The ‘Energy-Climate Challenge’ – the Natural Gas Solution

Mark Green
Posted July 13, 2016

John Holdren, director of the White House Office of Science and Technology Policy, had some important things to say at this week’s U.S. Energy Information Administration (EIA) conference – noting that fossil fuels will remain the world’s dominant energy for decades to come and that the idea of America leaving its oil and natural gas reserves in the ground is “unrealistic.” The first point is a fact-based projection by EIA. The second is a rational conclusion, given the first.

Now, on to something else from Holdren’s speech – his discussion of what he called the “energy-climate challenge.” Holdren:

“Without energy there is no economy, without climate there is no environment and without economy and environment there is no well-being, there’s no civil society, there’s no personal or national security, there’s no economic growth.”

The challenge – providing the energy we need in an environmentally responsible way – certainly is a complex task. The great news is the U.S. has found a model that provides both economic growth and advances climate goals: an abundant supply (thanks to fracking) of low-cost natural gas.

As we previously discussed here, the increased use of natural gas – mostly produced from shale reserves using safe hydraulic fracturing – has played a significant role in an historic decoupling of economic growth from rising carbon emissions, as the New York Times reported earlier this year.

The U.S. has an advancing, growing economy – and its carbon emissions have fallen. The fact is we’re leading the world in reducing carbon emissions, largely thanks to natural gas. EIA recently reported that U.S. energy-related carbon emissions in 2015 were 12 percent below 2005 levels even though the economy last year was 15 percent larger than it was in 2005:

EIA’s chart showing carbon emissions reductions by sector:

Back to Holdren. He said that however one defines the energy-climate challenge, technology will be an important part of the solution – a solution that advances key public interests including reduced energy costs, greater energy efficiency and increased manufacturing productivity. We’re seeing all of the above, thanks to natural gas and the U.S. energy revolution.

American consumers are benefiting from reduced household energy costs that are helping lower their  cost of living, EIA says:

U.S. energy efficiency, which EIA defines as “energy intensity” (energy consumption per unit of gross domestic product) is among the world’s leaders:

The U.S. manufacturing sector is being more productive, thanks to lower costs for the energy to run plants and for feedstock needed to produce a number of manufactured goods. An IHS report earlier this year for the National Association of Manufacturers:

In addition to the demand generated by energy-intensive sectors and the indirect and induced impacts on manufacturing, lower gas prices, from higher gas supply, that help to lower energy costs also increases employment and productivity, which results in a corresponding increase in personal income. From 2013 to 2015, personal income averaged 1.4% higher and households also spent less on electricity, which had the combined effect of greater spending on consumable goods and services. The overall impact on manufacturers across a broad swath of industries is positive.

The point is that in terms of Holdren’s energy-climate challenge, clean-burning natural gas is the leading answer. Natural gas is the heart of U.S. progress on reducing carbon emissions even as it fuels economic growth and benefits individual U.S. households. API President and CEO Jack Gerard:

“Today, our nation is the number one producer of oil and national gas on the planet. The dramatic reversal of the American energy landscape in just a few short years is not the product of government regulation, but instead industry innovation. In fact, this nation has achieved something no other nation on earth has accomplished so far: increasing energy production, a growing economy, albeit slowly, and reducing greenhouse gas emissions to near 20-year lows. This achievement, which we refer to as the U.S. model, serves as a real-world reminder of what this nation’s entrepreneurial spirit, unique system of government and private sector driven innovation and expertise can accomplish.”