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.

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.

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.

The 'Critical Decade' and Unburnable Carbon

There has been a massive disconnect between the concerns about catastrophic, multi-billion dollar climate change impacts and the types of measures that most governments propose for tackling the challenge.

In the U.S., for example, the Environmental Protection Agency's climate change impacts website features a photo of a town submerged by floodwaters:

and yet the agency summarizes its approach to fighting climate change as a collection of  "common sense measures to reduce greenhouse gas pollution", and encourages people to take steps "such as walking or biking to work".  The message seems to be, yes we are facing a catastrophic, life-changing threat, but everything will be fine if we make a few small changes here and there.  One gets the feeling they're not telling us something.

Australians have a reputation for speaking plainly. Even so, the language in a recent report from the Australian Government's Climate Commission was unusually bracing:

"[M]any consequences of climate change are already evident, and the risks of further climate change are better understood. It is clear that global society must virtually decarbonise in the next 30-35 years. This means that most of the fossil fuel reserves must stay in the ground." [emphasis mine]

Such frank language on climate change is rare from a government agency. It represents what one former U.S. politician called "an inconvenient truth". It is even more extraordinary coming from the world's leading coal exporting nation.

Extraordinary claims require extraordinary evidence. Fortunately, a number of organizations have already done the math.

Our atmosphere is finite - if the entire atmosphere were a sphere at standard air pressure, it would be just 2,000 km across.  The illustration below gives a good sense of the limited volume of the Earth's atmosphere.  When we change atmospheric chemistry by releasing billions of tonnes of greenhouse gases, we change how it absorbs and re-radiates heat.

Climate scientists agree that if we are to have fighting odds of keeping temperature increases this century below 2 degrees C (meaning climate change will be bad but not totally catastrophic), total greenhouse gas emissions between 2000-2050 cannot exceed 1,000 gigatonnes CO2e.

1,000 gigatonnes (1 trillion tonnes) seems like a lot - until one recognizes that 13 years in, we have already used 40% of that allocation.  That means we can only emit another 600 gigatonnes over the next 37 years.  At the current rate (which is increasing, not decreasing), we will surpass the 1,000 gigatonne threshold in 2028. This is, as the Australians put it, the "critical decade" for slowing growth and embarking on the path to zero emissions.

Just how high could emissions go if we do nothing? According to the International Energy Agency, world fossil fuel reserves are approximately five times greater than our 2 degrees emissions allocation, not counting further emissions from deforestation, land use change, and chemical processes.  That would mean temperatures that are five degrees or even higher than today's.  Think an ice-free Arctic, dust bowls across the American midwest, methane releases from the permafrost and potentially runaway climate change.  In other words, business as usual will take us far into uncharted territory.  As the Australian Climate Commission notes with characteristic bluntness: "It is clear that most fossil fuels must be left in the ground and cannot be burned."

With international climate change negotiations once again at an impasse, it is time for more frank language. Barring a technological miracle in the next few years, expect other governments to begin echoing the Australians' clear messages.

However, there is no need for businesses and communities to wait. Carbon Clear has found that organizations that take action beyond or in advance of government compliance schemes can gain first mover advantage in the race to decarbonize.  It is clearer than ever that a low-carbon transition is upon us.  How will you spend the rest of the "critical decade"?

World Bank President: "End Fossil Fuel Subsidies"

Last June I commented on the lack of joined-up thinking when it comes to fossil fuel subsidies.  World Bank President Jim Yong Kim seems to share this sentiment.

According to the Thompson Reuters news agency, Kim spoke out against fossil fuel subsidies during a U.N. meeting of climate and environment ministers in Bonn, Germany.  As he rightly noted, “They are regressive, negatively impact the environment and act as a barrier to progress on clean technology."

The World Bank has long been a champion of free markets, so perhaps it should not be a surprise when the World Bank's President calls for an end to government subsidies.

