"When you’ve got nowhere to turn, turn on the gas."
One of the great geological controversies of centuries past was the battle between the Plutonists and Neptunists over the origins of Earth’s surface. The Plutonists, who had Thomas Huxley on their side, asserted that rocks such as basalt and granite erupted in a molten state from deep within Earth, and that the other rock types, such as sandstone and slate, were derived from their breakdown and re-deposition as silt and mud. The Neptunists, who counted Goethe among their number, believed that Earth was originally covered in ocean, and that all rocks were formed as deposits on the floor of the ancient seas. By the mid-nineteenth century the matter had been all but settled in the Plutonists’ favour. But then in 1912, Randolph Kirkpatrick, a curator of corals at the Natural History Museum in London, published a bombshell which re-ignited the debate.
In his book "The Nummulosphere," Kirkpatrick argued that the entire planet consisted of fossilised fragments of extinct foraminifera of the genus Nummulites. Foraminifera are amoeba-like organisms that live in the sea. Their supposedly universal distribution in rocks of all types was, Kirkpatrick argued, clear proof that the Neptunists were correct.
Kirkpatrick’s idea is not as entirely as crackbrained as it sounds. He had noticed that the Egyptian pyramids were made of Nummulites’ skeletons similar in size and shape to a dime (nummulite being derived from a Latin word meaning little coin). In fact Nummulite fossils abound in rocks across vast swathes of Asia, north Africa and Europe. But Kirkpatrick claimed that he could see them in basalts and granites as well—rocks in which no fossils had ever been found.
Many a scientist, after spending thousands of hours peering down a microscope at some repeated shape, is familiar with the phenomenon of seeing that shape ad nauseam on blank walls, and endlessly in dreams. Perhaps this is what happened to Kirkpatrick. Strangely enough, one of Kirkpatrick’s colleagues, Otto Hahn—a German lawyer turned Swedenborgian and amateur petrologist—had been staring at other things. He claimed that all the world’s rocks were in fact formed from the fossilised remnants of an ur-forest of algae. In accordance with his Swedenborgian beliefs, he asserted that algal fossils were present in meteorites, so the ancient algal forests must have originated in outer space.
Among the tiny filaments of the fossil algae, Hahn said he spied the remains of a minute triple-jawed worm. This he named Titanus bismarcki, in honour of the German Chancellor. Kirkpatrick was irritated both by the name and the challenge to his theory. But soon, the whole scientific storm in a teacup was forgotten, and the Plutonists again reigned supreme. I sometimes think of Kirkpatrick and Hahn when I read the works of economists, business leaders and politicians as they discuss the future of gas. We often see what we want to see, and nowhere is this more evident than among analysts and investors who believe that gas is our energy future.
Until the plunging oil price distracted analysts, the debate about gas played out endlessly in the financial pages of the world’s newspapers. The extraordinary boom in the shale gas industry, beginning around 2000, seemed to open endless possibilities. Will gas replace coal? Will oil from shale gas extend the fossil fuel era for transport? And will cheap gas delay the adoption of renewables in energy generation? Shale gas already accounts for 40 per cent of US natural gas production and 29 per cent of oil. As of 2014, most shale gas reserves were being drilled in the US. The sale of condensates alone provides a profit when the resource is exploited, so the gas can then be sold for next to nothing. This cheap gas has not only driven coal from the market, but helped rejuvenate the American economy, laying the basis for energy independence and the return to the US of large-scale chemical and manufacturing industries that had been moving offshore for decades. But the question of how big the future of gas might be remains.
In the early 2000s, at the start of the shale gas boom, gas was seen as a temporary energy bridge to a renewables-based future. Yet some analysts now believe that gas is here to stay. Oxford University’s Dieter Helm, for one, sees a huge future for gas. In his 2012 book "The Carbon Crunch" he argues that gas will provide a bridge to a distant renewables future that is at least decades away. His basic message is that gas will remain cheap and abundant in many parts of the world, while renewables such as wind and solar will remain expensive and constrained by their intermittent nature.
New energy technologies are developing so fast that it’s already possible to test some of Helm’s claims. First, is ‘tight’ gas (gas that typically requires fracking or a similar intervention to recover, of which shale gas is one type) widely available, and will it stay cheap? Wells drilled to exploit shale gas remain productive for only one to three years. The regular drilling of new wells adds to cost. Then there is the impact of the slump in oil prices, paradoxically created in part by fracking. As we’ve seen, it may threaten some fracking, and thus the expansion of production of this kind of gas. In addition, public resistance to fracking, particularly outside the US, has stalled the industry in several areas.
