How fracking is making a difference

The Greens oppose fracking when the reality shows they should actually be supporting it. It has been responsible for massive price reduction in power and also massive reductions in greenhouse gas emissions.

Against all expectations, US emissions of carbon dioxide into the atmosphere, since peaking in 2007, have fallen by 12 per cent as of 2012, back to 1995 levels. The primary reason, in a word, is “fracking”. Or, in 11 words: horizontal drilling and hydraulic fracturing to recover deposits of shale gas.

No other factor comes close to providing a plausible explanation. Unlike the European Union, the US never ratified the Kyoto Protocol, in which participating countries committed to cut CO2 emissions by roughly 5 per cent, relative to 1990 levels, by 2012.

Nor is America’s continued emissions reduction a side effect of lower economic activity: While the US economy peaked in late 2007, the same time as emissions, the recession ended in June 2009 and GDP growth since then, though inadequate, has been substantially higher than in Europe. Yet US emissions have continued to fall, while EU emissions began to rise again after 2009.

One can virtually prove that shale gas has been the major influence driving the fall in US emissions. Just ten years ago, the natural-gas industry was so sure that domestic production was reaching its limit that it made large investments in terminals to import liquefied natural gas (LNG). Yet fracking has increased supply so rapidly that these facilities are now being converted to export LNG. 

On top of that utilisation of shale gas has resulted in power price reductions. The reductions in CO2 emissions are even more dramatic:

Natural gas emits only half as much CO2 as coal, and occupies a rapidly increasing share of electricity generation – up 37 per cent since 2007, while coal’s share has plummeted by 25 per cent. Indeed, natural gas has drawn close to coal as the number one source of US power. Renewables still constitute only 5 per cent of power generation in the US – less than hydroelectric and far less than nuclear, let alone coal or gas.

The greenies scared everyone over Fukushima and as a result clean green nuclear plants have been shut down increasing the use of coal.

Meanwhile, the share of coal – the dirtiest fuel – has been rising, not falling, in the rest of the world’s energy mix. Since 2010, coal dependence has risen even in Europe, where some countries are phasing out emission-free nuclear power and no natural-gas boom has materialised (though CO2 emissions remain far higher in the US than in Europe).

The advent of shale gas has had a variety of implications – more good than bad – for the US economy, national security, and the environment. The economic benefits include job creation in the short term, “re-shoring” of some manufacturing activities in the medium term, and, lower macroeconomic vulnerability to global oil shocks in the long term.

Despite the evidence greenies still oppose fracking. And their arguments don’t stack up.

Yet environmentalists are overwhelmingly opposed to fracking, evidently for three reasons. None, however, is persuasive.

First, fracking’s opponents worry that shale gas will displace renewable energy sources such as wind and solar power. But the fact is that CO2 emissions cannot be reduced without cutting coal use, and shale gas is already displacing coal in the US. This is not speculation; it is happening now. Even if some cleaner source becomes viable later, we would still need natural gas as a bridge to get us from here to there.

Put differently, if the world continues to build coal-fired power plants at the current rate, those plants will still be around in 2050, regardless of what other technologies become viable in the meantime. Solar power cannot stop those coal-fired plants from being built today. Natural gas can.

Moreover, natural gas also heats buildings. As the graph below shows, it now accounts for 31 per cent of overall primary energy production, surpassing coal, at 26 per cent, while for solar and wind combined account for just 2 per cent.

Second, environmentalists worry about local risks, especially to water supplies. There are also fears of methane leaks and induced seismicity. Such concerns cannot be dismissed. It is not enough to proclaim that fracking should be safe if operators are responsible and regulators do their job.

One must consider the likelihood that in some under-regulated US state, someone will not act responsibly and some local water supply will become contaminated. The industry should follow best practices, including making public the chemicals that it uses. High-quality environmental and safety regulation – and vigorous enforcement – are essential.


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