Green Group Report: Shale Gas Reduces GHGs and Consumer Energy Prices

In yet another blow to the “ban fracking” crowd, an environmental group has just released a new report that evaluates how natural gas prices affect electricity consumers and the environment – and the results are pretty darn good.

Using data from the Energy Information Administration (EIA), the Environmental Protection Agency (EPA) and Platts, the report – published by Resources for the Future – finds that from 2008 and 2012, as natural gas production ramped up, the price of natural gas fell 60 percent.  Because of this price decrease, both electricity prices and greenhouse gas emissions have been significantly reduced.  As the report states, “lower gas prices induce fuel switching and reduce emissions.”

Later in the report, the researchers explain, “we expect the regions with the largest increases in gas generation to experience the largest reductions in pollution emissions.” (p. 32; emphasis added)

The researchers do mention that the benefits of natural gas are not completely uniform across the United States, as different regions experience different results.  The report explains it this way:

“These are national results and we demonstrate theoretically that the degree to which low natural gas prices affect emissions and electricity prices depends on the degree of fuel switching that occurs; the more fuel switching, the greater the emissions reduction but the smaller the decrease in electricity prices. Indeed, the empirical results are consistent with these predictions. Comparing results across NERC regions, when there is more fuel switching, the environment benefits are greater, but the reduction in electricity prices is smaller.” (p. 34)

Put differently: While some regions have seen greater reductions in emissions and others are seeing bigger reductions in electricity prices, Americans are nonetheless enjoying the benefits of both GHG and electricity price reductions, thanks to shale.

Of course, this report is right in line with EPA’s finding in April that U.S. greenhouse gas emissions have fallen 10 percent since 2005, in large part due to increased use of natural gas. It’s also in line with the Intergovernmental Panel on Climate Change’s (IPCC) finding that the “rapid deployment of hydraulic fracturing and horizontal drilling technologies” is an “important reason for a reduction of GHG emissions in the United States.”

Earlier this year, EID pointed out that an increasing number of environmentalists have also distanced themselves from anti-fracking activists, choosing to embrace shale gas on environmental grounds.  Resources for the Future is the latest group to highlight the clear environmental (and economic) benefits of shale, which goes to show just how marginalized the “ban fracking” crowd has become.

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