Thursday, 18 July 2013

The Shale Gas Panacea (Part 2) - Does the UK have '43 Years of Gas'?

In a recent blog post, I provided a canned summary of the reasons shale gas has become such a burning issue.  That previous article covered issues surrounding potential environmental impacts, the relative attractiveness of shale gas compared to coal, and the potential for fugitive methane emissions.

In this post, I want to explore what exploitation of shale gas might imply for our efforts to transition to a low-carbon economy.

As a thought experiment, if we were to suddenly replace all the UK's coal consumption with natural gas, we would reduce greenhouse gas emissions by 42 million tonnes, a saving of nearly 10% from the national footprint total of 458 million tonnes CO2e.

Leaving aside the potential environmental impact of extracting this much shale gas, could we do it?  One would think so, judging from breathless headlines like this one in the UK from The Times:

Let's dig into that "43 years" statistic.

The Times article summarizes the findings from a British Geological Survey (BGS) report on the Bowland-Hodder Shale Formation in northern England.  According to the BGS, the mid-range estimate for the total gas in place in the Bowland Shale Formation is 1,329 trillion cubic feet (37.6 trillion cubic meters).  However, not all of that gas will be recoverable at a reasonable price using foreseeable technology.  A reasonable guess might be that 10% will be recoverable - call it 130 trillion cubic feet.

2012 gas consumption in the UK was approximately 3 trillion cubic feet - a figure that has actually declined slightly since 2000, as utilities burn more coal to produce power.

Divide the recoverable gas estimates (130 tcf) by current consumption (3 tcf/year) and you get 43 years. Not exactly cutting edge analysis, but easy to explain.

But is this number useful for anything besides headlines?

The first assumption we might question is that gas consumption will remain constant for the next four decades.  In the U.S., an influx of cheap gas has encouraged utilities to reduce coal consumption and shelve plans for new coal-fired generation; gas consumption increased by one-third in less than a decade.  If, as we expect, shale gas in the UK is cheaper than conventional gas supplies, gas consumption will rise to displace at least some of the UK's coal-fired power plants.  If gas were to completely replace coal and energy consumption otherwise stays flat, natural gas use could rise by nearly 50%, as indicated in the EIA chart below:

If, as expected, electric vehicles make significant gains over the next few decades, then natural gas use could rise still further as gas-fired electricity displaces petroleum.  Even this simple analysis shows that natural gas use could rise dramatically - even if overall UK energy demand does not increase.

However, the Office of National Statistics expects the country's population to rise 30% over the next four decades. Without significant efforts to improve reduce energy demand and shift to renewable energy sources, this projected population increase makes the assumption of constant gas demand even more untenable.

At this point in the analysis, we are piling guesses on top of guesses.  Coming back to our original question, yes, we could completely displace UK coal consumption and drive significant emission reductions, but not for as long as the headlines would have you believe.

And what happens once we've used up that shale gas bounty? Either we lurch back to a heavy dependence on coal, causing greenhouse gas emissions and air pollution to skyrocket, or we switch to lower carbon sources of power like PV, wind, wave, and geothermal - or nuclear.

Interestingly, it would likely take 15-20 years to fully build out renewables on a truly massive scale, along with the electricity transmission and smart grid infrastructure required to make best use of decentralized and intermittent renewable resources. Likewise, it would probably take 20-30 years for nuclear power to stage a significant comeback in the United Kingdom. Whether we employ renewables, nuclear or both is an important debate, but on for another day.

The shale gas revolution, should we choose to exploit it, has the potential to buy us some time.  If we can resolve the far-from-trivial environmental and other challenges facing hydraulic fracturing, we can achieve significant greenhouse gas emission reductions today, even as we build a longer-term low-carbon energy infrastructure for tomorrow.

Thursday, 11 July 2013

The Shale Gas Panacea (Part 1)

If you want start an argument, just ask a group of environmentalists what they think about shale gas.

Then pass the popcorn.

Conventional natural gas is pumped from vast underground pools like the deposits found under the North Sea, in Russia and in Saudi Arabia.  Geologists have long known that there was also a huge amount of gas and oil trapped in tiny bubbles in sedimentary rock called shale, spread across vast territories around the world.  However, traditional drilling techniques could not access this gas in a cost-effective manner; by comparison, it was far more cost effective to build and operate a drilling rig in the North Sea than drill for shale gas in Montana.

Two technological breakthroughs changed all that.  The introduction of horizontal drilling meant resource extraction companies could drill a network of wells covering a huge area from a single drilling site, without displacing overlying farms, fields and even towns.  Hydraulic fracturing, or "fracking", meanwhile, provided a means of crushing  shale rock using high-pressure fluid, without strip mining the area.  Once the rock is crushed, any pockets of gas or oil trapped in the rock would flow out along the path of least resistance - typically back along the tunnel created by the drill.

Suddenly, it became possible to extract tremendous quantities of shale gas and shale oil, overturning common assumptions about the availability of fossil fuels.  As a result of the shale  gas boom, natural gas prices in the United States are a fraction of the international gas price.

By 2015, the U.S. is expected to overtake Saudi Arabia as the world's biggest gas producer as  energy companies tap the Marcellus, Bakken and other shale basins.  In the UK, meanwhile, analysts are reporting breathlessly about the potential of the Bowland Basin, which some claim can supply the  country with gas for the next 43 years. I'll be taking a closer look at that number next time, but for now let's agree that there's a lot of gas down there.

