The American lesson on gas and climate

The American lesson on gas and climate

Davide Tabarelli | President and cofounder of Nomisma Energia
Despite the statements of the President-elect Trump, the US hardly rear up on the desire to minimize the effect of CO2 emissions, targets already largely achieved thanks to increased production of gas through fracking, increase that has made this more economical resource coal for the production of electrical energy

Barack Obama, the Democratic proponent of the "Yes we can" campaign leaves his post after eight years to a Republican who built his victory on criticism of broken promises and on a very crude approach towards climate change. In fact, President Obama made a significant contribution to the battle against climate change. His administration enabled the explosion in gas production, which replaced coal in power generation, with a consequent fall in CO2 emissions. The US is the world leader in terms of per capita CO2 emissions, at approximately 16 tons per year, against Europe’s 6, China’s 7 and Africa’s 1.  What happens in the US is important for two reasons: first, for the amount of emissions involved and, secondly, because it is a market that leads in the adoption of new technologies and policy effectiveness. The extremes tone of the presidential campaign won by Donald Trump on November 8 consolidated the stereotype that a President, with his/her government action, can push the US’s energy and emissions in one way or another. The Republican presidents in favor of fossil fuels and indifferent towards emissions, against the Democrats with their more climate-friendly approach. The reality is very different: the underlying trends only partly depend on what Washington decides, while technological innovation and the entrepreneurial drive toward change work together irrespective of politics. This is confirmed by President Obama’s experience--he opposed drilling, and yet obtained his best environmental results thanks to the oil industry, not the traditional oil industry of the major companies, but that of fracking, controversial due to its environmental effects.

The decline in emissions with Obama's presidency

From when Obama was elected in 2008 until 2016, when he will leave the White House, overall US emissions have declined by 14% (over 680 million tons of CO2 less) to 5.1 billion tons, or 16% of the global total. The cut, equal to more than one and a half times Italy’s emissions, was achieved mainly due to the explosion of gas consumption in power generation instead of coal (in addition,  in order of importance, were the growth of renewables and energy efficiency). In 2016, for the first time in the history of the American electricity industry, electricity production from gas exceeded that from coal--with production from gas at 36%, followed by coal at 27%, nuclear at 20%, renewables at 16%, and a remaining 1% from oil. US gas production has increased by over a third to 756 billion cubic meters (bcm) per year, a level that ranks it in first place as the main gas producer, ahead of Russia, which, significantly, has more than 3 times as many conventional reserves. The steady increase in supply, achieved mainly by the hydraulic fracturing revolution, has kept gas prices low, under €10 per megawatt hour (MWh), on average half those of Europe or of the international LNG market. Low prices have translated into value for money for power stations to use gas instead of coal. Electricity production from gas in combined cycles has increased by approximately 550 billion kilowatt-hours (kWh) and has displaced a similar production from coal. One kilowatt-hour produced from gas in combined cycles emits 0.35 kilos of CO2, while a kilowatt-hour from coal emits 0.85 kilos, a difference of half a kilo which, when multiplied by 550 billion kWh results in a total reduction, thanks to gas, of 275 million tons. Renewable sources, in the same period, grew by 225 billion kWh, an additional volume, entirely emission-free, that went on to replace an equal amount of that produced from coal, with a cut in CO2 emissions totaling 190 million tons per year. Ultimately, gas has helped to produce more electricity from renewables.

From when Obama was elected in 2008, until 2016, overall US emissions have declined by 14% (over 680 million tons of CO2 less) to 5.1 billion tons, or 16% of the global total

Natural gas is very abundant worldwide

This calculation can also be replicated for other countries and for the rest of the world. Essentially, the slowdown we are seeing in the growth of global emissions is primarily due to the increase in the use of gas instead of coal, which also supports the growth of renewable sources. The US’s problem is that hydraulic fracturing is invasive on the environment and involves critical issues and limitations which, at the individual state level, the new president, however favorably inclined, will be unable to change. The movement of trucks, water consumption, the risk of groundwater contamination and, lately, even micro seismicity, are all problems that will increase in importance and will tend to limit the increased use of the huge gas reserves available. For the rest of the world, hydraulic fracturing is less feasible for various reasons. However, even without fracking, there is plenty of gas in the world. Even today, all gas consumed outside of the US comes from conventional gas fields that, thanks to investments in new research technologies, have recently been discovered more frequently. The difficulty of this gas, unlike that from American fracking, is that it is not accompanied by a dense network of gas pipelines to transport it, as soon as it is produced, to consumption centers. The lesson from the US is that networks need to be extended, liquefaction and regassification terminals need to be increased, and transport technologies by ships and storage in consumption centers need to be improved, especially in Asia. The fracking revolution, destined to continue, and the discoveries of giant gas fields in new areas confirm that there is plenty of gas. This is excellent news for the environment, since, in the production of electricity, for which demand is growing strongly, it will help to limit CO2 emissions, supporting the growth of renewables.