Public opinion surrounding natural gas and climate change often has resembled a rollercoaster ride. From being the darling of both the Right (for its economic benefits) and the Left (for its lower carbon footprint compared to coal), natural gas has since fallen from grace among those on the Left, because of possibly large methane leaks and other emissions from the natural gas supply chain. It has fallen even further, as many US states and countries around the world seek to end fossil fuel use by 2050 or even sooner.
But in the very near term, the rollercoaster is picking up speed as we hurtle toward the election, as former Vice President Joe Biden calls for a move away from fossil fuels and a ban on new oil and gas leases on public lands, and President Trump defends the fossil fuel industry and denies the science of climate change.
Apart from the politics, where is the sweet spot for natural gas? The economic benefits from the natural gas boom, propelled by innovations associated with fracking, are undeniable. Some research shows reductions of up to 50 percent in the price of natural gas through 2013, with smaller benefits from there and into the future. The follow-on effects include pushing out coal without raising electricity prices, turning the United States into a net exporter of natural gas, and boosting the US chemical industry. A few studies estimate overall benefits at about a half million new jobs attributable to the shale gas boom and a net economic surplus of about $48 billion per year (compared to a GDP of $17 trillion in 2013).
Without further policy intervention (and not counting the recent rollbacks of methane regulations), the US Energy Information Administration predicts continued increases in natural gas production and use through 2050, driven by exports through 2030 and industrial and power sector demands. Of eight cases modeled, only one shows diminishing consumption. Even the reference case shows consumption rising by 18 percent over 2019 levels by 2050.
More uncertainty exists for the carbon footprint of natural gas. For one, the benefits of natural gas relate to whichever energy source it is compared to. If compared to coal, which is clearly on its way out due to unavoidable market forces, natural gas is a winner—irrespective of whether Trump is reelected or not. But if compared to renewables and potentially decarbonized hydrogen, it fares poorly.
Another question is how large the CO2e footprint of natural gas really is. The immediate issue is methane, which is 30 to 80 times more powerful than CO₂ as a greenhouse gas. Here, whatever the range of uncertainty about emissions, we currently are seeing voluntary efforts by some of the industry to get methane emissions down to about one percent of gas production. But at the same time, regulations are being or have been relaxed or eliminated. These opposing forces probably increase emissions on net, since many gas producers and pipeline companies have not publicly signed on to a low-methane commitment. At the same time, European demand for low-methane natural gas and other drivers toward a green gas market (or at least a low-methane standard for selling in the European Union or for purchasers in the United States) are encouraging companies to further reduce their methane footprint. The future looks bright on these fronts, but without regulation, the gains may not go far enough or fast enough.
This still leaves the CO₂ emissions when natural gas is burned or used in production processes (e.g., to make chemicals). Getting those emissions down requires either reducing natural gas production and finding substitute energy sources at reasonable prices, or using carbon capture and storage technologies. We do know that following Biden's plan to limit fracking on public lands will induce significant leakage to private lands, which could limit progress in reducing emissions. As for carbon capture and storage, bipartisan support for recently upgraded legislation—which gives $50 per ton of CO₂ in tax credits under the 45Q program—can help stimulate innovation and on-the-ground projects, irrespective of who is in the White House.
Overall, I am optimistic that all these factors will gradually reduce methane and CO₂ emissions per unit of natural gas produced and consumed. However, given the expected rise in natural gas production and use, at least some—and potentially most—of these gains could be offset. If progress at reducing emissions is determined to be proceeding too slowly, both the federal government and states have many tools short of the nuclear option—i.e., a fracking ban—to induce quicker actions from companies and to help protect jobs and the economy. It is up to key industrial and energy sectors to demonstrate their commitment to addressing climate change by taking action that lessens the need for expensive government interventions and support sensible government policy.
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October 30, 2020 at 12:47AM
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The Future of Natural Gas: Balancing Economics and Climate Change - Resources Magazine
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