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Is shale gas driving down CO2 output? A new analysis says, not so much

coal
REUTERS/Christian Hartmann
While natural gas replaced coal in the generation of about 160 million megawatt-hours of electricity nationwide, it also displaced about 47 million Mwh of essentially CO2-free power from nuclear, hydroelectric, wind and solar sources.

You hear it said all the time: the shale-gas boom is not only driving down American energy bills and advancing our energy security, it's also driving down our greenhouse-gas emissions by displacing coal in our power plants.

The standard argument goes like this:

  • Burning natural gas produces only about half the carbon-dioxide emissions as an equivalent quantity of coal.
  • Natural gas produced nearly one-third of U.S. electric power last year, double its contribution in the year 2000; while coal’s share fell from 50 percent to about 36 percent in the same period.
  • Though electric-power generation remains the largest single source of carbon-dioxide emissions in the U.S., those emissions have been dropping even as the economy continues its recovery from recession.
  • Therefore, natural gas must be the prime source of those reductions.

A fresh analysis challenges that reasoning, and uses the utilities' own data to show that natural gas is contributing only about one-quarter of the nation’s most recent progress on CO2 — with the rest attributable to falling demand, efficiency gains and mild weather.

The study was conducted by the CO2 Scorecard Group and looked at the year-to-year decline in U.S. emissions from 2011 to 2012.

Emissions dropping steadily

That drop was sizable – about 4 percent, representing 205 million metric tons – and brought these emissions to their lowest level since 1994, according the U.S. Energy Information Agency.

Emissions have fallen nationally in five of the last six years (2010 excepted), and EIA's summary spotlights natural gas's contribution without assigning it a precise share of the progress.

Researchers at CO2 Scorecard decided to dig deeper, delving into data from the eight regional coordinating councils that manage the North American power grid. Among their findings:

  • While natural gas replaced coal in the generation of about 160 million megawatt-hours of electricity nationwide, it also displaced about 47 million Mwh of essentially CO2-free power from nuclear, hydroelectric, wind and solar sources.
  • The displacement of noncoal sources by natural gas varied considerably from region to region; in the east-central and south-central U.S., increases in gas generation pretty much balanced declines in coal generation. But in the western U.S., gas displaced more nuclear and hydro power than coal.
  • In the region covered by the Midwest Reliability Organization, which includes Minnesota, the picture was more mixed. Natural gas generation was up 5.5 million MWh while coal was down 8.9 million MWh. Wind was up 5.9 million MWh; nuclear and hydro were down 2.1 million MWh and 2.9 million MWh respectively.

Those of you who reflexively do the math as you read have no doubt noticed that the MRO numbers don’t balance, and there’s a good reason: Electric power demand also changed from year to year, leading to perhaps the most striking finding in the CO2 Scorecard analysis:

  • 51 million MWh of coal-generated electricity was simply eliminated – people used less electricity in 2012. Energy efficiency, conservation and the mild January, February and March of 2012 are responsible for that reduction. [The MRO region’s share of that 51 million MWh is listed at 3.4 million MWh.]

For those of you whose eyes are already glazing under the influence of all these numbers, I apologize and hope you’ll hang with me for just a few more, because this is actually pretty interesting:

Falling demand, rising efficiency

Looking beyond the electric utilities, CO2 Scorecard examined  year-to-year changes in transportation and other industrial sectors to gauge their contributions to that 205-million-ton emissions drop. Their attributions:

  • 54 million tons, net, to changes in utilities’ fuel sourcing involving natural gas (that is, gas replacing coal, offset by gas replacing nuclear, hydro, etc.).
  • 64 million tons to reduced coal-fired generation driven by lower demand, and to reduced generation in the small niche of petroleum-fired generation.
  • 39 million tons to efficiency gains in the transportation sector “as a result of two phenomena – people are driving less, and when they drive they tend to drive fuel efficient cars.”
  • 48 million tons to efficiency and conservation efforts in residential and commercial sectors.

Bottom line?

Contrary to popular perception, 2012 data shows that the increased use of natural gas in the electric power sector is not the largest contributor of energy related CO2 reductions in the U.S. over the past year. Nearly 75% of the CO2 savings are attributable to economy-wide demand reduction driven by energy efficiency, conservation and the mild winter of the first quarter of 2012.

I first spotted the CO2 Scorecard study at Inside Climate News, whose report on Tuesday includes a bit of jousting between CO2 Scorecard's researchers and some other energy experts who see things differently.

One commenter observed that CO2 Scorecard is a nonprofit funded by a company that sells energy efficiency services, suggesting they have a vested interest in the viewpoint this study advances. Maybe so, but both the data sources and the math seemed transparent to me.

