Questions surround the use of natural gas for electricity generation

Energy has come a long way. For decades, North Americans have relied on large supplies of coal, hydro and nuclear power to fuel our homes, our schools and our businesses. As our communities grow and expand so too does our need for electricity. Much of this new electricity will be generated using natural gas.

Natural gas, not to be confused with the gasoline in our cars, is one of the fastest growing solutions for providing our growing population and booming economy with a constant and reliable source of electricity. With this tremendous growth across North America in the need for electricity, the use of natural gas to generate electricity has become an attractive option. Gas-fired generation facilities are not as expensive to build as other power facilities, require relatively short construction lead times, and are preferred because natural gas has cleaner burning properties. Furthermore, low natural gas prices throughout the 1990s made it an economic proposition. In fact, the use of natural gas for power in North America has more than doubled over the past decade and although the trend has not been as prevalent in Canada as it has in the U.S., it now accounts for a quarter of North American natural gas consumption.

However, burning natural gas to generate electricity does have potential drawbacks. The National Energy Board's Energy Market Assessment Natural Gas for Power: Issues and Implications [PDF: 4723 KB] takes a thorough look at some of the challenges and opportunities generated by using natural gas to produce electricity, including natural gas supply, the effect on prices and infrastructure requirements.

One of the biggest challenges is the adequacy of natural gas supplies at competitive prices. Rising prices have spurred on additional drilling, however even this growth in production has not been enough to keep pace with demand. North American gas producers are drilling more wells every year just to keep production constant. Therefore, if more gas is to be allocated for electricity generation, there will be less available for other consumers.

Furthermore, with power generation becoming the fastest growing sector of natural gas demand, the prices of both electricity and natural gas will become more closely linked and could climb. As demand for natural gas to generate electricity increases, so too will the price of not only natural gas, but also electricity.

Not only could prices associated with natural gas supplies go up, there may also be a need for a significant investment in infrastructure and other necessary services in order to provide gas-fired plants with a reliable source of natural gas. This could be of particular significance in those regions where natural gas is not in abundant supply, such as Ontario and Quebec.

As energy providers work to supply Canadians with a reliable source of electricity, there are questions surrounding the use of natural gas for this purpose that our policy makers and regulators may wish to consider.

• What are the advantages or disadvantages of increased reliance on natural gas for electricity generation?
• Has fuel diversity for electricity generation been examined closely enough across Canada?
• How can the appropriate investment in natural gas and electricity infrastructure be encouraged?
• What is the appropriate role for government, if any, in ensuring adequate generation?

The answer to these questions is still not clear. What is clear however, is the need to engage in debate, to ask the difficult questions and to consider the ramifications of using a non-renewable resource to generate electricity.