolio standard that requires utilities to use green power, drew the solar industry to the state, and the AB 32 climate change law is being closely watched worldwide.

(National Journal argued that with AB 32 Arnold Schwarzenegger has done more to combat climate change than Al Gore or President Obama.)

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Carolyn Lochhead

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