Others pointed out that even if natural gas deserves only 25 percent credit for the nation's progress on CO2 emissions, that share is far from trivial. Agreed.

Bloated consumption

Still, I think CO2 scorecard has added a valuable, skeptical and actually quite accessible critique to ongoing discussions about the role of shale gas in our energy future.

And it has demonstrated once again the enormous but often overlooked potential of efficiency and conservation. After all, the cheapest and cleanest MWh on the market is the one we don't consume.

As the CO2 Scorecard authors put it:

Our energy consumption is severely bloated and the potential to cut energy use and lower CO2 emissions remains large.

The policy lesson is obvious — real and lasting reductions in CO2 come from economy-wide policy effects, not from the current transient boom in the US natural gas market. Therefore, the best way to ensure continued economy-wide reductions in CO2 emissions is through a carbon tax.

* * *

Footnote: Neither CO2 Scorecard's nor the EIA's analysis accounts for the considerable emissions of carbon dioxide (and methane) that result from flaring (and venting) of "waste gas" at drilling sites. CO2 Scorecard is said to be planning a research paper on that topic later in the year.

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Comments (6)

Basic changes, 2001-2011

In the US electric power sector between 2001 and 2011, fossil fuel share of US electricity generation declined 3.7 percentage points, and nuclear declined 1.3 percentage points. Those 5 percentage points were picked up by renewables, mostly wind and hydro, with wind making up the majority.

Within fossil fuels, coal declined 8.7, petroleum declined 2.7, and natural gas increased 7.7.

http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0802b

Carbon Tax

Just think all this done without a Carbon Tax.

Just think

Yeah, just think of how much more we could have done with a carbon tax.

Nice...

Touchè!

Touche Nothing

Market demands as well as government mandates have made automakers make their cars more fuel efficient. It didn't take a tax for automakers and consumers to purchase these cars. Power companies want to make money. If building and replacing coal fired plants with natural gas plants will generate more profit, that industry will do it, as they have been. No tax was needed. As fuel costs have risen people have become more efficient as well. Replace worn appliances, bulbs and becoming more aware. Funny, no tax was needed.

Where do people have the "best quality of life"? Longest life spans? It's generally the developed nations that have built their infrastructure which is mainly the result of burning of fossil fuels. Poverty, diseases, high mortality and starvation dominate countries that have poor access to fossil fuels or green energy, which I'm all for, green energy that is.

Who suffers the most in America when prices rise? Not the rich. It's the poor who die in summer heatwaves, winters cold. Putting an extra burden on them is disgraceful.

As far as climate change, a whole different can of worms. Humans have thrived better in warmer climates than colder. Longer growing seasons are beneficial to growing populations. Who will be the first to go in a colder climate? While I'm not advocating that we continue and depend on fossil fuel, just that we act responsibly in the decisions we make. Why must the first response be tax, tax, tax tax?

anyway...

We have a carbon tax. It's privatized.

The difference between the costs of oil and the price of gasoline has expanded considerably in the past 13 or so years. Every actor in the value chain from extraction to retail sales has made extraordinary wealth, particularly in the United States. The Koch brothers went from a net worth of $6.2 billion to $68 billion from 2000-2013. That 10-fold, $62 billion increase in wealth came from oil, mostly from the pockets of US citizens. And they're a relatively minor beneficiary in a global context.

This is what happens when you have a high degree of market concentration of private industry in a sector, even more so regionally, with a highly price inelastic good like motor fuels. It's also helped by the annual $100+ billion road subsidy the US provides in excess of user fees. From launching wars, saber-rattling, delaying fuel economy standards, reliance on Chinese and Indian economies, the "Hummer" tax deduction, etc -- these all are policies the government has chosen which have fundamentally altered the price of petroleum products for consumers, with zero benefit in terms of government revenue.

Just take a look at how much of a gasoline tax outlier the US is:
http://cdn.static-economist.com/sites/default/files/2011.png?1345202166

Intelligent policy for a high-demand/high-production of oil country like the US is:

• cheap oil for domestic use
• expensive domestic gasoline through high fuel taxes
• selling exported oil at high prices
• directing fuel tax revenue to a host of measures to further reduce petroleum demand

This also would have an effect on health care costs, longevity, etc.

Decarbonization of electricity in the US is the result of policy which allows hydraulic fracturing with little oversight, as well as moves to restrict carbon emissions, and renewable energy mandates. These combined to effect the coal -> nat gas + renewables transition we now see.

There is no "free market" in US energy. Far from it.