U.S. Carbon Emissions on
by Joel Kirkland
President Obama mentioned climate change almost in passing during last night's State of the Union address, noting: "The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change."
But what Obama didn't mention is that declining energy consumption in a sluggish economy and well-placed regulations targeting air pollution and oil use are creating a more climate-friendly United States. Fuel-economy standards for gasoline guzzlers and the prospect that stable, cheaper natural gas supplies will speed closure of the nation's dirtiest coal-fired utilities are beginning to depress long-term projections for U.S. greenhouse gas emissions.
"They all point in the same direction. My view is that the U.S. is accomplishing something of significance," said Robert Stavins, director of the environmental economics program at Harvard University. "Other countries, European and the emerging economies, really want to see an ambitious domestic climate policy. Given our current politics, that's exceptionally unlikely."
The United States will still struggle to meet Obama's pledge during global climate talks to reduce emissions 17 percent from 2005 levels by 2020. But the latest long-term energy projections are painting a far sunnier picture than people had anticipated, coming two years after the United Nations' Copenhagen, Denmark, climate summit failed to produce a binding accord.
In an energy outlook this week, analysts at the U.S. Energy Information Administration (EIA) predicted a dramatic decline in U.S. energy demand through 2035 and a reconfigured energy pie that sidelines a significant amount of coal for natural gas. According to EIA, an arm of the Energy Department, carbon dioxide emissions tied to energy consumption flat-lines through 2035. By 2020, U.S. emissions into the atmosphere are projected to be 7 percent below their 2005 level of nearly 6 billion metric tons of carbon. By 2035, emissions are expected to still be below what they were in 2005.
Some experts think that could change if the U.S. economy picks up steam and industrial plants start humming again.
"Perhaps the Obama policies could drive us away from coal, but I think that's too optimistic," said Michael Wara, an environmental law professor at Stanford University. "The mix of coal and gas is going to shift in a way that lowers emissions in the near term. Then by 2020, it goes up again."
A slew of new coal-fired generators are coming online, he noted, and while those plants are sleeker and more efficient, they're still not nearly as clean as gas-fired turbines or renewable power sources.
"Some people had hoped -- or dreaded -- that pollution controls would accelerate a shift away from coal to gas. When you actually crunch the numbers, that's not really true."
Combination of economic trends and policies
Still, for now an array of Obama administration actions and economic trends are conspiring to cut emissions, according to EIA: Americans are using less oil because of high gasoline prices; carmakers are complying with federal fuel economy standards; electricity companies are becoming more efficient; state renewable energy rules are ushering wind and solar energy onto the power grids; gas prices are competitive with coal; and federal air quality regulations are closing the dirtiest power plants.
"Those will have profound effects on carbon dioxide emissions," Stavins said, "because they'll reduce investment in new coal and slow the use of existing coal."
Obama has taken heat from environmental groups for the perception that he hasn't done enough to address climate change. After passing the Waxman-Markey climate bill in the House in the summer of 2009 by a slim margin, the appetite in Congress and at the White House for a bruising Senate fight eroded. Elections sweeping Republicans into the House leadership set climate proposals on a path to nowhere in 2010 and 2011 as partisanship marginalized supporters of any federal bill aimed at cutting global warming pollution.
Part of Obama's solution, it appears, returns to natural gas. Last night, Obama plugged gas development and use more directly than he ever had before, bundling job growth, energy security and emissions reductions.
"We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy," he said.
The fast-moving drilling boom spreading across the Northeast and the middle part of the country has caused widespread public concern about water contamination, air pollution and earthquakes. Oil and gas companies developing fields in Pennsylvania, Ohio, Texas, Louisiana, Arkansas and North Dakota rely on a process called hydraulic fracturing, which produces natural gas by blasting water and chemicals into energy-rich rock formations deep underground.
But once it's produced, gas is a far cleaner fuel than coal for generating electricity. It generates fewer toxic pollutants and roughly half the greenhouse gas emissions as coal. U.S. EPA enforcement of air quality standards and the cheap price of natural gas are ushering in new investments in gas-fired power plants. And many analysts view gas as a growing piece of a puzzle of policy and economic factors that could keep U.S. carbon emissions in check through 2035.
Mixed reaction from gas groups
As drilling picked up over the past couple of years, the administration has straddled the line on natural gas. Obama has acknowledged the environmental concerns and asked his Energy Department to investigate, but his administration has been reluctant to impose new federal regulations. Doing so would upend the states' traditional role as the main regulator of oil and gas on privately held land, and perhaps choke off the gas needed to clean up dirty power plants.
Obama last night tried to meet environmental groups halfway, promising to require all companies that drill for gas on public lands to disclose chemicals they use.
"We are hard-pressed to believe that Obama's adoption of an 'all-of-the-above' rhetorical approach will build substantive bridges between Democrats and Republicans," said Christine Tezak, an analyst with Baird Equity Research, said in a note after the speech.
Obama also announced plans to expand access to 75 percent of the nation's potential offshore oil and gas sites.
Gas groups had mixed reactions. The Independent Petroleum Association of America called the administration's policies "harshly anti-oil and natural gas." America's Natural Gas Alliance, a Washington-based group aiming to boost gas consumption, said more gas demand means more jobs.
Until recently, lawmakers and the administration have been reluctant to use policy mechanisms to drive up gas consumption. The price of gas that trades on U.S. commodity exchanges has been famously volatile, and multiple spikes in the past decade have caused electricity prices to skyrocket.
Supply picture changed
What has changed during the President's first term is the supply outlook. Today, U.S. natural gas is trading at under $3 per million British thermal units, a rock-bottom price that's partly the result of a slower economy and the abundant new supply of shale gas. Low gas futures prices tied to contracts months and years out suggest traders believe estimates that put the nation's gas reserves at 40 percent higher than they were six years ago.
Still, supply and production estimates can change. Questions emerged last summer after the U.S. Geological Survey cut by nearly 80 percent estimates of recoverable gas in the Marcellus Shale, a sprawling gas formation in the Northeast. In its 2012 energy outlook, EIA slashed its estimate of unproved technically recoverable shale gas nearly in half to 482 trillion cubic feet, still a 20-year supply based on today's U.S. consumption.
Producers could also shift more drilling to crude oil, selling it for $100 a barrel, or gas liquids, a valuable oil-equivalent byproduct of gas used in chemicals and plastics production. Chesapeake Energy Corp., a top producer, has already started cutting production of cheap gas and strengthening its assets in oil-heavy fields.
Those supply issues and a surge in natural gas demand for fueling power plants and vehicles could drive up gas prices over time. More than 33 gigawatts of coal-fired electricity generation will be retired over the next couple decades, EIA said, pushing up demand for natural gas.
Obama plugged the federal government's role, with major oil and gas groups pressing the White House to confine regulations to federal lands and environmentalists equally as concerned about the president's commitment to renewable energy.
"By the way, it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock," Obama noted at one point in his speech.
"Our experience with shale gas shows us that the payoffs on these public investments don't always come right away," he added. "Some technologies don't pan out; some companies fail. But will not walk away from the promises of clean energy."
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