From Forbes
Natural Gas is getting mixed reviews when it comes to the climate cause. One side is saying that it is cutting into coal’s marketshare and thereby drastically reducing heat trapping emissions while the other is noting that it is boxing out more promising options, such as wind and solar energy.
The changing energy dynamics have meant CO2 emissions are the lowest they have been since the early 1990s. And so the key question then becomes whether policymakers should continue to tap the natural gas market or look forward to cleaner, renewable options to do the heavy lifting. Both types of fuel, in fact, are central to global commerce.
“This idea of natural gas as a transition fuel to renewables is strange, Total SA Chief Executive Patrick Pouyanne said last week at the World Gas Conference in Washington, as reported by Reuters. “Natural gas is a solution” to climate change. Executives from ConocoPhillips, BP Plc, Equinor Asa and Qatar Petroleum agreed with those sentiments.
The U.S. Energy Information Administration is reporting that the nation’s proven natural gas reserves increased by 5% to 341 trillion cubic feet, or nearly 17 trillion cubic feet more than the previous survey. Natural gas consumption is on the rise, increasing by as much as 30% a year, according to government projections — an amount that will at least be sustained because of the expected demand from Asia.
Natural Gas’ share of the power generation market could hit 50% percent in the coming years while that of coal will stagnate at 30%. Industrial growth, meanwhile, will account for 60% of that expansion.
Manufacturers, for example, use natural gas as a feedstock for refining and making chemicals and metals. They are making use of both “dry” natural gas and the “wet gas” that is separated from it. Those so-called natural gas liquids are comprised of such chemicals as butane, ethane, methane and propane — all of which can serve as the foundation for finished goods that are consumed domestically and exported around the globe.
Steel, chemical and fertilizer industrials are among the beneficiaries. Those businesses were paying as much as $14 per million Btus in 2005 and now it is about $3.00 for the same unit, which IHS Markit says will lead to an additional $328 billion in new manufacturing output by 2025.
“Over the next decade our nation’s demand for natural gas is only going to grow and much of that growth is from manufacturing,” National Association of Manufacturers President Jay Timmons said.
Economic winds
To be sure, some experts are dousing natural gas’ flame. Bloomberg New Energy Finance says that wind and solar electricity will make up 50% of the world’s energy mix — a function of the falling price of the underlying technologies as well as $548 billion being invested in storage capacity by 2050. On top of that, the report says that CO2 emissions will fall by 38% during that time.
The policy analysts go on to say that natural gas will get used mostly to firm up intermittent wind and solar energies. As a result, natural gas’ share of the global electricity supply falls from 21% today to 15% by 2050.
Natural gas is now the fuel of choice because of the advances in drilling technologies and specifically those tied to hydraulic fracturing that can plumb the shale gas from rocks deep underground in which it is embedded. But a recent analysis is suggesting that unless natural gas developers improve their methane emissions controls, consumers will revolt.
A study published in the journal Science says that the U.S. oil and gas business emits 13 million metric tons of methanefrom its operations year. And that is 60% more than the U.S. Environmental Protection Agency has estimated. In fact, the leak rate from existing operations is 2.3% — more than EPA’s estimate of 1.4%.
Along those lines, the courts have said that when companies make business decisions that they must consider the “social cost of carbon,” which means that they need to incorporate the level of greenhouse gases that they would be emitting. The corresponding strategy leads to investment in new technologies and cleaner fuels that serve as a catalyst to job creation.
And while the Trump administration has tried to rollback regulations that it says impede industry, its own EPA has released tools to evaluate such concerns. Critics, however, say that the agency is not considering “life cycle” CO2 emissions — everything from development to transportation. In fact, the Republican-led Federal Energy Regulatory Commission says that it will only consider emissions associated with pipelines per se — and not the actual production that they might inspire.
Certainly, if the unconventional natural gas is to reach consumers, the infrastructure has to be in place. Supporters say that market forces are meeting the demand — that as many 10 pipelines in the Marcellus and Utica basins have been opened or are in the process of opening. That area, which is where much of the shale gas development is happening, will increase its capacity from 23 billion cubic feet in 2016 to 35 bcf, says the Energy Information Administration.
Economic forces will propel the natural gas industry forward — something that is creating jobs and wealth while also helping to reduce heat-trapping emissions. But those advances do not preclude the development of newer and cleaner technologies to support renewables, which are also gaining favor in policy circles. For the foreseeable future, the fuels will co-exist while also expanding their reach.