What is even more noteworthy, then, about Kim's speech, is that he followed up his criticism of subsidies with a call for more government involvement to price greenhouse gas emissions.  Carbon dioxide, nitrous oxide, methane and other GHGs are atmospheric pollutants whose uncontrolled release is causing the planet's average temperature to rise. This in turn is affecting the frequency and intensity of storms, floods, droughts, glacier retreat, the spread of pests and disease and species loss.  For 90% of the planet's population, governments have given a free pass on emissions, by failing to force companies and individuals to incorporate the price of pollution into their everyday decisions.

Kim advocates a change of direction, encouraging governments to adopt one or more carbon pricing mechanisms, "whether this is through a tax on carbon, indirect taxation, regulation or the creation of a carbon market."

President Kim's comments are noteworthy because they come from an institution not known for encouraging governments to meddle in the market.  They bring to mind an observation I and my colleagues at Carbon Clear have made many times before: climate change is that rare global problem that humanity actually has the power to tackle.  We know what causes it, we know what it will take to address it, and we have at our disposal the technological and policy tools to make the transition to a low-carbon future.  We even know how to turn climate change from a challenge to an opportunity.  What we need now is the courage and conviction to act.

An End to Magical Thinking on Climate Change?

Mickey Mouse (c) Disney

Quick quiz: What's the link between the recent measles outbreak in the UK, fiscal austerity as a way to restart economic growth, and the news that global CO2 emissions are about to surpass the 400 parts per million mark for the first time in millennia?

Answer: All three reflect the dominance of magical thinking - or rather, the willingness of citizens and policy makers to make decisions based on supposition and gut feel rather than an understanding of cause and effect or relying on data.

Humans are notoriously bad at math.  It is extremely challenging for most people to identify more than five items in a group without counting them out.  We can rarely perform more than the most basic calculations in our heads.  Statistics, percentages, data analysis - these concepts do not come naturally.

This is a problem because society needs to base its important decisions on sound information.  When we make major decisions using bad information, the results can be catastrophic. As a result, we need to be very careful when we make decisions that affect the rest of society. Science and data are the order of the day, checking and double-checking, not gut feel or wishful thinking.  Unfortunately, that does not always happen.

In 1998, news outlets in the UK reported the results of a study that claimed a link between the measles-mumps-rubella (MMR) triple vaccination and autism.  Other researchers immediately questioned the study, and no one demonstrated a verifiable cause-and-effect relationship between the vaccine and the condition. It didn't matter.  Thousands of parents, responding to screaming headlines, refused to have their children immunised, believing that somehow avoiding vaccinations would make them safer.

Fast forward to 2013.  The original report has been thoroughly repudiated, and the doctor who published the research has been struck off the General Medical Council register. Meanwhile, over 1,000 children have contracted measles, a dangerous and easily preventable illness and many more are at risk.  The British government is now spending vast sums on a massive vaccination "catch up" campaign to halt the spread of measles, as well as mumps and rubella. These are diseases that were nearly wiped out in Western countries a generation ago.  They have made a comeback  thanks to over-reliance on shoddy data, and now all of us are paying to clean up the mess, not least the families of children who have contracted this horrible disease.

In 2010, Harvard economists Carmen Reinhart and Kenneth Rogoff published a research paper claiming a link between countries' national debt levels and economic growth. In particular, they argued that growth falls dramatically when debt levels exceed 90%.  No matter that the paper had not undergone peer review, that other economists questioned the report and that other researchers were unable to replicate the results.  And no matter that it was hard to work out a cause-and-effect mechanism that would kick in only above a certain threshold.  The report was seized upon by fiscal hawks at think tanks and in governments across Europe and in the United States to justify massive government spending cuts.  The resulting "age of austerity" has seen a change of  government in Italy, riots on the streets of Athens, cuts to public services and benefits in the United Kingdom, and across-the-board budget cuts in everything from air traffic control to national parks in the United States.  One might argue that politicians would have embarked on these measures in any event, but the fact remains that this paper provided intellectual cover and was cited far and wide to justify fiscal cutbacks.

