Two years ago, one of us (Jason) was at an energy industry conference planning committee and he made the point that whether or not everyone around the table agreed on global warming, the issue was just about to break out and dominate the public conversation on energy. Because of global warming, he went on to say, getting a new coal-fired power station built was just a “prudency review waiting to happen.” For those of you that remember, it was, in many ways, the prudency review process that killed the nuclear industry back in the 1980s.

In the past several weeks, several announcements suggest that this situation has indeed come to pass. Here’s what’s going on: the Kansas Department of Health and Environment turned down a permit for 1400-MW of coal-fired power based on emissions of global warming gases. This is arguably the first time a coal plant has been denied for this reason. Let’s repeat the state: Kansas. It’s not California, Florida, New York,or Oregon. Kansas has historically been a coal-friendly state.

Another story revealed that even in Montana, a coal-producing state (or at least one with significant coal reserves), coal plant permits are being fought by bipartisan coalitions, and that electric utilities concede that these groups are effective. In other reports that cross our desks regularly, we note that more than 10,000 MW of coal plants recently have been canceled or postponed around the country.

No doubt many are of you are cheering! But there are trade-offs in all things — especially in energy, environmental, and economic issues. As enthusiasm for coal wanes, it grows for nuclear, even among some that have fought tooth and nail against nuclear in the past. However, there’s a problem. The fastest any nuclear plant can come online, given regulatory and financing hurdles, is around 2015. Meanwhile, electricity demand continues to grow. As much as the rewewables camp wants to believe it, solar and wind are not going to supply all or even most of the necessary power anytime soon. (We strongly believe in renewable energy, but also believe that we need energy storage to make it work on a scale that will be able to replace a significant amount of fossil fuels.) So what’s going to replace coal as the dominant fuel for electricity production?

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First, we believe and hope that we will see a continuing and accelerating push for demand-side management and efficiency (long-overdue, we might add), but in areas where new power plants must be built, they will probably be fired by natural gas. The U.S. is expected to be importing an increasing amount of that natural gas as LNG (liquefied natural gas) from distant countries, many of which aren’t exactly our geopolitical best friends. (Countries with large natural gas reserves include Algeria, Australia, Brunei, Indonesia, Libya, Malaysia, Nigeria, Oman, Qatar, and Trinidad and Tobago.) According to the Center for Liquefied Natural Gas, LNG currently contributes about 2.8 percent of U.S. gas consumption, and DOE projections forecast it to jump to about 16 percent by 2030.

Our message here isn’t that one power generating option is so much worse than another; they all have serious problems in the context of balancing supply, demand, price, and environmental impact. Rather, the message is that natural gas prices are exorbitant and expected to remain so as long as petroleum inches towards $100/barrel. The message is that electricity rates will continue to go up and the only practical means of containing the impact will be to reduce consumption. The message is that one methane molecule is equal to approximately 20 carbon dioxide molecules, and that industry experts estimate that approximately 2-10 percent of the methane used for electricity is released into the atmosphere between the well and the power plant. Finally, the terror premium inherent in the price of natural gas and petroleum affects electricity prices. When LNG is used for power generation, electricity is held hostage to the same geopolitical vagaries that destabilize petroleum markets.

Here’s our humble suggestion: Add that “terror premium” and the costs of defending global shipping lanes to the price of electricity generated with LNG. Defending our shipping lanes should be of increasing concern to us all. In just the past month, there have been several pirate (yes, pirate) attacks, one in which the United States Navy intervened to help North Korean sailors. (See the BBC, Chosun, Wired, and the International Maritime Bureau.) Plus, the highest concentrations of pirate activity are around, you guessed it, some of those same countries listed above — the ones with large natural gas supplies.

Adding the “terror premium” into the cost of importing LNG is one way that renewables, domestically sourced natural gas, nuclear plants, and even advanced coal plants (there are far better ways to use coal than those proposed by plants that are currently on the drawing board) can compete. If our electricity prices are going to be high, they might as well be high for good reasons — support for domestic, renewable, and carbon-free sources of electricity.

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