February 26, 2013

Natural Gas in the Big Picture:

With advancements in hydraulic fracturing technology, shale gas has dramatically altered domestic energy in the United States.  Some commentators claim that shale gas can address all of our major energy problems. Some consider natural gas a bridge fuel to a clean energy future.  Bills in Congress proposing a federal “Clean Energy Standard” have included natural gas as a qualifying “clean” fuel source. President Obama’s recent State of the Union address emphasized natural gas and renewable energy as important to reshaping American energy use.   

Given the projected impacts of climate change, we have reached a point when the air and water impacts of natural gas development call on policymakers to sort through some key questions with care: How will current and future energy policy position natural gas, explicitly or by default, relative to fossil energy alternatives like renewable energy?  What role should natural gas play in the U.S. energy landscape in the coming decades?  If it is a bridge fuel, where is it leading? Are we poised to over-rely on natural gas, at the expense of rapid renewable energy development?

It is hard to overstate the significance of the energy transition that the United States is currently experiencing. Take a quick peak back: from 1949 until about 2005, U.S. energy exports were flat; imports continued to rise, particularly petroleum; and production and consumption largely grew in tandem.  In 1970, as domestic oil production peaked, consumption and production began to separate from each other.  Domestic production could not keep pace with consumption and, as a consequence, we grew more dependent on foreign energy resources, especially OPEC oil. Fossil fuels dominated our energy economy with renewable resources barely scratching 2-3% of total U.S. energy production.

Dramatic changes began to occur around 2005.  Production and consumption grew closer together, exports increased, and imports decreased.  Further, on the domestic production side, we began to experience a decline in coal production; an increase in natural gas production; an increase in crude oil production; the flattening of nuclear power; and an uptick in energy produced by renewable resources.  Correspondingly on the consumption side, also in the middle of the last decade, we experienced a decline in oil consumption; an increase in natural gas consumption; a decrease in coal consumption; and an uptick in the consumption of renewable resources.

Natural gas production in the United States has increased dramatically in recent years.  This growth in natural gas is expected to shift the United States from being a net importer in 2010 (11%) to a net exporter (5%) by 2035.  A recent report from the International Energy Agency projects that by 2017, the United States will produce more natural gas than Russia by 2015.

This growth has supplied cleaner-burning power than coal and created economic benefits in many communities.  But cleaner is not the same as “clean.” We are concerned that overreliance on natural gas risks undercutting long-term climate mitigation and climate adaptation initiatives.  

Mitigation: Natural gas may burn cleaner than coal, but it still produces significant greenhouse gas emissions.  According to recent data from the EPA Greenhouse Gas Reporting Program, petroleum and natural gas systems comprise the second largest reporting source of greenhouse gases in the United States.  This is second only to power plants, many of which now also utilize natural gas. Reporting shows petroleum and natural gas systems emitted 225 metric tons of carbon dioxide in 2011, as well as significant methane emissions – a highly potent greenhouse gas.  To date, the EPA has failed to aggressively regulate methane, even as it has adopted new rules for oil and gas producers, and despite a Department of Energy advisory committee recommendation that “[m]easures should be taken to reduce emission of air pollutants, ozone precursors, and methane as quickly as possible.”  Greenhouse gas reductions for climate mitigation – the central aim of a shift to clean energy – will be weakened by overreliance on natural gas.

Adaptation: Overreliance on natural gas also raises significant water concerns at a time when climate change threatens water quality and quantity in new and perilous ways. Drilling requires substantial volumes of water, which can strain ground and surface waters supplies. Faulty wellheads and chemicals mixed with injected water have the potential to pollute drinking water resources, and so can wastewater treatment and disposal. Congress has directed the Environmental Protection Agency to study the effect of hydraulic fracturing on drinking water.  In December 2012, the EPA issued a progress report on its study with the final report expected in 2014.  The urgency of protecting freshwater resources has to be a central focus in a clean energy transition – the water impacts of natural gas production may hinder climate adaptation.

Finally, despite near-term environmental and economic benefits, shale gas continues the traditional fossil energy model that climate change shows to be outmoded.  That model has benefited from a series of government supports including tax breaks and other subsidies; under-enforcement of royalty, environmental, and safety obligations; and an energy bureaucracy that has played an intentionally supportive role. Together, these policies have buoyed domestic oil and gas producers to phenomenal levels of wealth (In the first quarter of 2012, for example, ExxonMobil posted profits of $9.45 billion or $104 million per day. The company’s second quarter profits almost doubled to nearly $16 billion.)  Over-emphasizing natural gas as a “clean” fuel runs the risk of sapping momentum for a more dramatic shift toward renewable and efficiency-based models.  Despite increasing, but still episodic, support for new and cleaner technologies, renewable energy still does not compete on a level playing field with fossil fuels.  It would be easy, especially with abundant natural gas, to hold close to the status quo, making changes on the margins that don’t do enough to reduce energy sector emissions.  But we can do better and more.  Consider, for example, the Rocky Mountain Institute model, designed to utilize but scale back the role of natural gas over time as renewables and other efficiency technologies scale up.  U.S. energy law and policy today do not reflect a carefully considered downward trajectory for fossil energy use.  In the big picture of America’s clean energy transition, the United States has to move away from the longstanding emphasis on fossil fuels to maximize energy efficiency and advance rapid renewable energy development.

Joseph Tomain, CPR Member Scholar; Dean and Professor, The University of Cincinnati College of Law. Bio.

Uma Outka, CPR Member Scholar; Associate Professor of Law, University of Kansas School of Law. Bio.

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