The natural gas industry should start backing a price on carbon
emissions, the head of a Massachusetts Institute of Technology study on the
future of natural gas said Friday.
While the two-year study found that US gas consumption will nearly double
to 40% by 2050 without a carbon policy, to capitalize on the US's resurgent
gas reserves while lowering CO2 emissions will require a price on carbon, the
study said.
The study found that with both a carbon price and a goal to reduce CO2
emission 50%, gas' share of the market will peak at 40% in 2040, before
declining gently as it is replaced by wind, solar and other alternatives.
"A carbon dioxide price for all fuels without long-term subsidies or
other preferential policy treatment is the most effective way to achieve" the
result of leveraging US gas supplies to lower US carbon emissions, the MIT
study said.
"It's the biggest issue in energy," study chairman Ernest Moniz, of MIT's
Energy Initiative said at the report's rollout in Washington, as he challenged
the gas industry to support either a cap-and-trade scheme or a carbon tax.
Moniz noted that his group's report, which took two years and the efforts
of 30 MIT faculty and graduate students to complete, doesn't study the impacts
of one pricing scheme over another. Nor does the report examine specific
carbon prices, only low, medium, and high emissions scenarios.
In addition to confirming that the US has roughly 100 years of
recoverable gas reserves in the ground, mainly because of new shale
discoveries, it found the rest of the world has about 160 years' worth of gas,
all from conventional sources because unconventional extraction techniques
haven't migrated far beyond North America.
Even without a price on carbon, gas use will increase, particularly in
power generation, as newer gas plants replace older coal-fired plants, as
industrialized nations strive to cut their carbon dioxide output 50%.
While gas industry trade groups praised the study, few took a position
on the study's primary recommendation -- that carbon emissions need to be
priced.
"As the report notes, greater use of our nation's vast domestic supplies
of natural gas for power generation can cut carbon dioxide emissions from the
power sector by 10% in the near term and lead to reductions in other
pollutants such as mercury," America's Natural Gas Alliance CEO Regina Hopper
said Friday. After the study's release, her spokesman declined to discuss
the report's finding on carbon pricing.
But American Clean Skies Foundation CEO Gregory Stales said in an
interview that his group believes "putting a price on carbon will let gas
achieve its promise."
Clean Skies helped fund the MIT study. The foundation's chairman, Aubrey
McClendon, is also chairman of the board and CEO of the US' top gas producer,
Oklahoma City-based Chesapeake Energy.
"Carbon dispatch," a scheme whereby power generators are dispatched in
order of increasing emissions as opposed to price, is another area where
natural gas can help meet carbon goals, the study said.
Using the Electric Reliability Council of Texas as an example, the study
found that CO2 emissions would fall 22% if ERCOT required the dispatch of
lower-carbon gas plants over coal. Nationwide, the study said, carbon dispatch
would probably lower carbon emission by 10%.
The study also recommended further government support of research into
both shale plays and methane hydrates, noting that the current shale boom was
born and nurtured by research funded by the industry and tax incentives.
Further research into shales is needed, study co-chair Tony Meggs, an
MIT visiting engineer said, because there is still "a lack of understanding of
what is happening in the subsurface."
Shale producers are recovering 25% of the potential gas in shale plays,
Meggs said, "but we still don't know if it's being developed optimally."
Around the world, Meggs said, shale resources are still posing the
questions: "How much is there? Will it be productive?" Questions that are best
answered by sustained research, Meggs said.
"What is the shale gas of the future," Meggs asked an audience of
reporters, industry executives and academics. "Hydrates, I'd say. I could be
back here in 10 years saying, 'hydrates.'"
Methane hydrates, or methane locked in ice, are believed to be located
around the world in sea-floor sediments and permafrost. The US Department of
Energy's Oak Ridge National Laboratory said estimates on how much energy is
stored in methane hydrates range from 350 to 3,500 years' supply.
