Michigan’s energy future is changing. In an address on March 13, Governor Snyder outlined plans to incorporate between 30 and 40 percent of clean energy into the state’s energy grid by 2025. The new standard would call for a combination of renewable sources and increasing efficiency to existing energy sources.
To accomplish this goal, Snyder called for a portfolio approach that reduces the amount of coal, while alternating the state’s reliance on natural gas (NG) and renewable sources depending on cost. While prices for NG have remained low due to increased domestic production, Sam Gomberg sees economy risks associated with an over reliance on natural gas despite its price.
On March 19, Gomberg will address an audience on the State’s energy future as part of the Gerald R. Ford Lecture series at the Gerald R. Ford Presidential Museum, sponsored by Varnum LLP. Prior to the event, Gomberg sat down with MiBiz to talk about the future of Michigan’s energy grid and business implications of a transition to high NG use.
What are your thoughts on transitioning from coal to a heavy reliance on natural gas in Michigan?
It was a little concerning to see in the last couple weeks this enthusiasm around natural gas. Certainly, natural gas has a lot of benefits over coal. It's cleaner with far fewer lower carbon emissions than coal. There's certainly a role of expanding natural gas in Michigan for electricity but there are a lot of risks that come with that and we want to make sure those risks are being considered and that we are taking a more holistic approach to natural gas.
What are some of those risks to businesses?
Historically, the price for natural gas has been very volatile. That can be seasonal, if it’s a cold winter like the last in the Northeast, where prices jumped five times over what the historical lows have been. There are pipeline constraints to get enough natural gas to the (processing) plants and the electricity that we need, while still making sure that industries get what they need to keep production lines moving.
How would international demand impact natural gas prices?
If we start exporting natural gas, there’s a decent likelihood that U.S. natural gas will become more integrated into the international markets. They pay several times what we pay for natural gas in Europe and Asia. That's a game-changer in the low natural gas priced world we're living in now.
There’s concerns among the environmental community about the impacts of natural gas with hydraulic fracturing, what are your thoughts on that?
We are obviously tracking what's going on with fracking and have some concerns about water quality and quantity and methane leakage. We're certainly in favor of responsible regulations of the industry. What's going on right now is pretty much the wild wild west in states like Montana and the Dakotas. We're in favor of a more measured approach and whatever is needed to protect our drinking water.
How do we balance the increased use of natural gas with renewables?
I talk a lot about the risks of natural gas, (but) renewables are very low-risk resources. You don’t have the risks of environmental regulations and they’re relatively simple technology compared to things like nuclear or combined cycle natural gas plants. Because they are so low risk, they can really reduce the risk portfolio of the entire grid. You can have expanded use of natural gas, but buffer that risk element with renewables. That's what we're hoping to see.
Grand Rapids is pushing a 100 percent renewable energy standard by 2020. How can municipalities impact adoption of renewables?
Some of these municipalities are very against some of these renewable standards. Others, like Grand Rapids, are very much in favor of clean energy. I think, on a state level, municipal utilities that are in favor of renewable energy should be vocally supportive of state renewable standards or other measures that drive policy.
Interview conducted and condensed by John Wiegand