New Report Says Natural Gas Bad for Climate – Because It’s Good for the Economy

This week, a group of researchers published a report in the journal Nature that hazards yet another attempt at organizing a semi-coherent case against natural gas qua an effective means of addressing climate change.

Of course, we’ve seen papers like this in the past, and we’ve addressed at length each of their respective bad-inputs, faulty assumptions and architectural inadequacies in previous posts. So, in short: what makes the recent report in Nature unique is not its bottom-line conclusion. What makes it unique is that, in order to arrive at that conclusion, these researchers had to argue that natural gas is so bad … because it’s too good. Clear as mud, right? Let us explain.

Boil it all down, and the report essentially assumes that America’s current natural gas abundance won’t be going away anytime soon, which likely will lead to a protracted stretch of low natural gas prices. The researchers argue that sustained periods of low natural gas prices will invariably have the effect of “accelerating” economic activity, which results in a future expansion of the economy.  From there, the researchers claim that if natural gas development is “deployed globally” this same effect would happen worldwide.

An expanded economy means more jobs for workers, more revenue for state, local and federal governments, and reduced prices for consumers and businesses. So far, so good – right? For these researchers, though, an expanded economy leads to a scenario in which more energy will need to be marshaled to keep it running and growing – and, according to their models, that energy is likely to come (predominantly) from low-cost natural gas, as opposed to higher-cost nuclear and renewable energy.

In other words: a plenitude of natural gas leads to lower natural gas prices (agreed), which spurs significant economic growth (agreed), which creates a larger economy (agreed), which requires more energy to keep running (probably), which opens up new markets for natural gas (we hope!). And somehow, this is all supposed to be a bad thing? From their paper:

“[L]ower natural gas prices accelerate economic activity, reduce the incentive to invest in energy-saving technologies, and lead to an aggregate expansion of the total energy system … ” (p. 2).

Although we love seeing new studies released that confirm the critical role that natural gas development and use is continuing to play to strengthen the U.S. economy, it’s important to point out that models like the ones relied on (exclusively) in this report generally have serious limitations.

In this case, the models used by the researchers go completely against what we know from current trends: the reality is that cheap, abundant natural gas is already here, and has been for quite a while. It’s already stimulating significant economic growth – and the actual, real results of this influx of natural gas are exactly the opposite of the trends that the report predicts through its hypothetical modeling exercises.  For instance, the report states:

“All five models found that gas substitutes for all other primary fuels—such as nuclear and renewables—although coal loses the largest market share in all models (Fig. 3a).” (p. 2)

Contrary to these predictions, as natural gas use has grown, providing affordable energy for consumers, so too has the use of renewable energy.  In fact, a recent report by the Energy Information Administration (EIA) found that natural gas, solar and wind are increasingly being used to generate new power:

“In the first six months of 2014, 4,350 megawatts (MW) of new utility-scale generating capacity came online, according to preliminary data from the U.S. Energy Information Administration’s Electric Power Monthly. Natural gas plants, almost all combined-cycle plants, made up more than half of the additions, while solar plants contributed more than a quarter and wind plants around one-sixth.”

In other words, at a time when the United States is achieving record natural gas production, which is driving down natural gas prices, natural gas has in no way “crowded out” renewables.

These trend-lines are clear, and can be seen in action, empirically, all throughout the country.  Take Texas for instance: the state is not only leading the nation in oil and natural gas production, but according to EIA:

Texas leads the nation in wind-powered generation, with over one-fifth of the U.S. total.” (emphasis added)

In reality, natural gas is helping renewables grow because natural gas provides the clean-burning baseload power that these industries need to prevent outages when the wind doesn’t blow and the sun doesn’t shine.  That’s why a report by the Texas Clean Energy Coalition found natural gas and renewables “are complementary, not competing, resources.”

And you don’t have to just take our word for it. Many in the renewables industry agree that natural gas has been a benefit to their companies and members. As Rhone Resch, CEO of the Solar Energy Industries Association, recently explained, “Natural gas and renewables complement each other very nicely.”

