The analyses presented show how a Federal carbon fee could benefit US natural gas (NG) producers while meeting the COP21 goal of avoiding an increase in global temperatures of +2°C (3.6°F) above pre-industrial levels (Rine, 2019a). Absent a Federally mandated carbon tax, however, unilateral reductions in production by petroleum companies could result in costly opposition from stockholders and investors. The basis of the analyses are modeled responses to a 25-year national carbon fee dividend (CFD) program beginning in 2025 at $10/metric ton (t) of CO₂ emissions and increasing annually by $10/t. The CFD program, if enacted nationwide, would within a decade begin the elimination of coal usage for electrical power generation while incentivizing carbon capture and storage (CCS) for NG. In theory, US NG producers with a CFD stimulated CCS program could not only attain an 80% drop in US carbon emissions by 2050 (for combined coal and NG usage), they could produce more NG than following a business as usual approach (BAU; Figure 1).

Also addressed are how growth rates of renewable energy and cost of commercial energy storage might impact US demand for NG (Rine, 2019b). Present day levelized costs of energy from new commercial-scale solar and wind powered facilities are already competitive with NG facilities. But growth of US renewable energy projected by the Energy Information Administration (EIA) for 2025 to 2050 (∼130%) is a fraction of the growth necessary to replace fossil fuel usage by 2050. Other studies of past growth in renewable energy calculated that between 2004 and 2010 there was a growth of approximately 300%. Assuming the EIA projected growth through 2024 is correct (∼160% from 2015 to 2024), growth in renewable energy would have to exceed 700% from 2025 to 2050 to completely replace energy produced from NG and coal. This unprecedented growth requirement indicates there will be continued need for energy from NG during this period. The competitiveness of commercial- or municipal-scale battery storage versus NG powered peaking plants is difficult to predict because of the large variability in both the levelized costs of energy from gas peaking plants and storage costs for batteries. Present-day estimates for low-cost battery storage could replace high-cost NG peaking plants immediately after instituting a CFD plan. Whereas a low-cost NG peaking plant may still be competitive decades after the initiation of an annually increasing carbon fee.