Diversifying U.S. Energy Mix for a Secure Future

As the U.S. ramps up its natural gas production, clean energy experts are suggesting that billions in investment could be better used to fund by diversifying the U.S energy mix for a secure future.  As the U.S. reduces its coal production, the oil and gas industry is shifting its attention to “less-polluting fossil fuels”, such as natural gas. 

Gas is viewed by many as a transition fuel that will be widely used to fill the demand gap while the U.S. gradually increases its renewable energy and nuclear power capacity. However, some believe that this sharp increase in natural gas production, and plans to bring more projects online, comes at the expense of greater diversity that could boost energy security in the coming years. 

A Shift to Green with an Exception 

Over the past three and a half years, the Biden administration has pushed for a movement away from fossil fuels in favor of an accelerated green transition. This has been strongly supported by the introduction of the U.S.’s most far-reaching climate policy to date – the Inflation Reduction Act (IRA) – in 2022. 

The U.S. has rapidly increased its green energy output in recent years, supported by billions of dollars in public and private investment. In the first quarter of 2024, the country’s utility-scale solar, wind, and storage sectors added a combined 5,585 megawatts (MW) of new capacity, equivalent to an increase of 28% compared to installations in the same period the previous year, according to the American Clean Power Association. 

However, the focus on natural gas has also increased. Oil and gas companies view natural gas as a transition fuel that will be in wide demand for several decades to come, as we move away from coal and oil and before there is sufficient renewable energy capacity to replace these sources. 

In addition, the Russian invasion of Ukraine in 2022 and the subsequent introduction of sanctions on Russian energy sent the world searching for alternative gas supplies. During this time, the U.S. stepped in, providing Europe and other parts of the world with vital gas supplies. This encouraged companies to develop ambitious gas project pipelines for the next decade, with North America’s liquefied natural gas (LNG) export capacity expected to more than double by 2028. 

According to the Energy Information Authority (EIA), natural gas will continue to be the largest source of U.S. electricity generation in coming years, with about 1,700 billion kWh of annual generation in 2024 and 2025. 

Diversification Could Save Money and the Environment 

The U.S. natural gas capacity is expanding at a record rate, but not everyone agrees that so much focus should be put on the transition fuel. 

In September, clean energy advocates and the state attorney general’s office in Minnesota spoke out against planned gas projects from the state utility Xcel Energy. Xcel plans to develop six new natural gas peaker plants to meet Minnesota’s growing electricity demand. However, critics believe that these new facilities may be obsolete well before customers are done paying for the development. 

Xcel plans for the gas plants to run for just a few hours a day, to boost energy stability when wind, solar, and other clean power sources are not producing enough energy to meet public demand. However, a coalition of clean energy groups believes that more economical options are available that could save ratepayers as much as $3.5 billion. 

Based on modeled alternatives developed by experts, investing in a single new gas plant, as well as depending more on existing plants, energy storage, efficiency and demand response, and buying surplus power on the regional power grid, could offer a better alternative. 

Last year, Minnesota Gov. Tim Walz signed legislation that required electric utilities to use 100% clean energy by 2040. Amelia Vohs, the climate program director for the Minnesota Center for Environmental Advocacy, explained that the coalition’s model offers “a much better solution that’s flexible in this time of uncertainty without making this big commitment to gas resources for the next 40 years.”

An Over-Reliance on Natural Gas 

The U.S. has been pivotal in the provision of natural gas to countries around the globe in the face of shortages caused by the sanctions on Russian energy, as well as other geopolitical issues. However, many energy experts are criticizing the oil and gas industry, as well as the government, for going forward with so many new gas projects while also rapidly ramping up the country’s renewable energy capacity. 

Almost two dozen LNG projects are awaiting licenses from the U.S. Department of Energy, with several other projects having already been approved over the last two years. Meanwhile, the U.S. is expected to add record renewable energy capacity over the next decade, which will lead to a reduction in the reliance on fossil fuels for electricity production.

While natural gas has its place, and the U.S. continues to provide vital exports to other countries to fill the demand gap, an over-reliance on new gas developments could threaten the progress of the green transition. Several oil and gas companies continue to focus their efforts on LNG projects rather than allocating investments to clean energy and battery storage. This could result in an oversupply of natural gas in the next decade, and consumers will likely have to foot the bill. By contrast, investing in the greater diversification of the U.S. energy mix could support a shift to green, as well as provide a greater return on investment for bill payers. 

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