Is the US About to Accidentally Meet Kyoto Protocol Targets?
One of the reasons I moved to the Bay Area and came to Berkeley’s Haas School of Business was to get involved in the renewable energy industry. I have definitely had the opportunity to do just that, but I have never shared the disdain, disillusionment, or disregard for traditional fossil fuels that I sometimes see in my classmates. That is not meant to be an indictment of their passion for renewables. I mean, somebody needs to save the world from climate change.
Part of this is likely from a background different from many in California. I grew up in New Orleans surrounded by friends and relatives who worked in oil and gas. Wellheads and offshore oil platforms were not something you protested against – they were prime fishing spots. When you found a particularly productive one that could reliably produce keeper trout, you jealously guarded the coordinates on your GPS.
All of these factors have led me to follow the natural gas industry more closely than many of my classmates in and out of the business school. Recently, I was spurred to write this post during a discussion with a friend who was unaware of the enormous changes happening in US electricity generation and carbon emissions due to the availability of natural gas, primarily from shale.
Natural Gas Taking a Record Share of Electricity Generation
The chart below from the Energy Information Administration says it all. This is a profile of US electricity generation from fossil fuel sources. For the last 100 years, the vast majority of the country’s power has come from coal. That is now changing – and changing fast!
Alexis Madrigal at The Atlantic puts this into perspective:
“It’s worth noting that the raw numbers that underlie the percentages below are enormous, too. Each percentage point of share is roughly 40 million megawatt hours a year. By comparison, all solar projects in 2010 (the last year stats were available) produced 1.3 million megawatt hours.
The only comparable change in the electricity system occurred when nuclear power plants came online in the 1970s, but even that doesn’t match the speed that natural gas has gained generation share (I checked!). What we’re seeing in natural gas is truly a novel thing.”
What does this mean for CO2 emissions?
What I would like to tie this to, and what the title of this article references, is that the growth in generation share of natural gas has major implications on US carbon emissions. Natural gas emits approximately 50% of the CO2 of coal for a given unit of energy. That means the historic transition we are seeing in electricity generation is reducing US carbon emissions by a similar amount.
This transition started several years ago, and the US as well as the global climate have already been seeing the benefit. From 2006 through 2011, US emissions fell by 7.7%, the largest of any country. While the recession probably deserves some of the “credit,” natural gas is clearly taking the reins for 2012.
Watts Up with That? created the following chart from EIA carbon emissions data. Based on 2012 to-date, it looks like the US might actually reduce CO2 emissions below 1990 levels this year – the targets widely touted by the Kyoto Protocol. Admittedly, we are a few years late, but I think it bears recognition.
I am not arguing that these results indicate legislative action on climate change is unnecessary, but I do think they highlight how little we can predict of the future. Changes in technology can have drastic and unexpected consequences. I would be shocked if anyone anticipated these changes to our energy mix or reductions in carbon emissions even three or four years ago. Hopefully we can see a breakthrough in renewable technologies that can keep the trend moving in the right direction.
Please look for additional shale gas content at this year’s Symposium on October 19. I am helping organize the Shale Gas Panel, and it promises to be a good one!