Shale may change America, but not the climate

Shale is bringing huge economic benefits to the US, but while the switch from coal to gas is reducing emissions, such a move is at best likely to delay the worst climate scenarios by a decade.

If you believe the hype, shale gas will solve many of America’s problems, from high petrol prices to wars in the Middle East. There is no doubt that it will bring huge benefits to the US. However, its role in climate change is misunderstood – and must be dealt with urgently.

There is some cause for optimism, at least from a US perspective. The International Energy Agency concluded recently that America will be the world’s largest gas producer by 2015, surpassing Russia. The US is also leading Europe on climate change. If it had ratified the 1997 Kyoto protocol, America would by now have met its obligations.

Now the bad news. Climate change remains a huge problem, even if the US’s energy mix is improving.

This paradox rests mainly on the unlocking of abundant natural gas using hydraulic fracturing, or ‘fracking’, in Pennsylvania’s Marcellus Shale rock formation and elsewhere. America’s sudden unconventional gas boom means it is using more gas and less coal. Gas emits only half as much carbon dioxide as coal. Utilities companies recently announced the retirement of about 8 per cent of US coal power capacity. This move to gas accounts for about half of America’s emissions reductions; most of the rest is the result of the recession.

However, the mathematics of greenhouse gas accumulation remains the same. Because carbon lingers in the atmosphere for centuries, even emitting less of it annually means we are still piling up too much.

Magnifying that problem is global energy demand, which will double in the next two decades. Even if China and eastern Europe started fracking in a big way, the world would not reduce actual emissions – just the rate of emissions growth. That would delay the worst climate scenarios by only a decade. True, wind and solar power are gaining, but they provide less than 3 per cent of global power today; even in 2035 they will probably supply well under 20 per cent. Coal remains the fastest growing world fuel by volume. In 2011, coal use climbed seven times faster than wind and solar, and three times faster than gas. Thankfully, there exists technology to cut greenhouse gas emissions steeply from all fossil-fuel power plants – coal and gas alike.

Carbon capture and sequestration involves the capture and concentration of carbon dioxide from large industrial plants and its injection deep underground. This takes the gas out of the atmosphere indefinitely.

The US leads CCS research and development, and the Department of Energy’s sustained investments have created a global knowledge base. Norway, the UK, France, China, Canada, Australia, and Japan are supporting and building large-scale demonstrations, and companies such as General Electric, Siemens and Schlumberger have the requisite commercial equipment and practices.

Many think of CCS as a coal technology, but that is not the whole story. The easiest application may prove to be natural gas power plants. That is because natural gas power produces less carbon to capture to begin with – less carbon to dispose of underground – and does not produce impurities that can clog equipment. And gas plants convert fuel to power more efficiently than coal plants.

For these reasons, a new zero-carbon gas plant is less expensive than a zero-carbon coal plant.

What is blocking progress on demonstrating and deploying this technology at commercial scale? First is cost. Adding CCS does increase the cost of coal or gas power, although this cost will fall with innovation. The answer is an accelerated demonstration program, and government incentives for early deployment. Carbon from power plants can also be used to extract more oil from depleted fields, which in turn can produce revenue to offset CCS costs.

The second obstacle is an odd coalition for inaction. Many environmentalists oppose CCS as an enabler for coal, ignoring the fact that the world will be dependent on coal and gas for a long time and that we must deal with the carbon they produce. Other environmentalists, some in the fossil fuel industry, and politicians generally, are simply happy to take credit for the near-term pollution reductions from the switch to gas, ignoring the long-term emissions implications.

Low­-cost gas could signal the start of a new era of sustainability and commercial competitiveness. And if the US were to take a lead with gas CCS, it would show the world it can have cheap, clean power with a negligible impact on the climate.

The writers are chief energy technologist of Lawrence Livermore National Laboratory and executive director of the Clean Air Task Force.

Copyright The Financial Times Limited 2012.

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