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Description
The Powerplant and Industrial Fuel Use Act (FUA) was passed in 1978 in response to concerns over national energy security. The 1973 oil crisis and the natural gas curtailments of the mid 1970s contributed to concerns about U.S. supplies of oil and natural gas. The FUA restricted construction of power plants using oil or natural gas as a primary fuel and encouraged the use of coal, nuclear energy and other alternative fuels. It also restricted the industrial use of oil and natural gas in large boilers.
During the early 1980s, the demand for natural gas declined substantially, which contributed to a significant oversupply of gas for much of the decade. Residual fuel oil, the main target of the FUA, was used for peak electricity generation; most new base load power plants constructed in that decade were coal-fired or nuclear.
Falling natural gas demand and prices finally spurred the repeal in 1987 of sections of the FUA that restricted the use of natural gas by industrial users and electric utilities. As a result of the repeal, natural gas and oil could again be used to fuel large new baseload electric power plants, and restrictions on gas and oil-burning industrial boilers, turbines, and engines were lifted. The FUA restrictions continued that had allowed industrial cogenerators to use natural gas if they met certain operating conditions. Restrictions were eliminated for all new facilities constructed after 1987.
Impact
The repeal of the FUA set the stage for a dramatic increase in the use of natural gas for electric generation and industrial processing. Natural gas consumption for electric generation rose from 2.6 trillion cubic feet (Tcf) in 1988 to 5.7 Tcf in 2002, an increase of about 119 percent. Natural gas consumption for industrial processing rose from 6.4 Tcf in 1988 to 7.6 Tcf in 2002, an increase of almost 19 percent. Therefore, total natural gas consumption for electric generation and industrial processing increased approximately 47 percent during that period. Natural gas became viewed as an economically efficient and environmentally friendly fuel for electric generation and industrial processing when compared with other fossil fuels.
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