Fast forward to 2013. The original report claiming a link between debt levels and economic growth has been debunked due to questionable methodological techniques and a particularly glaring Excel formula error.  Even the International Monetary Fund, which championed "structural adjustment" and similar austerity measures for developing countries in the  1980s and 1990s, has begun to rethink its initial support of fiscal austerity.  In the meantime, economic output remains anaemic, unemployment has skyrocketed across southern Europe, and in the UK slow growth means that government debt has risen not fallen.

Whether it's in social sciences like economics and sociology, or in the physical sciences like biology and physics, we can make the most confident predictions when there is a logical link between cause and effect, when the research is subject to peer review, and when other resaerchers using the same data reach similar conclusions. To quote the late astronomer Carl Sagan,

"What counts is not what sounds plausible, not what we would like to believe, not what one or two witnesses claim, but only what is supported by hard evidence rigorously and skeptically examined. Extraordinary claims require extraordinary evidence."

And so to climate change.

Scientists have for decades been researching the link between human-induced greenhouse gas emissions, rising global temperatures, and changes to the global and regional climate. Every ten years, the UN-mandated Intergovernmental Panel on Climate Change (IPCC) publishes a summary of these research findings, along with recommendations for government action.  The IPCC is comprised of thousands of the world's best climate scientists - physicists, meteorologists, chemists, computer modelers.  Their research is published and subject to international peer review.  They flag past errors and describe how they have subsequently updated their findings.  The findings and recommendations represent the consensus view of  over 120 governments, are cautiously worded and full of caveats regarding potential uncertainties.

The IPCC assessments reports are a triumph of science and data over gut feel.  The process is slow, methodical and cautious.  After all, climate change is a global problem that affects almost every aspect of how we live, work and play.  It is important to make sound decisions based on good information.

So what to make of the news that global CO2 concentrations are about to exceed 400 parts per million for the first time since the Pliocene Era, 3.5 to 5 million years ago?

More magical thinking, I'm sorry to say.  Politicians worry that setting ambitious targets to tackle climate change will cause economic hardship and continue to subsidise fossil fuels, ignoring the costs of climate related disasters like heatwaves and drought, floods and storms, and irreparable damage to our forests and other ecosystems.  Journalists looking for balance have given equal voice to a handful of climate skeptics and recognised scientists who quote the peer reviewed IPCC data.  And the general population, unable to see directly the link between their lifestyles and rising global temperatures and lacking any direct incentives to take action, refuses to change its behaviour.

But all is not lost.  The sudden push to vaccinate children in the United Kingdom shows that we can overcome magical thinking to make rational decisions.  The rapid shift in opinion against a once ubiquitous study on debt and economic growth shows that people can change their minds and consider alternatives when new data becomes available.

The IPCC 5th Assessment Report will be released in late October 2013.  As the impacts of climate change become more apparent to people around the world, I'm hopeful that governments, businesses, communities and individuals will review the IPCC findings, abandon gut feel, and seize this latest opportunity to tackle climate change and embrace a lower-carbon future.

Previously: Science- It Works on Mars and on Earth
Previously: Welcome to the Reality-Based Majority

More on Fixing the EU ETS

The other day, I pointed out that the collapse in the carbon price on the EU ETS compliance market was down to politics, not an inherent failing of cap-and-trade.  I concluded by pointing out that we need courageous political leaders willing to take faster action against climate change.

It seems I'm not alone in reaching this conclusion.  Here's the article lead from yesterday's Point Carbon news website:

Of course, the voluntary carbon markets are relatively less likely to be held hostage by politics.  Companies around the world increasingly are going beyond any compliance obligations to set ambitious emission reduction targets and buy quality carbon offset credits that reduce GHG emissions outside their organisational footprint boundaries.  Carbon Clear is committed to helping companies control their carbon impact - we look forward to working with you.