UC-Berkeley professor Richard Muller put it best in a report explaining why environmentalists should embrace hydraulic fracturing and natural gas:

“Yet cheap natural gas can also make it easier for solar and wind energy to further penetrate electricity markets by providing the rapid back-up that those intermittent sources require. In addition, natural gas is the only base load fuel that can be downscaled into microgrids and distributed generation networks to provide that same flexibility and reliability for solar energy on rooftops and in buildings, expanding the market for urban solar systems. Particularly for areas focusing on distributed generation, natural gas can be an enabler of wind and solar.”

Expanded natural gas development and use, as we know, has already significantly accelerated economic activity in the United States – and, to the extent that phenomenon continues to advance into the future, it’s difficult to understand how that can be considered anything but a great thing for the United States. But, to these researchers, more natural gas use invariably leads to greater GHG emissions – and that, apparently, is why they say it’s bad.

But once again, the researchers fail to recognize and take into account what’s currently happening all around them – namely, that as more natural gas is added to the system, GHG emissions (both from natural gas systems, and on an absolute basis in general) continue to decline, save for a slight uptick in 2013 which was still massively lower than emissions in previous years.

According to the Intergovernmental Panel on Climate Change (IPCC):

“A key development since AR4 is the rapid deployment of hydraulic fracturing and horizontal drilling technologies, which has increased and diversified the gas supply… this is an important reason for a reduction of GHG emissions in the United States.” (p. 18)

The Energy Information Administration (EIA) found recently that the “increase in natural gas-fired generation…substantially reduced the carbon intensity of electricity generation in 2012.”

The National Oceanic and Atmospheric Administration found the increased use of natural gas is the reason CO2 emissions from U.S. power plants “were 23 percent lower in 2012.”

The Paris-based International Energy Agency reported that the “decline in energy-related CO2 emissions in the United States in recent years has been one of the bright spots in the global picture. One of the key reasons has been the increased availability of natural gas, linked to the shale gas revolution.”

And, of course, the Environmental Protection Agency (EPA) published its latest Greenhouse Gas Inventory, which not only found that oil and gas producers had dramatically reduced methane emissions, but that thanks to natural gas, greenhouse gases have been significantly reduced.  According to EPA:

“In 2012, total U.S. greenhouse gas emissions were 6,501.5 Tg or million metric tons CO2 Eq. Total U.S. emissions have increased by 4.4 percent from 1990 to 2012, and emissions decreased from 2011 to 2012 by 3.3 percent (225.0 6 Tg CO2 Eq.). The decrease from 2011 to 2012 was due to a decrease in the carbon intensity of fuels consumed to generate electricity […] with increased natural gas consumption.” (emphasis added)

Another important point is that the researchers ran these models on a global scale, which leads to even more complicated calculations as different countries have drastically different energy priorities, needs and generation and transmission systems.  The shale boom is currently a North American phenomenon – and it should be noted that, while global GHG emissions slightly increased in 2013, the United States was the only country in the world to reduce its GHG emissions in 2012 – and that was largely thanks to natural gas.  In fact, IEA called that the only “bright spot” in the world’s emissions outlook.

In an interview, one of the researchers, Jae Edmonds, made this telling comment:

“Some kind of complementary policies have to go in and make natural gas beneficial for climate change mitigation,” Edmonds says. “There are a lot of policies we can implement.”

Buried deep in the “methods” section of the Nature report, the researchers suggest that “abundant gas could help reduce CO2 emissions” only under a scenario in which the federal government institutes a renewable portfolio standard (RPS) – essentially a policy that mandates utilities to use a certain (and increasing) percentage of renewables as part of their power generation mix.

But, once again, the researchers fail to acknowledge the fact that significant gains have already  been achieved in the context of GHG reductions without the imposition of an RPS; without U.S. Senate ratification of Kyoto; without the imposition of a carbon tax; and without the implementation of the cap-and-trade regime envisaged under Waxman-Markey.

Of course, one can’t predict with certainty what will happen in the future.  But if past is prologue, and even some of the current trend-lines continue to advance along the same trajectory, the upshot will be an America in the future that leverages additional natural gas supplies into a bigger, better and more dynamic economy than the one we have now; more jobs; greater revenues; lower GHG emissions; cleaner air, and more diverse mix from which the energy we use is sourced and supplied.

And the best part? You don’t need a fancy modeling machine to imagine what a future scenario like that might look like. All you need to do is open your eyes.

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