Why might this be good news for environmentalists? Per unit of energy, natural gas has a much lower greenhouse gas emissions intensity than coal or oil.  In the United States, an abundance of cheap shale gas is ruining the economics of coal-fired power plants. In 2005, gas accounted for 19% of the country's electricity production; in 2012 this figure was 30%.  Largely as a result, America's greenhouse gas emissions are falling rapidly - even before President Obama's proposed regulation of power station emissions comes into effect.  Here in the UK, low prices for EU ETS permits reduce the incentive for power station operators to reduce emissions; it's cheaper to burn coal and buy a permit than use expensive gas. In addition to its CO2 emissions, coal combustion also releases mercury into the environment and contributes more to ambient air pollution than does burning gas.  A massive influx of cheap gas could reduce output at the UK's coal-fired power plants, and force operators to shelve plans for new coal-fired generation. A cleaner environment and  lower greenhouse gas emissions would be the result.

Why might the fracking revolution be bad news for environmentalists? For one thing, we need to be clear about what fuel shale gas is displacing.  Not all that American coal is staying in the ground: as demand for coal falls in the U.S., its price has plummeted.  As a result, it has been cost effective for some European utilities to buy (relatively) cheap American coal instead of  more expensive European and Middle Eastern gas.  Coal imports from the U.S. were up 23% in 2012.  Seen at a global level, shale gas production may be displacing...gas, not coal.

In addition, hydraulic fracturing is not a tidy process.  The hydraulic fluid is a potent  chemical brew and has the potential to contaminate local groundwater supplies.  Changes to  underlying rock formations have led to a spate of earthquakes in some areas after the  introduction of fracking.  And many environmentalists are concerned that the gas may not always  flow as intended - unplanned releases of inflammable gas can pose a safety hazard, and with a 100-year global warming potential 21 times greater than CO2, natural gas releases from fracking could undo some of the benefit that comes from displacing coal. Other studies argue that this fear is overblown, and energy companies have both the capability and financial incentive to minimise leaks.

While this debate will rage on, I predict that there will be some fracking in the UK, and it will continue to grow in the U.S. The question, then, is whether we can mitigate potential harmful environmental impacts, and use this resource boon as wisely as possible.

We'll return to this issue in a subsequent article.

Thursday, 4 July 2013

Obama's $2.7 Billion Climate Science Salvo

 Last week U.S. President Obama announced a new initiative to spur action on climate change.  Unlike previous efforts, this Climate Action Plan bypasses a legislature that has been largely paralyzed and relies on existing legislation and the President's executive authority.

There has already been a great deal of commentary about this new plan, and especially the proposal to regulate emissions from new and existing power plants.  I discussed the power plant proposals last year and will return to this issue again.  Today, we'll focus on a component of the Climate Action Plan that has received much less attention: science.

Many of the remaining critics of robust government action to reduce greenhouse gas emissions argue that the science is still not solid enough to provide a foundation for decisions that will fundamentally alter the U.S. and global economy.  President Obama has provided a two-fold response.  First, in his speech he made a strong moral argument in favor of the precautionary principle:

So the question now is whether we will have the courage to act before it’s too late. And how we answer will have a profound impact on the world that we leave behind not just to you, but to your children and to your grandchildren.

As a President, as a father, and as an American, I’m here to say we need to act. 

This moral call to arms is important - we need to act on the courage of our convictions.  But it probably won't silence the critics, even if it turns out that the United States is able to cost-effectively make the transition to a low-carbon economy and create tens of thousands more green jobs.

The President's second response to the remaining critics of climate science, then, was a masterstroke.  The Climate Action Plan announces over $2.7 billion of funding to develop "actionable climate science".  Government agencies will provide research grants to better understand and document climate change risks and impacts, make more and better government climate science data freely available, and provide toolkits that boost climate resilience.

For climate change skeptics, the President's response is a classic example of the adage, "be careful what you wish for".  The Climate Action Plan threatens to unleash a tsunami of new data.  The Office of Management and Budget's peer-review process for publication of important scientific research is in some cases more rigorous than  for scientific journals.  The peer reviewed scientific literature showing a positive link between human activity and climate change impacts vastly outnumbers publications showing the reverse.  Thus, it's likely that the deluge of new research resulting from this "actionable climate science" initiative will tilt scientific and popular opinion even further away from those who advocate business-as-usual.

Research does not deliver instant results, but it's good to see which way the wind is blowing.  Across the globe, businesses are beginning to assess their own climate-related risks, impacts and opportunities - often as part of their annual CDP disclosure process.  The new climate research agenda from the U.S. will provide further tools to help businesses understand their climate change exposure and take action.

This article was originally published on the 2degrees Network.

Tuesday, 2 July 2013

The New Normal

David Kadlubowski/The Arizona Republic, via Associated Press
I think we have had more than enough "teachable moments" around climate change.  On Sunday, June 30th, 19 firefighters died fighting a wildfire in Arizona, the greatest number of firefighters lost in a single incident since September 11th, 2001.

Fires are a fact of life in the arid American southwest, but they are growing more frequent, hotter, and more severe.  The reason: a warming planet.

As Climate Central reports, Arizona's average temperature has been rising by 0.72 degrees per decade since 1970. When winters are cold, precipitation falls as snow, which seeps into the soil as it melts.  When winters are warmer, more precipitation falls as rain and runs off into streams and rivers.  Less water seeps into the soil, leading to the drier conditions that help fires spread.  The warmer winters also give the growing season a head start, leading to thicker undergrowth that can serve as kindling.

The New York Times notes that wildfires in the first decade of the twenty-first century covered on average twice as much U.S. acreage than in the 1990s.  This figure is expected to increase as hotter, drier weather becomes commonplace with rising global temperatures.

As I've said before, this is what climate change looks like.  Welcome to the new "normal".

It is too late at this point to completely avoid damaging climate change.  However, we still have an opportunity to reduce emissions and forestall the most catastrophic impacts.  We don't need any more "teachable moments" - now is the time to take action to control our carbon impact.