Implications and Policy Options of California's Reliance on Natural Gas

by Mark A. Bernstein, Paul Holtberg, David S. Ortiz


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California's current energy plans call for increased reliance on natural gas to meet its growing electricity demand. The increased demand for natural gas will place a burden on an already constrained pipeline system. This report describes likely problems and potential options for addressing and preventing problems in natural gas management in California. The state should address the infrastructure shortfalls that are evident in the gas supply system. Gas receipt capacity could be increased by building new pipelines, increasing the capacity of existing pipelines, and providing incentives to increase storage capability. The state should also examine ways to reduce the demand for natural gas. These include (1) natural gas efficiency programs in the residential and commercial sectors and (2) measures aimed at electricity generation. The latter include retrofitting older gas-fired power stations with modern and efficient equipment, replacing antiquated gas-fired power stations, and diversifying the portfolio of electricity generation by including other generation options. The report also estimates the impact of using renewable resources--such as solar, wind, biomass, geothermal, and hydro power--and combined heat and power distributed generation to reduce the growth in natural gas demand. The authors conclude that California should hedge against future potential problems by engaging in a regional planning process and implementing an energy portfolio designed to address the issues outlined in the report.

The research described in this report was performed under the auspices of RAND Science and Technology.

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