I had the pleasure of taking part in a roundtable discussion at MIT a few days back, with researchers, investors, entrepreneurs and others there to talk about what cheap natural gas might mean for U.S. efforts to combat climate change.  The assumption being that unconventional gas development efforts (shale gas, etc.) and the resultant massive expansion of reserves here in the U.S. points to a prolonged period of relatively cheap natural gas.

Somewhat to my surprise, the group mostly thought this was a bad thing.  Because, many felt, cheap natgas would mean building out more of a power infrastructure based upon gas instead of solar/wind/etc. power.  "We cannot achieve our 2050 carbon emissions targets if our energy mix is heavily based on natgas," I heard.

That's a fair point, and it was a good discussion.  But once again I saw a missed opportunity to embrace a key industry as a partner, and a tendency to push natural gas aside as at least part of the solution.

A recent analysis by researchers at the Lawrence Berkeley National Lab (LBNL) concluded that global coal reserves are significantly less than what has been previously reported.  It suggested that coal price spikes are already being felt in places like China and are likely to begin happening in other regions like the U.S. as well.  The authors argue that the era of cheap coal is coming to an end.

Meanwhile, I also got a copy of a briefing by the Worldwatch Institute pointing out that natural gas, if produced responsibly, may hold a vital role as a backup power fuel that can help backfill sporadic power from major renewables like solar and wind power.  It's a good summary report that should be released soon, look for it.

I see a lot of cleantech VCs investing in grid-scale energy storage options, with an eye toward solving the "intermittent power" problem.  But a data point in the Worldwatch report caught my eye.

• According to NREL and Worldwatch, the estimated levelized cost of backup electricity (I presume including utilization factors) is $0.13/kwh for compressed air energy storage, $0.14/kwh for pumped hydro, $0.15/kw for natgas combustion turbine, and then batteries and fuel cells come in at higher than $.20/kwh (in most cases much higher).

If this is correct, CAES and pumped hydro are only marginally better than natgas as a backup electricity generation tech, all three leaving the other options behind.  And guess which of the three is more readily available and easy to scale?  (Altho, I think they missed a fourth, probably even cheaper option over the near term, in demand response and other reactive use of the grid as a virtual energy storage option)

My point isn't that other grid-scale energy storage options aren't going to work better than this, eventually.  But the key being "eventually".  VCs making those bets are making, for the most part, very long-term bets. 

If the LBNL analysis is correct and coal prices will begin rising, there will be pressure to find other baseload power supplies, and much sooner than those emerging energy storage technologies could be ready for prime time.  Natgas alone, and intermittent renewables with natgas backup, are technologies that are ready today to fill that gap cost-effectively.  Non-intermittent renewable power (e.g., geothermal and ocean power) would also see a boost in interest, but have demonstrated they have trouble scaling rapidly.  So given the choice between natgas alone, or intermittent renewables with natgas backup, which one would the renewable power industry prefer to see fill that gap?

Thus, proponents of renewable power push away natural gas to their own detriment.  They should be embracing natural gas as a key partner for the near- to mid-term.  Not rhetorically and conceptually lumping natgas in with the other fossil fuels, and pushing the industry away, while focusing more on making the coal industry happy.  That's not to say renewables proponents should ignore the potential environmental impacts of production, but those should be engaged from a collaborative perspective of "let's figure this out," not adversarially "let's shut it down."

Because you know what?  Like it or not, those reserves will be accessed by an energy-hungry society, one way or another.  Furthermore, the natgas industry is a lot bigger than the renewables industry.  If they can't get along, it won't end well.  Especially if the natgas industry can only find friends among the oil producers, while the coal industry is given significant subsidies in hopes of a "clean coal" future.  Which the LBNL analysis, if correct (and it's definitely debatable), would say is a doomed effort anyway.  The whole concept of "clean coal" is predicated on the assumption of long-term cheap coal supplies, after all.  

Coal and renewables will likely never be good friends.  Natgas and renewables can at least be allies.