US Energy Experiences Natural Gas to Coal Whiplash; Natural Gas ‘Bridge to Sustainability’ Collapses Yet Again

Ugly Coal

(A Coal Plant Dumping its Toxic Brew into the Atmosphere. Image source: Climate Crocks)

Natural gas was supposed to act as a bridge to sustainability. Fracking and increased drilling were supposed to reduce US reliance on high-carbon coal. But in 2013, coal consumption is again rising. So what the hell happened?

In short, history repeated itself and energy markets have experienced yet another natural gas to coal whiplash….

Natural gas is an inherently volatile energy source. As prices rise, new sources are sought out, new technologies applied to its extraction and, if depletion barriers are overcome, a surge of new supplies are brought to market. Then, as the wave of new supplies comes to dominate, prices crash. Rushing in to take advantage of the falling prices, the utility companies engage in a generational shift to natural gas electricity production. This increasing consumption of natural gas has two effects. It puts a bottom on natural gas prices and it reduces coal-fired power generation by becoming more competitive on the basis of price. A result of these changes is that US CO2 emissions fall. But, due to the market whip-lash effect of natural gas, these reductions are only temporary.

On the supply side, as natural gas prices fall, less and less producers are able to make a profit. The rate of drilling that drove both the boom and the glut slows to a trickle. This happens even as utilities and other natural gas users demand more of the low cost substance. As a result, prices begin to rise. But since drilling rigs are now allocated elsewhere and natural gas producers are cautious to return to aggressive drilling, supply doesn’t keep pace with demand. Eventually prices rise to the point where natural gas is again, less competitive with coal. Utilities, to preserve their balance sheets, shift back to black rock fuel and carbon emissions again rise.

The 2013 Whiplash

In 2013, US energy markets and related CO2 emissions are now experiencing just this kind of whiplash. After falling to a low price of around $2.60 per million btu, natural gas has been trading in a range between $3.60 and $4.25 since May of this year. And the effect on energy markets has been profound. The result, as Joe Romm implied in his allegorical article ‘Bridge Out’ is that the entirely ephemeral natural gas bridge to sustainability has again disappeared. According to Romm’s excellent article:

Coal’s share of total domestic power generation in the first four months of 2013 averaged 39.5%, compared with 35.4% during the same period last year, according to the Energy Information Administration [EIA]…. By contrast, natural gas generation averaged about 25.8% this year, compared with 29.5% a year earlier.

In the words of another brand of popular fiction: what the frack?

The long touted bridge to sustainability has, yet again, failed. And we find ourselves increasing consumption, yet again, of the worst emitting fuel source — coal. As a result, US carbon emissions are, after about four years of decline, expected to rise in 2013. The US Energy Information Agency projects that the US will emit 2.4% more CO2 than it did last year. But, should the coal surge continue through end of year, this carbon emissions backslide could be even worse than predicted.

Natural Gas: Unreliable Bridge, Bad Help

Sadly, even the reduced CO2 emissions that came, in part, as a result of a temporary shift to natural gas generation also brought with it a terrible cost. Fracked wells drove the most recent boom and bust whip-lash cycle. They were a rapidly depleting, temporary measure to increase production, and these costly wells emit far more methane than their contemporary counter parts. Some studies have even noted that methane leaks via the fracking process make natural gas a more harmful than coal when net carbon emissions are taken into account.

Perhaps worse, the fracked wells also threaten underground and surface water sources from both cracks in the casing pipes and toxic effluent at the numerous and proliferating drill sites. Further, water use in fracking is voracious and, in many cases, adds another burden to fresh water supplies.

Water stress is rising across the United States with fossil water in the Ogallala rapidly depleting even as the US West suffers year after year from a widening climate-change induced drought. With fracking threatening the purity and safety of dwindling supplies, numerous cities and one New Mexico county have banned the enhanced extraction process in an effort to protect municipal water.

In the end, high cost natural gas fracking efforts have managed a temporary reduction in US CO2 emissions at the cost of rising methane emission and harm to water supplies. The flood of new gas also likely delayed or replaced some efforts to transition to the more effective pollution reducing sources of wind and solar. Finally, the price whip lash inherent to natural gas production has returned markets, yet again, to rising coal use.

