Innovation Needed for Gas to Bridge to Somewhere

A new research letter in Nature (McJeon et al 2014) concludes that globally abundant natural gas will not “discernibly reduce fossil fuel CO2 emissions.” The paper models a scenario in which the US shale gas revolution is scaled globally. While natural gas displaces higher-carbon coal-fired power, zero-carbon power like nuclear and solar are also displaced, according to the model, and cheap gas encourages more energy consumption. The net impact is marginal: between 2 percent less and 11 percent more emissions in the authors’ “abundant gas” scenario:

The first thing to say about the paper is that its assumptions are its conclusions. In their “abundant gas” scenario, the authors assume “that technological change halves the extraction cost” of natural gas and that “this rate of cost reduction is more aggressive than that of most low-carbon energy sources against which natural gas is competing.” Well, if natural gas is cheaper than renewables and nuclear today, and continues to get cheaper at a faster rate than zero-carbon sources, then it should be no surprise that renewables and nuclear don’t take over in the model.

McJeon et al is only the latest paper in a series modeling natural gas’s impact on global emissions mitigation (for more, see IEA 2012, Newell and Raimi 2014, Shearer et al 2014). What all these papers have in common is their policy conclusions: that natural gas is not sufficient to achieve global climate stabilization goals and that significant further policy will be needed. Again, it’s not clear why this would surprise anyone.

The common policy prescription of these papers and the discussion around them is that “climate policy” – typically a global carbon price – is needed to make fossil energy more expensive to motivate the shift towards cleaner, more expensive sources of energy like solar and nuclear.

A carbon price would certainly help, but focusing on emissions pricing misses the fundamental point on display in these papers and in the ongoing energy transition. If natural gas is to truly become a bridge to somewhere, substantial innovation will be needed in zero-carbon energy technologies. The one non-negotiable parameter in all future energy projections should be that nations around the world will prioritize economic growth, and most will prioritize dramatic increases in energy consumption. If natural gas is the cheapest way to meet that demand growth, we shouldn’t be surprised when we miss our ostensible climate goals.

Instead of the failed attempts to price carbon for the past 25 years, scholars and policy makers would be better served by looking at the US shale gas revolution itself. As we wrote in our 2013 report Coal Killer:

If energy transitions are not automatic — if they are instead created and aided by public investments and institutions — then policymakers should keep one eye on replacing coal with gas and the other on sup- porting the development of technologies to succeed gas. To a large extent, this has long been what the United States has done, by supporting the development of natural gas, nuclear, and renewables even while coal use expanded during the 20th century. Viewed from the perspectives of history and technology, the natural gas revolution is best understood as a moment in the process of energy modernization and innovation, not its end point.

In the United States, natural gas is lowering emissions (and will continue to for decades), boosting the national economy, enabling the deployment of intermittent renewables and, ideally, providing the economic surplus to be invested in accelerating innovation in zero-carbon energy technologies.

The authors of the Nature piece are right about one thing: the US shale gas revolution is “the most important energy development in the past decade.” We should learn from it.

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