July 25, 2013 — With the rise of natural gas in the United States in recent years, there has been a significant amount of debate over the long-term implications of a natural gas build-out in this country and around the world. Cheap natural gas has led to the widespread displacement of coal in the U.S., contributing to historic declines in the nation’s CO2 emissions, and many see it as a promising bridge to renewables. But others question whether natural gas really will lead to a low-carbon future.
Will the greenhouse gas emissions from expanded natural gas push the global concentrations of atmospheric GHGs beyond what is consistent with safe climate stabilization? Does cheap natural gas undermine the deployment of carbon-free energy sources such as wind, solar and nuclear? How can we ensure that the expansion of natural gas encourages rather than derails continued expansion of carbon-free energy?
In a Breakthrough Institute report released last month, we find that natural gas can indeed be a bridge fuel to a low-carbon future, provided national governments and policy makers understand it as such and simultaneously invest in a diverse portfolio of other low-carbon energy technologies.
Environmental experts and advocates have long viewed natural gas as a critical driver of the shift from coal to lower-carbon energy. Because it produces roughly half the CO2 emissions of coal, natural gas has been considered as a bridge fuel to zero-carbon energy supplies by Al Gore, the Natural Resources Defense Council, Resources for the Future, former Environmental Protection Agency head and former Obama climate chief Carol Browner, and energy experts across the political spectrum.
Studies that model natural gas as a bridge, such as one conducted by Michael Levi of the Council on Foreign Relations, find it could help stabilize atmospheric CO2 concentrations. Levi’s scenario shows natural gas could play a significant role in limiting the atmospheric CO2 concentration to 550 parts per million, provided it is gradually phased out and replaced with zero-carbon-emitting energy.
While Levi’s paper also finds that natural gas could play less of a role in limiting the concentration to 450 ppm — a concentration frequently associated with the threshold for “dangerous climate change” — this finding should not come as a surprise. Limiting global atmospheric CO2 concentrations to or below 450 ppm would require that we stop building new fossil fuel infrastructure in the next several years and significantly reduce energy demand over the next few decades. This is highly unlikely due to rapid energy demand growth in China, India and other developing countries, and carbon emission “lock-in” from existing fossil fuel infrastructure. Levi’s finding, therefore, is evidence that gas can play an important bridging function to a low-carbon future.
Natural gas must be recognized by policy makers and energy planners as a moment in the process of energy modernization and innovation, not the end point.
Many have voiced concerns that fugitive methane leakage from natural gas production diminishes the climate benefit of switching from coal to natural gas. And it is true that over the short term, fugitive methane emissions have the potential to erode most or all of the CO2 emissions benefit resulting from switching from coal to gas. However, there is strong evidence that leakage can and will be lowered substantially in the future. One study found that 70 percent of total leakage from 250 wells in Fort Worth, Texas, was occurring at only 10 percent of the wells, suggesting significant potential for low-cost, high-impact intervention. And a recent report from the World Resources Institute identifies several promising options for further limiting fugitive methane emissions. Moreover, long-term climate models suggest that warming trends have less to do with the rate of methane leakage and more to do with other variables, such as the thermal efficiency of future coal plants and whether the switch to gas is permanent or a bridge to zero-carbon energy. So, although methane leakage reduces the short-term emissions benefit of switching from coal to gas — and should be addressed for that reason — it does not limit natural gas’s potential as a bridge fuel to a low-carbon future.
Bridge to Renewables, Nuclear and Carbon Capture
One of natural gas’s most important strengths as a bridge technology is its ability to support the continued expansion and deployment of wind, solar and other zero-carbon energy.
Renewables such as wind and solar complicate the traditional operation of electricity power systems. For example, utility-scale wind generation, a particularly volatile intermittent power source, requires electricity operators to make significant adjustments to balance generation and load, creating inefficiency in the system. By providing backup and firming capacity, the expansion of gas-fired power plants can accelerate the integration of intermittent power into existing electricity grids. New natural gas plants can power up and reduce output very quickly with minimal efficiency loss, and new NGCC — natural gas combined cycle — plants are specifically designed to offer flexibility to a renewables-heavy grid system.
Countering concern that cheap natural gas undercuts the deployment of renewables, wind and solar have seen rapid growth in recent years thanks to federal tax incentives, state mandates and other subsidies. And while there may be cases where cheap natural gas has challenged the economics of renewable power, the far bigger threat to renewables is subsidy dependence and regulatory uncertainty.
Likewise, the existential threats to nuclear power have more to do with high capital costs and regulatory challenges than with recent price competition by cheap natural gas. (Another report published this month by the Breakthrough Institute details the reforms needed to accelerate innovation in nuclear energy to make it cheaper and more scalable.)
Finally, cheap natural gas presents opportunities for development of advanced carbon capture technologies. While carbon capture has typically only been considered for coal-fired power, the cleaner pollution stream emitted from natural gas plants makes them more amenable to carbon capture than coal.
Pay It Forward
The transition from coal to natural gas is not unique. The replacement of dirtier, more expensive and otherwise inferior energy technologies by newer, better, cleaner and cheaper ones is characteristic of all significant energy transitions to date.
The robust economic gains of shale gas should be paid forward to the development and deployment of renewable energy technologies, as well as advanced nuclear and carbon capture and sequestration technologies.
But although the transition to cleaner, cheaper, more energy-dense fuel has many historical precedents, it is not inevitable, nor does it occur spontaneously. Natural gas has seen unprecedented growth in the U.S. as a result of technological innovation that led to its cheap and abundant production. It has had enormous positive economic impacts. But in order to fulfill its critical role in the transition to lower-carbon and improved energy technologies, natural gas must be recognized by policy makers and energy planners as a moment in the process of energy modernization and innovation, not the end point. One way to ensure this is to reinvest a portion of the enormous revenues from expanded gas production into zero-carbon energy innovation.
Lower natural gas prices due to the shale gas revolution resulted in more than $100 billion of additional economic surplus in 2010, and are expected to have contributed similar benefits in the years since. A study by the economic research firm IHS found that unconventional oil and gas activity generated $61 billion in federal and state revenues in 2012, and estimates this will increase to $91 billion in 2015 and $111 billion in 2020.
The robust economic gains of shale gas should be paid forward to the development and deployment of renewable energy technologies, as well as advanced nuclear and carbon capture and sequestration technologies. The Obama administration and members of Congress have already recognized the necessity of paying it forward, advancing policies that would allocate portions of unconventional oil and gas drilling revenues for clean energy technologies. Proposals such as these should be encouraged and advanced vigorously at both federal and state levels.
Gas’s success as a bridge fuel crucially hinges on the degree to which it is recognized as such by policy makers, energy planners and industry. It depends on smart policy to accelerate the transition from coal to gas, and on reinvesting state and federal revenues from expanded drilling into other low-carbon and zero-carbon energy technologies. And it depends on acknowledging the temporary role that gas can — and should — play as we move toward tomorrow’s energy system.