The term for this is bad help. Very bad help. In short, no fossil fuels represent a solution to climate change or enhance sustainability. They are all dirty, dangerous, and depleting.

To this point, I’ll leave you with the trailer to the must-seem Gasland II:

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25 Comments

  1. Sourabh

     /  July 12, 2013

    Hey Robert,

    I was about to send you this info. Glad, you already blogged about this.

    Just a suggestion:
    “Some studies have even noted that methane leaks via the fracking process make natural gas [only] little better [or ,according to some studies, even worse] than coal when net carbon emissions are taken into account.”

    Reply
    • Good suggestion. The studies I’ve seen make nat gas about as bad as some forms of coal. So I’ll add the caveat ‘as bad or little better.’

      If you have a study that shows total fracking emissions are worse than coal, please post it and I’ll link.

      Thanks again!

      Reply
  2. Sourabh

     /  July 12, 2013

    If possible, can you add an edit button? Sometimes, typos are identified after posting comments.

    Btw, why did you suddenly start moderating comments? Did too many deniers visit your site?

    Reply
  3. An interesting article on how Government made the dirty and impractical process of fracking “profitable”…

    …it is only after decades of development and government support that fracking operations are now seen as cost-effective. In contrast, the support for developing renewables has been erratic and only a fraction of that given to fossil fuel industries. Renewable energy sources are often dismissed as expensive and incapable of meeting the country’s energy demands. Yet looking at the history of energy development, it is clear that political and corporate interests deliberately impeded the development and expansion of renewable energy. Fracking is a clear example of how direct government research and consistent support turned an impractical, expensive process into one that is now seen as the key to domestic energy independence.

    Reply
    • And the way this happened is that fossil fuel special interests both lobbied Congress extensively and exerted strong influences through agencies with which it has direct contact. Historically, powerful corporations have been able to corrupt democracy in this fashion to bring about results that are in their interests and not in the broader national interest. In the case of the oil and gas industries, especially, these businesses have traditionally held extraordinary sway over broader government bodies. As such, government action in the US has often been skewed in their favor.

      Reply
      • I’ve always preferred the term corporatocracy, since we’ve never really had a true democratic government.

        “You can have wealth concentrated in the hands of a few, or you can have democracy; you cannot have both.” ~ Supreme Court Justice Louis Brandeis

      • Well, we certainly have a number of corporations who behave as if they run the government. People might wake up and get angry if this became too obvious, though.

      • Under well-run “inverted totalitarianism”, the common people don’t notice and, in fact, will cheer and support measures that are against their own interests and in favor of the corporate elite.

      • Hence the ‘hologram.’

        I think people are becoming less and less keen on corporate rule, power, and influence. The 2008 crash was a huge blow to neoliberalism and the globalized corporate giants it feeds. Climate change is causing large cracks in oil and gas industry power and influence.

      • Yes the hologram.

        Interesting times, but in this time of social instability and environmental crisis you also see a transformation of the corporatocracy into more overt forms of totalitarianism… a 24/7 surveillance and security state spying on its own citizens under the open-ended precept of the “war on terror”, unprecedented crackdown on whistle blowers, the rule of law is twisted and perverted more and more for the elite’s benefit, etc.

      • It’s extraordinarily disturbing. A shift toward violent control and constant, oppressive surveillance would be a shift toward systems collapse. Just, fair and equal government that respects human dignity will be necessary to avoid severe unrest, civil war and state crisis.

        The disease of greed works its tragedy yet again.

  4. Sourabh’s links to methane leakage rates research are good ones. NOAA’s been looking at this, too – and found rates as high as 9% in Utah. From Nature:

    http://www.nature.com/news/methane-leaks-erode-green-credentials-of-natural-gas-1.12123

    I don’t think NG is the answer here. But until we get good data, the NG industry can continue to claim ‘green’ creds.

    Reply
    • The thing that scares me the most about these methane emissions is that, if they do come from fractures and not from breaks in the well casing, then we’ve just set off another long-term emission source just when we need it least.

