The People of America's Oil and Natural Gas Indusry

America’s Climate and Energy Success Story

Mark Green

Mark Green
Posted December 1, 2015

This week’s climate summit in Paris will be filled with talk of ways to reduce global greenhouse gas emissions. That’s an important discussion for sure, but it’s one that should focus on achievable, real-world initiatives. A couple of starting points for an action agenda:  

The first is an acknowledgement – that the availability of safe, reliable energy is fundamental to lifting people – and entire nations – from poverty.  United Nations Secretary-General Ban Ki-moon has called energy the “the golden thread that connects economic growth, social equity, and environmental sustainability.” With the International Energy Agency telling us that more than a billion people around the world don’t have electricity, it would be a mistake for the Paris summit to do anything that impedes or blocks access to energy. The world needs more energy, not less.

The second point a realization by the summiteers that private markets, not command-and-control government interventions, offer the best avenue to advance climate objectives while growing energy supplies – progress without hamstringing economies and hindering individual opportunity. API President and CEO Jack Gerard:

“More than a billion people around the world lack access to electricity and face a daily challenge for adequate food and education, clean water, protection from heat and cold and efficient transportation. To rise out of poverty and enjoy the health and safety many Americans take for granted, these developing nations need more energy, not less.”

Yes, we can do both: We can pursue climate goals and increase production of the energy that plays a large role in ameliorating poverty – the same energy that powers economies and supports modern daily living. We must do both. 

Without safe, reliable energy life’s a struggle. Energy is essential for clean water, to heat and cool homes and to safely prepare a warm meal. Energy means mobility – transportation and also the ability to improve one’s standing in society. Energy is linked to life itself. Look at the way the increase in global life expectancy

 england


Mirrors the growth in global energy use:

World Energy Use


The good news is that climate progress and increased energy development aren’t mutually exclusive. In the U.S., oil and natural gas supplied 63 percent of the energy Americans used in 2014, and the U.S. Energy Information Administration projects they will furnish 63 percent of the energy used in 2040:

supply


Oil and natural gas also serve as the feedstocks for everything from the plastic in our cellphones to the materials in heart valves, guitar strings, football helmets and more. So, as we think about these energy sources that Americans actually choose and use every day, the challenge is to reduce emissions even as we meet our energy needs well into the future.

And this is happening: America’s energy revolution is, in fact, playing a significant role in lowering U.S. emissions – at a time of GDP growth. According to EPA’s greenhouse gas emissions inventory, the U.S. has reduced greenhouse gas emissions to 18-year lows. A key factor is rising natural gas use resulting from an American energy renaissance built on shale reserves and safe hydraulic fracturing and horizontal drilling. From 2005 to 2013, domestic production of dry natural gas increased 34 percent while U.S. production of crude oil rose 43.8 percent. During that same period emissions from natural gas and petroleum systems fell 3.54 percent:

co2_change

We also can compare U.S. carbon emissions to those in the world’s top 20 economies. We’re second to none in reducing greenhouse gas emissions from energy:  

economies

Digging a little deeper, we see that U.S. industries have gotten better at managing their own energy use. One strategy involves heat and power technology that turns waste heat into energy, reducing energy consumption and emissions. Again, EPA data show that greenhouse gas emissions from U.S. industry, including oil and natural gas companies, have declined and are actually below 1990 levels:

econ_sectors

Also remarkable: While this was occurring, U.S. population grew from 248.7 million to 316.5 million, and the economy (GDP) grew from $5.9 trillion to $16.77 trillion:

percapita_gdp

Oil and natural gas companies also are expanding use of alternative energy with lower greenhouse emissions. They’re researching, developing and/or marketing virtually every form of renewable or alternative energy, including solar power, biofuels, geothermal energy and wind power. They’re working with automakers and government agencies on new fuel/vehicle technology such as fuel cells and hydrogen power. While companies must continue to meet consumer demands today and tomorrow for oil and gas, they’re also contributing to a future in which alternatives will play a more significant role.

Meanwhile, companies are reducing natural gas flaring to cut emissions (while also adding to energy supplies) and storing CO2 underground, where it can be safely held for thousands of years. The oil and gas industry has also been implementing new emissions estimation and tracking tools to enable it to assess how well it is meeting the goals it has set for itself and report progress to the public.

We see similar results with methane. Because methane is the major component in natural gas, containing it allows more of the product consumers want to be delivered to them. Recent EPA data shows that initiatives by producers to capture methane are working. Since 2011 methane emissions from petroleum and natural gas systems fell 13 percent. Over that same time period emissions from completions and workovers of hydraulically fractured natural gas wells decreased 83 percent. This is occurring as natural gas production continues to rise:

methane

The fact is the oil and natural gas industry is doing its part to reduce greenhouse gas emissions. Since 2000, industry has invested $90 billion in emissions-reducing technologies, according to a study by T2 Associates – nearly as much as the rest of U.S.-based private industries and more than double the amount invested by each of the next three industry sectors: the automobile industry ($38.2 billion), the electric utility industry ($37.1 billion) and agriculture ($13 billion):

ghg_investments

More indicators that industry is leading in terms of investments in emissions reduction:

  • Since 2000, industry has spent nearly $25 billion developing substitute and less carbon intensive fuels, such as liquefied natural gas, while also reducing fugitive gas emissions. Industry’s investment in fuel substitution technologies represents 53 percent of the total invested by private industries and the federal government in this technology class.
  • Industry has invested nearly $15 billion in non-hydrocarbon technologies – including, wind, solar, biofuels, geothermal and landfill digester gas – since 2000, accounting for 17 percent of the total industry and federal government investment in this technology class.
  • Industry has invested $50 billion for advanced end-use technologies – efficiency improvements, carbon capture and storage and advanced technology vehicles – representing 30 percent of the total industry and federal government investment in this technology class.
  • Since 2000, industry has invested nearly $3 trillion in U.S. capital projects to advance all forms of energy, including alternatives, while reducing the industry’s environmental footprint.

What we see here are the outlines of a workable, scalable approach to tackling climate objectives while also sustaining and growing energy production. Gerard calls it the “U.S. model,” one that has everything to do with government restraining itself and letting market forces work.

This contrasts with the model that’s being illustrated in the administration’s Clean Power Plan, which ignores the natural gas success story in the U.S. and pushes power plants to adopt sources like wind and solar. All energy sources have a role to play in supplying America’s energy needs. But using regulatory authority to benefit one power source over another in electricity generation could stifle innovation, destroy jobs and raise energy bills for those who can least afford it.

EIA data shows that natural gas is the prime power source in 11 of the 22 states with below-average emission rates. An additional eight states in this group rely on natural gas to deliver more than 20 percent of electricity consumed:

states_natgas

In the 25 states with above-average emission rates, targeted switching to natural gas could reduce emissions below EPA goals:

states

Again, this points to the wisdom in letting private markets work. The U.S. model works. You can have emissions reductions in the midst of an energy revolution and when there’s population and economic growth. It’s a demonstration of the power of markets that should be the centerpiece of discussion in Paris. Gerard:

“Achieving an agreement between more than 190 nations will mean overcoming competing and conflicting national priorities and vested economic interests. There should be no place for dogmatic adherence to ideology. But rather science, economic reality and real-world proven results should guide the delegates’ deliberations. To that end, the U.S. has an opportunity to lead and to showcase how America’s free market has already taken the lead on reducing greenhouse gas emissions, even as we increase economic activity and domestic energy production to keep energy reliable and affordable for all consumers. Our success is driven, not by government mandate or legislative fiat, but through innovation, investment and entrepreneurial spirit.” 

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.