How we could blow the energy boom: America's vast new surplus of natural gas could lead to greater prosperity and a cleaner environment. But if we don't fix our decrepit, blackout-prone electric grid, we could wind up sitting in the dark.

• Author: Leonard, Jeffrey

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For the first time in four decades, spanning the last eight presidents, America is poised to break free of its energy crisis. The country finds itself suddenly awash in domestic energy, especially new supplies of natural gas extracted from shale rock. The economic windfall is already enormous. According to a recent study by energy analysts, consumers saved more than $100 billion in 2010 alone as a direct result of the natural gas boom. Economists at Bank of America calculate that the boom contributes nearly $1 billion per day to the economy, equal to 2.2 percent of GDP--roughly the same as the economy's rate of growth in recent years.

The environmental windfall is also substantial. Relatively clean-burning natural gas is rapidly replacing coal as our primary source of electricity, leading to reductions in greenhouse gas emissions. Gas-fired power plants are also more easily integrated with renewable energy sources such as wind or solar, giving that industry a boost. The potential benefits of the gas boom also include the promise of a manufacturing revival in the U.S. based on the comparative advantage of lower energy costs, and the opportunity for the country to overcome its chronic trade deficits. This "energy dividend" could be, in other words, the biggest game changer in global politics and economics in a generation.

Yet this bright shiny future is hardly assured. While natural gas deposits could very well yield enough to sustain our energy needs for another century, there are many reasons to fear that we won't succeed in maintaining adequate supplies of economically available natural gas, or in putting enough of it to optimal use--generating electricity.

More fundamentally, in order to capitalize on today's energy dividend, we need to meet a second essential precondition: repairing, expanding, and modernizing our overstrained electrical grid. As it stands, the grid--an interconnected network of 360,000 miles of transmission lines and substations linking more than 6,000 power plants to customers nationwide--is an inefficient and increasingly blackout-prone tangle of 1950s technology. In its present dilapidated state, it is not only imposing unacceptable and avoidable environmental costs due to its inefficiency, it is also making us vulnerable to an array of threats that could dramatically impair the U.S. economy tomorrow--regardless of how much surplus energy we have in the ground.

The gas boom could bring us nearly limitless potential for building a greener and more prosperous future. Yet without long-term planning and bold political leadership to fight for the right policies, America may wind up awash in cheap energy, while American homes and businesses are stuck in the dark.

Many people will come to this subject concerned about the environmental consequences of "fracking"--that is, hydraulic fracturing--of natural gas, and it's certainly an important issue. But as this magazine has argued (see Jesse Zwick, "Clean, Cheap, and Out of Control," May/June 2011), with the right regulations we can reduce the adverse environmental consequences without fundamentally altering the total volume of natural gas produced.

Properly deployed, natural gas has the potential to enable America to overcome our dependence on coal, an extremely dirty fuel, as our primary source of electricity. The result will be profoundly positive for the environment simply because natural gas is substantially cleaner than coal. When used to generate electricity, natural gas emits about half as much carbon dioxide, produces some 80 percent less nitrous oxide pollution, and releases negligible sulfur dioxide, particulate matter, and mercury compared to coal. Electricity generation accounts for 40 percent of all carbon dioxide emissions in the United States, so this transition alone provides us with a clear path over the next several decades to make dramatic reductions in greenhouse gas emissions.

Another, often overlooked, environmental benefit of using natural gas to produce electricity is that it facilitates the development of other energy sources that cause no emissions. Unlike coal-fired plants, those fueled by natural gas are easy to "turn up" and "turn down." This means that they work well in concert with wind or solar power--when winds are calm or the sun isn't shining, natural gas turbines can ensure that electricity generation remains constant. In 2010, Florida Power and Light brought online a new breed of hybrid power plant connecting one of the country's largest solar thermal power plants with an existing natural gas complex.

Utilities nationwide are already accelerating the shift toward natural gas. So far this year, gas-fired generating plants have accounted for about 45 percent of national electricity production, up from 30 percent in 2008. Old coal-fired power plants have...