      Reply
  5. “The thing that scares me the most… if they do come from fractures..”

    Unfortunately, it’s not just the fracking wells that are leaking, Robert. I wonder if you’ve seen this current research, looking at NG leaks in our delivery infrastructure:

    http://seattletimes.com/html/businesstechnology/2021331722_frackingscrutinyxml.html

    “For Jackson [...] his part of the equation is to find out how much methane is leaking out once the gas is being piped to homes.

    In Washington, D.C., he is spending a week in a silver 4Runner, outfitted with the pipe sticking up 8 feet to determine how high the flume of gas is rising, an anemometer on the roof to measure wind speed, and the spectrometer in the rear for methane readings. At sites with especially high readings, the researchers get out of the car to test inside manholes by hand.

    In Boston, his team found 3,356 leaks with concentrations up to 15 times naturally occurring levels, according to the study published last year. In D.C., they have found the number of leaks are fewer per mile, but each one is bigger.

    “So far the cities look leakier than people anticipated,” Jackson said.”

    Given the piece you wrote today about increasing solar price parity, the pursuit of NG as a ‘bridge’ energy source looks increasingly ill-advised.

    Reply
    • These ‘soft emissions’ can really creep up on you. The well report noted between 4-8 percent leakage and it looks like infrastructure probably produces the same amount. With methane contributing 20 times the warming over 100 years, these leaks more than double and may triple the climate change contribution of natural gas.

      Thanks, these sources are extraordinarily informative.

      Reply
  6. Nancy

     /  July 15, 2013

    Thank you for writing about this. In my area (New England) people are very happy when “Gas” comes to their neighborhood. Their oil bills have risen sharply over the years, but “Gas” is cheap. With lots of people struggling financially, it appears to be a good way to save money. In my opinion, they should spend their money on insulation instead. But all the TV ads make gas sound clean and green!

    I am amazed at the Billions being spent by fossil fuel companies on new exploration for oil and gas and other fossil fuels. My question is: If those fossil fuel companies spent that money every year on renewable energy (R&D, rebuilding their power plants, etc) couldn’t they become very rich with CLEAN energy? Can the governments ‘require’ fossil fuel companies to use clean energy? Thank you!

    PS: Re Jet Stream changes…..we are Massachusetts and we have been HOT up here. This week, we will have temps in the 90s ALL WEEK LONG. I don’t remember this kind of heat in all my 65 years!

    Reply
    • The worldwide subsidy for fossil fuel is about 520 billion each year. The subsidy for renewables is about 80 billion each year. If all the subsidy support for fossil fuels was cut, then transferred to renewables, we’d have a much stronger base of renewable energy and, likely, be able to complete a full transition by 2030-2050.

      So governments just cutting fossil fuel subsidies and transferring those subsidies to renewable energy would have a huge impact.

      That said, it’s possible you could have government mandate fossil fuel companies transition to clean energy. Getting such a bill through Congress given the current high number of climate change deniers would be very, very difficult. That said, states could encourage such action by levying a sales tax on non renewable energy sources (oil, gas, coal etc) and then transferring that money directly back to customers as an incentive to buy home solar systems, wind energy shares, or electric vehicles. Cities and municipalities could raise property taxes on homes with non-renewable energy and lower them on homes with renewable energy. Extra revenue could be put into a city renewable development fund to put solar panels on schools, libraries and other municipal buildings.

      So I think there are all sorts of creative options you could pursue even at the city and state levels, if the political will was strong enough.

      Reply
  7. Nancy,

    Its not that they don’t know about profits in clean energy industry. However, oil and gas resources are pursued because of greed and short-term thinking. Clean energy can provide similar levels of profits, but only in long-term. Also, clean energy is distributed. So, fossil industry may lose its monopoly and control over resources. Its just greed and reluctance to CHANGE.

    I recommend reading Carbon Democracy book. It discusses similar issues. I haven’t read it yet, but someone recommended it to me. I read its reviews and it seemed a good book.

    PS: Gas prices are also set to rise again in coming years. Gas boom is a myth propagated by wall street to make profits. There are lots of material available online examining the future of gas.

    Reply

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