• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Ci Logo

Climate Interactive

  • About
    • About
    • Who We Are
    • Partners & Funders
    • Work With Us
    • Donate
  • Our Work
    • Simulators & Science
      • En-ROADS
      • C-ROADS
      • Research & Insights
    • Experiences
      • En-ROADS Climate Workshop
      • Climate Action Simulation Game
      • World Climate Simulation Game
      • En-ROADS Guided Assignment
    • En-ROADS Ambassador Program
      • About the Program
      • Become an Ambassador
      • Meet our Ambassadors
    • Other Tools & Programs
      • The Climate Leader
      • Multisolving
      • Food Systems
      • Systems Thinking
  • Get Involved
    • Trainings
      • En-ROADS Training
      • En-ROADS Ambassador Program
      • The Climate Leader
    • Join an Event
      • Webinar & Event Schedule
      • Contact an Ambassador
      • Run an Event Yourself
  • Multimedia
    • Blog
    • Videos
    • Press
  • Support
    • Frequently Asked Questions
    • Community Forums
    • Contact Us
  • About Us
  • Staff
  • Partners & Funders
  • Work With Us
  • Donate
  • Simulators & Science
    • En-ROADS
    • C-ROADS
    • Research & Insights
  • Experiences
    • En-ROADS Climate Workshop
    • Climate Action Simulation game
    • World Climate Simulation game
    • En-ROADS Guided Assignment
    • Join an Event
  • Ambassador Program
    • About the Program
    • Become an Ambassador
    • Meet our Ambassadors
  • Other Programs
    • Multisolving
    • Systems Thinking
    • Climate Analysis
    • Food Systems
  • Blog
  • Videos
  • Press
  • Trainings
    • En-ROADS Training
    • En-ROADS Ambassador Program
    • The Climate Leader
  • Events
    • Event & Webinar Schedule
    • Contact an Ambassador
    • Run an Event Yourself
    • Register Your Event
  • Frequently Asked Questions
  • Community Forums
  • Contact Us

To hit the gas or not?: Natural gas and our energy future

February 3, 2012 By Ellie Johnston

Debate over whether to promote natural gas or not has been elevated across the country following President Obama’s State of the Union address where he made a strong call for natural gas development. Just yesterday, one of the nation’s largest and oldest environmental organizations, the Sierra Club, announced that it will no longer support natural gas. Below is a post from systems modeler and Climate Interactive partner, Tom Fiddaman, about some of the dynamics at play when considering gas as a transition fuel to low-carbon energy sources.

Gas – a bridge to nowhere?

Tom Fiddaman, February 3, 2012

NPR has a nice piece on the US natural gas boom.

Henry Jacoby, an economist at the Center for Energy and Environmental Policy Research at MIT, says cheap energy will help pump up the economy.

“Overall, this is a great boon to the United States,” he says. “It’s not a bad thing to have this new and available domestic resource.” He says cheap energy can boost the economy, and he notes that natural gas is half as polluting as coal when it’s burned for electricity.

“But we have to keep our eye on the ball long-term,” Jacoby says. He’s concerned about how cheap gas will affect much cleaner sources of energy. Wind and solar power are more expensive than natural gas, and though those prices have been coming down, they’re chasing a moving target that has fallen fast: natural gas.

“It makes the prospects for large-scale expansion of those technologies more chancy,” Jacoby says.

From an environmental perspective, natural gas could help transition our economy from fossil fuels to clean energy. It’s often portrayed as a bridge fuel to help us through the transition, because it’s so much cleaner than coal and it’s abundant. But Jacoby says that bridge could be in trouble if cheap gas kills the incentive to develop renewable industry.

“You’d better be thinking about a landing of the bridge at the other end. If there’s no landing at the other end, it’s just a bridge to nowhere,” he says.

(For those who don’t know, Jake Jacoby is not a warm-fuzzy greenie; he’s a hard line economist who leads a big general equilibrium modeling project, but also takes climate science seriously).

For me, the key takeaways are:

  • Gas beats coal, and may have other useful roles to play. For example, gas backup might be a low-capital-cost complement to variable renewables, with minor emissions consequences.
  • It’s better to have more resources than less.
  • Whether the opportunity of greater resources translates into a benefit depends on whether the price of gas accounts for full costs.

The last item is a problem. In the US, the price of greenhouse emissions from gas (or anything else) is approximately zero. The effective prices of other environmental consequences – air quality, pollution from fracking, etc. – are also low. Depletion rents for gas are probably also too low, because the abundance of gas is overhyped, and public resources were suboptimally over-allocated decades ago. Low depletion rents encourage a painful boom/bust of gas supply.

Not only physical assets are mispriced. Another part of the story is learning-by-doing, deliberate R&D, and economies of scale – positive feedbacks that grow the market for low-emissions technologies. Firms producing new tech like PV or wind turbines are only able to appropriate part of the profits of their innovations. The rest spills over to benefit society more generally. Too-cheap gas undercuts these reinforcing mechanisms, so gas substitutes aren’t available when scarcity inevitably returns, hence the “bridge to nowhere” dynamic.

Long-term renewable deployment in the U.S. is going to depend primarily on policy. Is there enough concern about environmental consequences to put in place incentives for renewable energy?

– Trevor Houser, energy analyst, Rhodium Group

They key is, what kind of policy? Currently, we rely primarily on performance standards and subsidies. These aren’t getting the job done, for structural reasons. For example, subsidies are self-extinguishing, because they get too expensive to sustain when the target gets too big (think solar feed-in-tariffs in Europe). They’re also politically vulnerable to apparently-cheap alternatives:

“If those prices hang around for another three or four years, then I think you’ll definitely see reduced political will for renewable energy deployment, ” Houser says

The basic problem is that the mindset of subsidizing or requiring “good” technologies makes them feel like luxuries for rich altruists, even though the apparently-cheap alternatives may be merely penny-wise and pound-foolish. The essential alternative is to price the bads, with the logic that people who want to use technologies that harm others ought to at least pay for the privilege. If we can’t manage to do that, I don’t think there’s much hope of getting gas or climate policy right.

Primary Sidebar

Blog

Categories

  • Analysis
  • Blog
  • Business Focus
  • C-ROADS
  • En-ROADS
  • Equity
  • Examples of Multisolving
  • Featured
  • Food Systems
  • Event Type
  • Multisolving
  • Multisolving in Action
  • Multisolving Leaders
  • The Climate Action Simulation game
  • The En-ROADS Guided Assignment
  • Asia & Middle East
  • Africa
  • Uncategorized
  • World Climate Simulation

Footer

  • Explore
    • Home
    • Updates
    • Our Work
  • Connect
    • Support
    • Contact
    • FAQ
  • Get Involved
    • Training Program
    • Join an Event
    • Donate
Social Media
FacebookLinkedInTwitterYouTube

    Get Updates

    I accept having my information collected.* Privacy Policy.

    ⟶

    • Languages
    • Español
    • Português
    • Français
    • Deutsch
    Climate Interactive
    • © 2022 Climate Interactive
    • Privacy Policy