--Bill Holland, bill_ holland@platts.com
emissions, the head of a Massachusetts Institute of Technology study on the
future of natural gas said Friday.
While the two-year study found that US gas consumption will nearly double
to 40% by 2050 without a carbon policy, to capitalize on the US's resurgent
gas reserves while lowering CO2 emissions will require a price on carbon, the
study said.
The study found that with both a carbon price and a goal to reduce CO2
emission 50%, gas' share of the market will peak at 40% in 2040, before
declining gently as it is replaced by wind, solar and other alternatives.
"A carbon dioxide price for all fuels without long-term subsidies or
other preferential policy treatment is the most effective way to achieve" the
result of leveraging US gas supplies to lower US carbon emissions, the MIT
study said.
"It's the biggest issue in energy," study chairman Ernest Moniz, of MIT's
Energy Initiative said at the report's rollout in Washington, as he challenged
the gas industry to support either a cap-and-trade scheme or a carbon tax.
Moniz noted that his group's report, which took two years and the efforts
of 30 MIT faculty and graduate students to complete, doesn't study the impacts
of one pricing scheme over another. Nor does the report examine specific
carbon prices, only low, medium, and high emissions scenarios.
In addition to confirming that the US has roughly 100 years of
recoverable gas reserves in the ground, mainly because of new shale
discoveries, it found the rest of the world has about 160 years' worth of gas,
all from conventional sources because unconventional extraction techniques
haven't migrated far beyond North America.
Even without a price on carbon, gas use will increase, particularly in
power generation, as newer gas plants replace older coal-fired plants, as
industrialized nations strive to cut their carbon dioxide output 50%.
While gas industry trade groups praised the study, few took a position
on the study's primary recommendation -- that carbon emissions need to be
priced.
"As the report notes, greater use of our nation's vast domestic supplies
of natural gas for power generation can cut carbon dioxide emissions from the
power sector by 10% in the near term and lead to reductions in other
pollutants such as mercury," America's Natural Gas Alliance CEO Regina Hopper
said Friday. After the study's release, her spokesman declined to discuss
the report's finding on carbon pricing.
But American Clean Skies Foundation CEO Gregory Stales said in an
interview that his group believes "putting a price on carbon will let gas
achieve its promise."
Clean Skies helped fund the MIT study. The foundation's chairman, Aubrey
McClendon, is also chairman of the board and CEO of the US' top gas producer,
Oklahoma City-based Chesapeake Energy.
"Carbon dispatch," a scheme whereby power generators are dispatched in
order of increasing emissions as opposed to price, is another area where
natural gas can help meet carbon goals, the study said.
Using the Electric Reliability Council of Texas as an example, the study
found that CO2 emissions would fall 22% if ERCOT required the dispatch of
lower-carbon gas plants over coal. Nationwide, the study said, carbon dispatch
would probably lower carbon emission by 10%.
The study also recommended further government support of research into
both shale plays and methane hydrates, noting that the current shale boom was
born and nurtured by research funded by the industry and tax incentives.
Further research into shales is needed, study co-chair Tony Meggs, an
MIT visiting engineer said, because there is still "a lack of understanding of
what is happening in the subsurface."
Shale producers are recovering 25% of the potential gas in shale plays,
Meggs said, "but we still don't know if it's being developed optimally."
Around the world, Meggs said, shale resources are still posing the
questions: "How much is there? Will it be productive?" Questions that are best
answered by sustained research, Meggs said.
"What is the shale gas of the future," Meggs asked an audience of
reporters, industry executives and academics. "Hydrates, I'd say. I could be
back here in 10 years saying, 'hydrates.'"
Methane hydrates, or methane locked in ice, are believed to be located
around the world in sea-floor sediments and permafrost. The US Department of
Energy's Oak Ridge National Laboratory said estimates on how much energy is
stored in methane hydrates range from 350 to 3,500 years' supply.
--Bill Holland, bill_ holland@platts.com
