Shale natural gas—usually the most boring of fuels—has been one of the hottest energy topics in 2011, alternately lionized as a cleaner-burning and plentiful power source and demonized as a poisoner of local water supplies, and even worse for the climate than coal. That debate will continue to run hot—just last week New York filed suit over potential shale gas exploration in the Delaware River Basin—but there’s little doubt that the growth of shale gas has the power to change the way we use energy. Late last year, the U.S. Energy Information Administration doubled its prediction for domestic shale gas production, raising its estimate of the totally recoverable reserves of the resource from 347 trillion cubic ft. to 827 trillion. President Barack Obama lauded natural gas in his State of the Union speech this January, including the fuel in a potential clean energy standard—even though it is, after all, still a fossil fuel.
Now the International Energy Agency (IEA) has jumped on the shale gas bandwagon—though not without some reservations. In a new report (PDF) released today in Paris, the IEA explores the factors that could lead to a possible “golden age” of natural gas. The report presents a scenario where the global use of natural gas rises by more than 50% from 2010 levels, and comes to represent more than a quarter of global energy demand by 2035, displacing coal as the world’s second-most used fuel after petroleum. Global gas demand would increase to 5.1 trillion cubic meters in 2010, 1.8 trillion cubic meters more than today.
There’s no doubt that unconventional sources like shale gas are the main driver, increasing global supplies and keeping the price of gas competitive—the IEA says that unconventional gas will meet more than 40% of the uptick in consumption. And for all the attention that’s been focused on the fracking debate in the U.S., it will be China—and to a lesser extent, the Middle East—that will drive this possible golden age. Chinese gas demand will increase from about 100 billion cubic meters—roughly the current levels of German use—to a amount equivalent to the gas now used by the entire European Union.
All of this adds up, as IEA Director Nobuo Tanaka said in a statement:
We have seen remarkable developments in natural gas markets in recent months. There is a strong potential for gas to take on a larger role, but also for the global gas market to become more diversified and therefore improve energy security.
Seeing natural gas displace coal will make a real difference—especially in the world’s most polluted cities. China has embarked on an aggressive strategy to develop its own unconventional gas resources and bring in more from abroad, not so much for climate reasons—though natural gas is a cleaner fossil fuel—but for health factors. China is faced with a “very grave” environmental situation, as its top green official put it recently. Though there is worry here in the U.S. about the threat that hydofracking gas might pose to water supplies—more on that later—in China, home to 16 of the 20 most polluted cities in the world, that would be an acceptable risk. In fact, it would almost certainly be a welcome tradeoff—as anyone who’s spent time in blackened Chinese cities like Beijing or Chongqing would know.
But that doesn’t mean a golden age of gas would be perfect—or that it’s even going to happen. Predicting the future is inherently fraught, something we too often fail remember when trying to craft policy around energy and environmental projections that run for decades. There are always so many ways we can be wrong. In the case of the IEA’s gas predictions, the agency assumes that the price of natural gas will remain competitive, and that the cost of production of shale gas and other unconventionals will remain around $3 to $7 MBtu. That’s possible—but it’s also possible that sustained low prices could discourage energy companies from drilling, which has happened before. Already companies in the U.S. like Chesapeake Energy—one of the biggest players in shale gas—are showing more interest in emerging shale oil sector, in part because oil is so much more expensive.
There’s also the regulatory uncertainty around shale gas and fracking—at least in the West. Environmental groups in the U.S. have fought back over fracking, with the federal government taking a closer look at the practice and even industry-friendly states like Texas demanding that drilling companies reveal the full list of chemicals they’re pouring into the ground. There’s an open debate over the full greenhouse gas footprint of shale gas, with a controversial report from a Cornell researcher named Robert Howarth claiming that shale gas may be worse for the climate than coal. That Howarth paper has been an outlier, however—the IEA, for its part, suggests that shale gas has a 3.5% higher “well-to-burner” carbon emissions than conventional gas and is much cleaner than coal, more in line with a recent Department of Energy analysis. The good news is that most of the problems with fracking can be dealt with by smarter and tougher regulations—if the gas industry would just stop being so obstructionist. But more regulations could well cost more—and that might dim the hopes for a golden age of gas.
Lastly, even if everything comes true and the future for gas resembles what Chesapeake CEO Aubrey McClendon must dream about when he puts head to pillow in Oklahoma City, that might be bad news for the climate. The IEA estimates that increased natural gas could push out coal—which is good for the climate—but it could also displace nuclear and renewables, which would be bad. The golden age scenario—without major additional investment in renewables and other lower-carbon energy sources—would put the world on a track for an atmospheric carbon concentration of 650 ppm, far higher than the 450 ppm many scientists believe we need to aim for. And that could mean temperatures rising by some 3.5 C above pre-industrial levels—again, scarily high. As the IEA’s Tanaka said:
While natural gas is the ‘cleanest’ fossil fuel, it is still a fossil fuel. Its increased use could muscle out low-carbon fuels, such as renewables and nuclear – particularly in the wake of the incident at Fukushima and the likelihood of a reduced role for nuclear in some countries. An expansion of gas use alone is no panacea for climate change.
Natural gas isn’t a savior and it won’t destroy the world either. It’s just part—albeit a significant part—of the energy story to come.
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