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John M. Reilly

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Natural Gas, Coal, and Climate

Posted: 05/20/11 12:38 PM ET

Contributing writers:

Henry Jacoby, Professor of Management
Ronald Prinn, Professor of Atmospheric Science
Richard Schmalensee, Johnson Professor of Economics & Management

Recent research has shown that over the next few decades an effective U.S. climate policy to significantly reduce greenhouse gas emissions would rely on extensive reductions in energy use and substitution of natural gas for coal in power generation. The second pathway -- gas-for-coal -- is premised on the fact that natural gas, when combusted, produces 50 percent lower CO2 emissions than coal.

A recent paper by Cornell Professor Robert Howarth and others in Climatic Change Letters calls the gas-for-coal solution into serious question, suggesting that natural gas power generation is twice as greenhouse gas (GHG) intensive as coal. Howarth bases this conclusion in part on his assessment of methane leakage in the production stages of natural gas, with a specific focus on new methods to produce unconventional shale gas.

Natural gas is primarily methane. There are methane leakages at different stages of the production process, as well as CO2 emissions when natural gas is burned to generate electricity. Methane is a powerful GHG but, unlike CO2, which resides in the atmosphere for over a century, methane lives in the atmosphere for around a decade.

The Howarth study raises some legitimate questions about the uncertainties surrounding associated estimates of methane emissions -- but Howarth's conclusions depend on a couple of unsound assumptions.

First is the metric Howarth used to compare the warming impact of methane to that of CO2. This can be a complex calculation, because there are several different kinds of GHGs with different life spans and varying impacts on the climate.

To make a comparison among these different GHGs, whose lifetimes can range from a few to thousands of years, the "global warming potential" (GWP) concept was developed in the 1990s. In general, policymakers have focused on GWPs calculated over a 100-year period, although the Intergovernmental Panel on Climate Change (IPCC) also calculated GWPs over 20- and 500-year periods.

The choice between 20-, 100-, or 500-year GWPs comes down to whether one wants to measure the near-term impacts of global warming or the longer-term impacts. Choosing an index based on 20 years, as Howarth has done, largely ignores serious longer term risks of climate change, masking the urgent need to immediately start controlling those GHGs that will remain in the atmosphere for hundreds to thousands of years.

Howarth's choice threatens to tilt critical policies away from some of the more dangerous risks we face in the longer term, focusing us instead on near-term and largely manageable gas production methane leakage. For these reasons, his choice of the 20 year GWP is outside the norm -- indeed, EPA, DOE, the California Air Resources Board, and others routinely use the 100 year GWP in their policy analysis.

Howarth also assumes a gas power generation efficiency as low as 28 percent. That figure can be misleading, because it applies not to the "base-load" generation units that would compete with coal to meet the consistent daily electricity demand of consumers, but to "peaking units" which help meet variable demand in electricity. Peaking units have relatively low efficiencies, in the range suggested by Howarth.

Natural gas base-load units have efficiencies in the 40-54 percent range, compared to 30-35 percent for the current fleet of coal plants. The higher the efficiency, the less CO2 is emitted for every kilowatt hour of electricity produced.

Recalculating the gas-coal comparison using Howarth's methane emissions figures -- but sticking with the 100-year GWP and more accurate gas unit efficiencies -- shows roughly 50 percent lower greenhouse gas emissions from natural gas generation compared to coal generation.

Finally, it is important to recognize that methane leakage from natural gas production is wasted product with economic value: gas producers have a financial incentive to capture this methane. And ideally, climate policy through a GHG price would penalize methane leakage, providing producers with additional incentives for capturing methane.

Reduced energy use and coal-to-gas substitution could provide a bridge to a low carbon future, enabling us to move forward on climate change mitigation while we continue critical research on other more advanced technologies. Energy alternatives require close scrutiny for their range of impacts on the environment -- the environmental effects of shale gas are no exception.

It would, however, require much more compelling evidence and analysis to persuade us that we should actually use more coal and less natural gas power generation, a logical conclusion from Howarth's paper. Calculations that test conventional wisdom are important in driving further scrutiny. The preponderance of the evidence, however, continues to support the conclusion that substitution of gas for coal in power generation is an important component of a sensible and effective near-term climate change policy.