Has shale gas really reduced US carbon emissions? The problem of coal exports
The diffusion of fracking has allowed the United States to significantly reduce its carbon emissions and to undergo a renaissance in manufacturing. Or so goes the conventional narrative of shale gas's many promoters. This narrative however faces multiple problems, and faces obvious criticisms of hype and exaggeration.
Vaclav Smil has extensively argued that the "renaissance" in American manufacturing is not worthy of the term. As Smil remarks: "In the past 12 years, America lost 7 million manufacturing jobs, and it got 400,000 back. Would you call that a renaissance? Definitely not. A renaissance is a glorious flowering beyond the previous state. The US will never regain those millions of manufacturing jobs. Never. Never."
That fracking has resulted in a decline in America's "on the books" emissions is something its proponents and opponents can agree on. Yet, a deconstruction of these emissions cuts in light of the rather obvious globalised nature of carbon emissions shows that these emissions cuts may in large part be illusory. In fact they may be as much as 50% lower than thought.
Carbon consumption versus carbon production
Here is the great contradiction in the Obama administration's apparent climate policy. America is to reduce its carbon emissions while simultaneously increasing its carbon extraction. Today US carbon emissions are at their lowest levels in almost two decades, yet the amount of carbon it extracted from the ground, in the form of oil, coal and natural gas, is now higher than ever. The peculiarities of international climate negotiations mean that what really matters, at least to negotiators, is the stuff that you burn in your country. Therefore the graph below is largely irrelevant to America's official carbon emissions. As I will explain later this is rather misguided.
Deconstructing the decline in US coal consumption
American coal consumption reached its historic peak in 2007, and has been in decline ever since. This decline is likely to be inexorable. New EPA rules will essentially rule out new coal power plants from being built, and the resulting reduction in coal consumption is unlikely to be offset by increases in coal consumption in America's manufacturing sector. This transition, away from coal and towards gas fired electricity generation, is one of the key reasons American carbon emissions are down about 12% from 2005 levels.
However this move away from coal is not being reflected elsewhere. Consider the United Kingdom. In 2012 it saw a 30% increase in the use of coal to generate electricity. This had three main causes: low carbon prices, more expensive natural gas, and cheaper coal. And the final cause is related directly to the diffusion of fracking in America. Reduction in internal demand for American coal has led to an increase in exports and a decline in international coal prices. This is reflected in the relative reductions in US coal consumption and production:
US annual coal consumption declined from 1,128 to 889 million short tons between 2007 and 2012, a fall of 238 million short tons or 22%. In contrast, annual US coal production fell from 1,147 to 1,016 million short tons in this period, a fall of 130 million short tons or 11%. This suggests that almost half of US coal consumption that has been displaced by natural gas has been exported. Lower certainly than some commentators have claimed, but not low enough to be easily dismissed.
Coal exports can be split into two categories: those that just replace coal that would be consumed elsewhere, therefore not increasing emissions; and those that result in more coal consumption in other countries. The increase in coal consumption in Europe (where coal is replacing gas) suggests that a significant amount of increased US coal exports, perhaps the majority, are of the latter category. The obvious conclusion is that the emissions reductions from US shale gas are over-stated if you focus purely on America's territorial emissions.
Fracking's emissions cuts: accounting for coal exports
So, how much has fracking really reduced US emissions? To answer this question I will de-construct a recent statement from a pro-shale gas report by the Breakthrough Institute: "It is not the case that reduced US coal consumption has been offset by increased exports of US coal. From 2008 to 2012, annual coal consumption for US electric power declined, on average, by 50 million tons. Over the same four years, annual exports increased by only 14.5 million tons on average." 14.5 million tons is certainly lower than 50 million tons, however this statement is overly dismissive of the coal export problem. We can see this by comparing the emissions saved by the reduction in coal use, and those from increased coal exports.
[A brief digression. Why is fracking reducing US emissions? Coal and natural gas power plants rarely run at maximum capacity. Their utilization rate, normally referred to as their load factor, is a result of the respective running costs. The decline in natural gas prices has resulted in gas power plants running more often, and coal plants less often. Gas power plants emit approximately half as much carbon dioxide per unit of electricity, therefore emissions have declined.]
Below is a graph of US coal exports since 2007.
Like most modernised countries the vast majority of US coal use is in the electricity sector (93% in 2012), and the trend in consumption in the electricity sector since 2007 looks like this:
We immediately face a base-lining problem. Between 2008 and 2012 coal consumption declined by 217 million short tons. If we use 2007 as our baseline the decline is 222 million short tons. However if we use 2008 as a baseline the increase in annual coal exports is 44 million short tones over this period, whereas using 2007 gives us a change of 67 million short tons.
The combustion of 1 short ton of coal results in the emissions of 2.86 short tons of carbon dioxide. Therefore, using 2007 as a baseline the increase in annual exported carbon dioxide in the form of coal is 173 million metric tonnes of carbon dioxide (3.2% of annual US carbon dioxide emissions), and 114 million metric tonnes of carbon dioxide (2.1% of annual US carbon dioxide emissions) if we use 2008 as our baseline. Gas power plants have carbon dioxide emissions per unit of electricity of 44-60% of those of coal plants. Therefore if we use 2007 as our baseline approximately 50% of the reduction in US emissions due to coal-gas switching is being offset by exports. The figure is 35% if we use 2008 as our baseline.
This calculation however rests on some uncertain assumptions. It assumes that all of the reduction in coal use were caused by increases in production from natural gas power plants. However, US electricity production declined 2.5% between 2007 and 2012, while wind power increased from 0.8% to 3.3% of electricity generation. Any attribution of reduction in carbon emissions due to fracking has an element of uncertainity attached to it. However this uncertainty is not enough to distract from the key conclusion that a significant amount of these emissions cuts are offset by exported emissions.
Experience has taught me that energy debates too often resolve themselves into vacuous pro/anti arguments therefore I will conclude by making some obligatory, but obvious statements. The above conclusions are in no way "anti-fracking." These problems are faced by renewables and nuclear energy in equal measure. No, the problem is not fracking, but an unwillingness to fully address carbon exports. That some fossil fuel cuts are partly illusory is obvious, if rarely stated. Think about Britain, which has successfully reduced its emissions, but offset almost all of these reductions by exporting them to countries such as China. And think again about whether one country using less coal, oil, or natural gas will have an obvious impact on carbon emissions. As Mike Berners Lee and Duncan Clarke argue in The Burning Question, you using less coal will result in that same coal being cheaper for someone else, who may then be inclined to use more of it.
So, the Obama administration appears to have a stance where the US should simultaneously increase carbon production, while decreasing carbon consumption. When viewed as serious climate policy this is complete mumbo jumbo. If we are to be serious about climate change then it is time we also be serious about carbon accounting.
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