Climate Benefits of a Natural Gas Bridge 'Unlikely to be Significant'

Natural gas can only be a worthwhile bridge to a low carbon future if a series of tough conditions are met, according to a working paper from the influential New Climate Economy initiative.

The paper says the climate benefits of gas, including shale gas, could in theory be significant. It suggests a 10% increase in global gas supplies could prevent 500 gigawatts (GW) of new coal capacity being added by 2035, avoiding 1.3 billion tonnes of annual carbon dioxide (CO2) emissions.

But it warns that any theoretical benefits could easily be wiped out without controls on methane leakage, limits on total energy use and targets to ensure low-carbon energy sources are not displaced.

Replacing coal

The North American shale gas revolution has helped drive down emissions from US electricity supplies. The US shift from coal- to gas-fired power stations has been driven, though perhaps only in part, by market forces because fracking has made US gas cheaper.

The US example is often cited as evidence that gas can act as a lower-carbon bridge to a low-carbon future. Gas advocates argue it could help the world avoid new coal-fired power stations and close down old ones, halving carbon emissions per unit of electricity in the process.

For instance in a recent interview with Energy Post, Jérôme Ferrier, president of the International Gas Union says that gas, the "cleanest fossil fuel", can play a key role in limiting global warming. He says that the great challenge for the world is to move from coal to gas.

The new working paper, jointly authored by the New Climate Economy initiative and the Stockholm Environment Institute, questions the premise of the gas bridge.

First, it shows how emissions from relatively efficient "super-critical" coal plants can be halved with a switch to gas supplied through pipelines. In climate terms, this is the best-case scenario for added gas use, with each 1GW coal plant replaced by gas saving nearly 3 million tonnes of CO2 per year.

This means a 10% increase in global gas supplies could, in theory, replace around 500GW of new coal and avoid 1.3 billion tonnes of CO2 per year by 2035. In China, added gas could replace half the 200GW of coal capacity expected to be added from 2020 to 2035, avoiding emissions of 300 million tonnes per year by 2035.

These would be big climate benefits, though still small relative to current annual emissions of more than 30 billion tonnes.

Leakage rates

However, the benefits of a switch from coal to gas are reduced if it arrives as liquid natural gas (LNG) transported by ship, giving a 41% carbon saving rather than 49%, the paper says. The impact of methane leakage rates can be even greater, reducing the carbon saving to as little as 24%, or perhaps even increasing emissions under some high-leak estimates.

Even these savings will only materialise if coal is actually displaced by gas, and that depends on relative prices as well as access to gas supplies.

The paper says:

"It can be difficult to know with any certainty, even for gas introduced into the power sector, the extent to which coal rather than other resources might ultimately be displaced.  Important factors include the relative availability and price of natural gas compared with other fuels and energy sources in different sectors. Policies from local air pollution regulations to carbon pricing can also strongly influence how gas is used."

What happens if gas is used for heating, transport or industry instead of substituting for coal power? These uses have much lower climate benefits, the paper says, and in some cases will be worse than the alternative - for instance, if gas displaces low-carbon energy supplies such as nuclear or renewables.

The paper says gas-fuelled trucks may be worse for the climate than diesel, though the scientific literature "disagrees to some extent on this". Gas-powered cars, heating and industry have a small emissions benefit, it says.

Market effects

Leakage rates and the end-use of gas are both important to the climate impact it can have, but another factor is even more significant. If increased gas supplies reduce prices it is likely to boost energy consumption, reducing any climate benefits. This is described by the paper as a "scale" effect.

A related argument is that coal displaced by added US gas production pushed down prices on international markets and caused increased coal burn in European nations in the early 2010s, again offsetting emissions saving in the US.

So what is the net climate benefit of using natural gas as a bridge to a low-carbon future? Is it actually lower carbon than the alternatives? Taken together, leakage rates, the spread of sectors where gas is used as a substitute and market-mediated impacts on demand probably wipe out the expected carbon savings from using gas.

The paper says:

"Recent studies employing energy-economy models capable of reflecting all three effects - substitution, leakage, and scale - tend to come to similar conclusions: They find that both globally and for the United States, the increase in emissions from the [market-mediated] scale effect fully offsets the emission benefits from the substitution effect, net of methane leakage. As a whole, they suggest more abundant and less expensive natural gas supplies are, on their own, unlikely deliver a significant climate benefit."

Bridge to nowhere?

The question of whether gas is truly a bridge to a low-, or at least lower-carbon world, has been the subject of debate for several years now. The answer, as this new paper makes clear, is context specific. In the UK, where coal is already on the way out, there is probably rather limited space for additional gas supplies, in the context of legally-binding carbon budgets.

The International Energy Agency's 2C scenario sees new electricity-generating capacity around the world having emissions well below those from natural gas this decade, and near zero after 2020. This suggests there is little room for expanded gas power at a global level too.

Yet the new paper argues a gas bridge can still help lead us to a safer climate future as long as a series of additional "guardrail" policies are implemented. These must limit increases in energy demand caused by reduced gas prices, manage and reduce gas leakage rates, ensure added gas substitutes for coal in the power sector and prevent gas displacing nuclear or renewables.

Much more difficult, the paper warns, will be how to get off gas further down the road. If the world manages to use gas as a bridge, but fails to develop carbon capture and storage, then gas-related assets might end up stranded en route to a truly low-carbon future.

Simon Evans

Our thanks to the Carbon Brief