In an interview with Oilprice.com, International Energy Agency (IEA) Executive Director Maria van der Hoeven, discussed what the IEA called back in 2011 “a golden age of gas”. This new era was ushered in by the scale of unconventional natural gas resources found in U.S. shale formations accompanied by the absolutely essential advances in technology that allowed their economic extraction. However, whether mankind can tap the full potential for a golden age of gas hinges on a big “if” as Ms. van der Hoeven emphasizes:
“Exploiting the world’s vast resources of unconventional natural gas holds the key to golden age of gas, we said, but for that to happen, governments, industry and other stakeholders must work together to address legitimate public concerns about the associated environmental and social impacts. Fortunately, we believe that unconventional gas can be produced in an environmentally acceptable way.”
This last part of her statement is the crux of the matter because – as she points out – “a golden age of gas does not necessarily imply a golden age for humanity, or for our climate. An expansion of gas use alone is no panacea for climate change. While natural gas is the cleanest fossil fuel, it is still a fossil fuel.” If the IEA’s central scenario of the World Energy Outlook (2013) comes to pass, natural gas production will rise by about 50% from 2011 levels to 4.98 trillion cubic meters (tcm) in 2035. As evidenced in the U.S., the drastic increase in natural gas production from shale formations has caused coal’s share of electricity generation to steadily decrease. Moreover, projections in the EIA’s Annual Energy Outlook 2014 (AEO2014) Reference case see natural gas-fired power generation replacing generation formerly supplied by coal and nuclear plants – with natural gas eventually surpassing coal around 2035.
Source: EIA – Annual Energy Outlook 2014 (AEO2014)
While everybody seems to be focusing on the fact – at least in the U.S. – that coal is being displaced by natural gas, Ms. van der Hoeven makes the point that “there is also the possibility that increased use of gas could muscle out low-carbon fuels, such as renewables and nuclear, from the energy mix.” This is a staunch reminder that those two fossil fuels – natural gas and coal respectively – are not inextricably linked and thus also do not indicate that humanity is on the ‘right’ trajectory to slow down global climate change. Unsurprisingly, it all very much depends on the entire energy mix within respective countries. The following graphic underscores Ms. van der Hoeven’s argument and illustrates that depending on the actual methane leakage – based on best to worst case scenarios for carbon dioxide emissions from power generation – methane leakage can move natural gas from solution to part of the problem.
Source: IEA – Strategic Challenges in Global Energy
In this regard, the Union of Concerned Scientists (UCSUSA) – expressing the same concerns – offers an interesting infographic titled “The Climate Risks of Natural Gas”.
Source: The Union of Concerned Scientists (UCSUSA)
The biggest ‘takeaway’ from this infographic is that it seems to be predicated on the almost linear assumption that while natural gas is eating away coal’s share in the energy mix, the reduced share of nuclear energy in the energy mix will largely be replaced with renewable energy sources. If true, those assumptions appear to be misguided given that nuclear is one of the world’s largest sources of low-carbon energy. Thus, the role nuclear power should play in a country’s energy mix needs to be at the forefront of any discourse about national energy policy and climate change. Ms. van der Hoeven underscores this in the interview by arguing that nuclear “has made and should continue to make an important contribution to energy security and sustainability. (…) as some phase-out plans envision the replacement of nuclear capacity largely with renewable energy sources (…), such a decision would also likely lead to higher demand for gas and coal, higher electricity prices, increased import dependency on fossil fuels and electricity, and a more difficult path towards decarbonisation. Such a scenario would therefore make it much more difficult for the world to meet the 2°C climate stabilisation goal, and have potentially negative impacts on energy security.” The following chart is instructive in this regard.
Source: National Center for Atmospheric Research; from Coal Seam Gas News
The above-described consequences are by no means hypothetical. Instead, it seems that as electricity prices increase and energy security weakens without nuclear power in their generation portfolios, decision-makers on energy policy in, for example, Germany and Japan, will need to reevaluate their energy strategies. It should also not come as a surprise if Australia as a major future LNG exporter – with the expansion of coal seam gas projects (CSG) – decides that nuclear energy is a valid option for reaching its set climate goals, particularly given the country’s vast uranium reserves. As such, fugitive greenhouse gas emissions from coal seam gas production in Australia, with more LNG projects scheduled to come on line over the medium term, will likely increase.
