In some recent posts, Joel Darmstader and I discussed aspects of North American energy independence, with a focus on oil independence. In the last post in the series, Joel looked at environmental consequences of the rapidly changing continental energy picture. I think that issue is worth a second look.
The development of natural resources often disturbs the natural environment. Fossil fuels—coal, petroleum and natural gas—are all extracted via mining or drilling and are commonly associated with environmental damages. Additionally the use of fossil fuels for energy is associated with environmental damages, particularly air pollution and greenhouse gas emissions (GHG) associated with global warming. Nevertheless, the benefits of this energy are essential to the high standard of living in North America, and environmental damages are generally accepted by society as a nonmarket cost of energy production that needs to be mitigated and managed through regulation.
The two new sources of energy for North America—the Canadian oil sands and the fracking of shale oil and gas—offer both new environmental challenges and new opportunities. Joel and Alan Krupnick have both discussed the environmental impacts of oil sands development. Fracking has risks too. Concerns generally relate to ground and surface water, water consumption, and links to chronic seismic activity.
Clearly, there are environmental challenges. The technology associated with fracking is still in its infancy and improvements are underway and likely to continue. Whether these newly developed domestic sources of oil and natural gas involve significant environmental disturbances and, if so, how much they may differ from traditional fossil fuel extraction methods remains to be definitively determined. However, extraction continues even as scientific and regulatory authorities continue to assess the process and the environmental implications.
But the large new sources of natural gas available with fracking also create environmental opportunities. The problem of energy self-sufficiency is confounded by concerns over carbon emissions associated with fossil fuel energy. In essence, the long-term problem involves the adequacy of energy fuels constrained by concerns over GHG emissions associated with that energy source.
On its face, progress toward North American energy self-sufficiency, particularly as it relates to fossil fuels and oil, appears to exacerbate the GHG environmental problem. However, this is proving not to be true—GHG emissions associated natural gas are only about 50% of the emissions of coal per unit of energy produced. The most advantageous place to substitute natural gas for coal is in electrical power generating facilities. This substitution is already underway as the price of natural gas has declined sharply. The EIA has projected that coal’s share of U.S. electricity production could fall to 30 percent in 2035 (from 42% in 2011) as natural gas is substituted. Shifts in the U.S. energy mix are not limited to electricity: Alan Krupnick has shown the considerable potential of natural gas in the transport sector.
The agreeable result is that U.S. GHG emissions in 2011 were down about 2% from the preceding year, partly due to this shift. Indeed, some analysts suggest that emission reduction targets for 2020, once viewed as unattainable, may be achievable in part due to the large role for natural gas. The huge increases in shale gas and oil production driven by fracking technology have changed the national mix of fossil fuels and promise to continue this shift into the future.
If these trends continue, there would also be a dramatic reduction in GHG emissions from electrical power generating facilities, and perhaps with a lag, in transport sector emissions. Furthermore, this power generation change need not be driven by legislation or policy, but would be largely the outcome of the market’s response to dramatically lower natural gas prices and to the expectation that substantially lower prices would continue into the future.
New oil and gas supplies offer possibilities of moving North American and US to oil and energy self-sufficiency. Although environmental challenges associated with the development and use of fossil fuels persist, they appear manageable.
Concerns are sometimes expressed that natural gas substitution will defuse pressures to develop non-fossil fuel solutions. However, in the longer run fossil fuel energy will likely need to be replaced by less environmentally damaging renewable energy sources such solar and wind . Nevertheless, the road to a major role for renewables, e.g., wind, solar, is a long one (Nathan Richardson wrote on this natural gas "bridge" last week). Natural gas, while not perfect, could facilitate our transition to major reliance on non-emitting renewables.
