Embracing Natural Gas as a Complex Environmental Asset


Author: Mark C. Thurber

Environmental groups are conflicted when it comes to natural gas. Greenpeace and the Sierra Club tend toward categorical denial that any good can come from a fossil fuel. By contrast, the Natural Resources Defense Council and the Environmental Defense Fund argue that, if suitably regulated, the fuel can offer substantial net environmental benefit by displacing local pollution and greenhouse gas emissions from coal. Supporting this latter view, the International Energy Agency (IEA) calculates that U.S. greenhouse gas emissions have fallen 7.7% since 2006 the largest emissions reduction of any country in that time period — largely due to coal-to-gas fuel switching. Natural gas is not without environmental risks, but an approach that embraces its complex potential is likely to yield the greatest environmental benefit.

Environmentalists have expressed three main concerns: 1) the process of unconventional gas extraction can pose serious risks to human health and safety, mainly by contaminating the water supply, but also through other mechanisms, such as induced seismicity; 2) leaks of methane throughout the production-to-distribution value chain significantly erode the lifecycle greenhouse gas emissions advantage of natural gas relative to coal; and 3)  even a factor of two reduction in greenhouse gas emissions from replacing coal with gas falls well short of the 80% reductions needed to arrest climate change, with cheap gas making it even more difficult for lower-carbon energy to compete in the marketplace.

Fracking produces fracwater, a toxic byproduct which is difficult to dispose of and can pollute groundwater.

For all the demonization of fracking in the public dialogue, most assessments of unconventional gas extraction including reports commissioned by the governments of the U.S. and the U.K.  have concluded that environmental impacts are manageable if appropriately regulated. For the most part, fracking itself is not the biggest concern. Poor workmanship of the steel casing and cement that isolate the well from the surrounding rock is a more significant contributor to groundwater contamination, and wastewater injection is more risky from a seismic standpoint.

Fugitive methane emissions from the natural gas value chain became a hot topic after a 2011 study by Cornell researchers Howarth et al. claimed that natural gas from shales had a lifecycle greenhouse gas footprint comparable to, or greater than, coal. This hyperbolic statement has been largely debunked, but fugitive methane emissions are a legitimate concern. Methane can leak during well completion, from gas handling equipment of various types, and from pipelines and storage facilities. A 2011 report from the United Nations Environment Program estimated that relatively low-cost actions could reduce methane emissions from oil and gas operations and long-distance pipelines in North America and Europe by about 15 million tonnes per year by 2030. Given that the global warming potential of methane is around 25 times that of carbon dioxide (assuming a 100-year time horizon), this translates into a significant benefit for climate. And yet, monitoring and regulation of methane emissions from oil and gas activities remain limited.

The third broad complaint about natural gas development that new gas-fired plants lock in reduced, but still excessive, emissions of greenhouse gases while retarding renewable energy deployment is most compelling if one believes the energy sector can be rapidly de-carbonized with renewable energy. Unfortunately, trends to date do not support this optimistic view. Historical analysis by Arnulf Grubler and his colleagues at the International Institute for Applied Systems Analysis (www.globalenergyassessment.org) dramatizes the problem. Global primary energy demand served by non-hydro/non-biomass renewables tripled in size between 2000 and 2008, while demand served by coal increased by 44%. Nevertheless, because of the small base for wind and solar (a 0.3% share of primary energy demand in 2000 versus 22% for coal), the world still added 17 times more coal energy than wind and solar generation over this period. We can expect wind and solar to contribute more as their costs fall, but even an IEA scenario assuming stricter climate policies predicts that more coal generation will be added by 2035 than wind and solar generation.

For reasons of cost and intermittency, wind and solar cannot yet make a dent in coal use; natural gas can. The results-oriented environmentalist should therefore seek creative strategies for pushing gas towards its full climate mitigating (and local air quality enhancing) potential, while being mindful of these environmental concerns. For a more constructive engagement with gas, I propose the following shifts in emphasis.

Resources such as wind cannot yet make a dent in coal use.

First, push for more monitoring and regulation of fugitive methane. This topic still remains largely out of the public eye (especially in comparison with anti-fracking hysteria), perhaps because some environmentalists have seized on fugitive methane as a rationale for killing unconventional gas rather than as a climate change mitigation opportunity.

Second, emphasize replacement of the highest-emitting coal plants with modern gas-fired facilities. The Sierra Club has worked effectively to prevent construction of new coal plants, but with gas prices at historic lows in the U.S., the economic logic for new coal plants has diminished anyway, and the larger climate payoff may come from replacing existing facilities. According to the EPA, the top 10 carbon dioxide emitting power plants in 2010, all of which were fueled by coal, were collectively responsible for over 180 million tonnes of carbon dioxide emissions that year  more than the greenhouse gas emissions from the entire transportation sector in California in 2009. Coal plants whose construction costs were paid off long ago can be cash cows for power companies, but repowering these antiquated facilities with natural gas is a very cost-effective way to reduce carbon dioxide emissions even after compensating plant owners.

Third, encourage end use applications for gas, particularly in transportation. Replacement of gasoline with natural gas in automobiles yields about a 20% reduction in greenhouse gas emissions; switching electric vehicles from coal-fired to gas-fired electricity is even better. Boosting demand for natural gas helps not only by directly reducing emissions but also by supporting gas prices and thereby boosting incentives for exploration and production. Higher gas prices also help narrow the gap that new forms of low-carbon energy have to bridge to be competitive in the marketplace.

When it comes to natural gas, environmentalists have the choice of sticking to a black and white narrative about virtuous renewable energy against evil fossil fuels or embracing the messier path of nuanced regulation and a search for the strongest environmental leverage. The latter path is likely to yield better results.

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Mark Thurber, is associate director of the Program on Energy and Sustainable Development at Stanford University. He was an editor of and contributor to Oil and Governance: State-owned Enterprises and the World Energy Supply (Cambridge University Press, 2012), which describes the key role of national oil companies in global oil and natural gas markets.