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natural gas & the US energy transition

The U.S. position in natural gas is a crucial asset in making America’s energy transition both feasible and at a competitive cost across a range of carbon reduction scenarios, at least through 2030. Natural gas can replace up to 50% of the existing coal capacity by 2022 at lower cost, providing significant economic and carbon benefits, regardless of other climate policies. (Source: Harvard Business School & BCG "Americas Unconventional Energy Opportunity")

EPA Administrator Gina McCarthy put it well in April 2015 when she said, “[Fracking] has changed the game for me in terms of how the energy system is working. The inexpensive gas that’s being produced has allowed us to make leaps and bounds in progress on the air pollution side and, frankly, to make the Clean Power Plan.”

A recent report by the Massachusetts Institute of Technology (MIT) found that in the U.S., a combination of demand reduction and displacement of coal-fired power by gas-fired generation is the lowest cost way to reduce CO2 emissions. For more stringent CO2 emissions reductions, further de-carbonization of the energy sector will be required; but natural gas provides a cost-effective bridge to such a low-carbon future.

The MIT study concluded that over the past few years, the U.S. has developed an important new natural gas resource that fundamentally enhances the nation’s long-term gas supply outlook. Given an appropriate regulatory environment, which seeks to place all lower carbon energy sources on a level competitive playing field, domestic supplies of natural gas can play a very significant role in reducing U.S. CO2 emissions, particularly in the electric power sector. This lowest cost strategy of CO2 reduction allows time for the continued development of more cost-effective low or zero carbon energy technology for the longer term, when gas itself is no longer sufficiently low carbon to meet more stringent CO2 reduction targets. The newly realized abundance of low cost gas provides an enormous potential benefit to the nation, providing a cost effective bridge to a secure and low carbon future. It is critical that the additional time created by this new resource is spent wisely, in creating lower cost technology options for the longer term, and thereby ensuring that the natural gas bridge has a safe landing place in a low carbon future. (Source: MIT Study on the Future of Natural Gas - http://mitei.mit.edu/system/files/NaturalGas_Report.pdf)