Then there are the unanticipated outcomes. In October 2014, the price of gas in Queensland (most of which is ‘tight’ gas from coal-seams) was close to zero. That’s because the industry was in the ‘ramp-up phase.’ It had production, but no capacity, as yet, to export its product. You would think that companies in this situation would simply turn off their production. But that has proven impossible to do because the wells flood and cannot be restarted. It’s a surprise that will cost many millions of dollars, as otherwise useable gas is flared off or vented. So, while gas continues to boom, unanticipated problems are beginning to manifest themselves, dampening to some extent Helm’s enthusiasm.
When it comes to renewables, the problems with Helm’s predictions are even clearer. Helm seems to hate wind turbines as a blot on the landscape. And wind power, he says, is hopelessly uneconomical, with little prospect for any significant cost reductions or technological innovation. Yet in 2014 the world invested US$310 billion on installing clean energy, including a record $99.5 billion for wind, owing to several ‘mega’ onshore and offshore wind projects. In 2004 the world was spending just US$60 billion overall on clean energy. Investments have grown fivefold in a decade. As we shall see when we examine the renewable energy industry, not only have innovation and cost reduction occurred on a massive scale in the wind industry, but they are accelerating sharply. According to Helm, solar is hopelessly expensive. But its cost has dropped, on average, to about twice that of coal, and in areas with good sunlight resources it is already cost-competitive with coal. Solar is anticipated by some to be globally competitive with coal by 2020.
Those aware of the advances in clean technology have a different take from Helm, and are much less optimistic on the fracking craze. Dr Jiang Kejun, director of the Energy Research Institute/National Development and Reform Commission (ERI/NDRC), China, believes that the rush to gas is all about getting it out of the ground before it becomes uncompetitive with renewables. It’s not a view often heard in the US, but gas and renewables are already competing in the marketplace, and the most cost-effective technology will ultimately prevail.
So, is gas our bridge to the future? A spate of recent analyses predictably come up with different answers. Ezra Levant’s "Groundswell: The Case for Fracking" is an unapologetic glorification of gas, arguing that fracking is the most important innovation of the twenty-first century. Levant reveals that fracking has economic, geopolitical, environmental and patriotic aspects—which makes it complicated to evaluate objectively.
One attempt at a more objective approach is Bill Powers’ "Cold, Hungry and in the Dark: Exploding the Natural Gas Myth Supply." Using a detailed analysis of gas-well performance, he argues that US gas is headed for a ‘deliverability crisis’ by 2015. In other words, there will be a gas shortage. But, whatever its immediate or even medium-term future, there’s no doubt that gas is having a significant impact right now. A big enough impact, in fact, to cause some to doubt the short-term future of renewables. As David Crane, President of NRG Energy, which builds both gas and renewable power plants, said, ‘cheap gas has definitely made it harder to compete’, adding that only with renewable energy subsidies were companies able to propose wind projects below the price of gas.
But continuous improvements in renewables are closing the gap, according to a panel of researchers at the Windpower 2014 conference:
Advances in materials have allowed the design of longer turbine blades and rotors that can operate efficiently at lower wind speeds. Since 2012, a ‘massive proliferation’ of these turbines has driven average capacity factor increases up by 10 per cent at every level of wind resource. As a result of these advances, costs are falling; preliminary data shows that the average 2013 power purchase agreement was at $0.021 per kilowatt-hour.
The economics of wind and gas are complex. Both have a global average cost of about US$84 a megawatt hour of generation capacity to install, excluding subsidies, according to Bloomberg New Energy Finance. That’s 3 per cent higher than the cost of a coal-fired power plant, and about half that of a nuclear reactor if government takes on the insurance and other risks. In the US, federal subsidies for wind are worth US$23 per megawatt. But gas projects can take advantage of complex taxation arrangements, known as ‘master limited partnerships’, that allow pipeline operators to pay less income tax. This effectively acts as a subsidy, which helps drive down the cost of gas.
The economics of both wind and gas are affected by geography. The best wind resources in the US are in south Texas, where wind farms can be built for US$60 a megawatt hour, which is less than the $65 price of a high-efficiency gas turbine, according to New Energy Finance. But there are hundreds of other variables that help determine whether a utility invests in gas or wind.
And there are other players. For example, in April 2014, Austin Energy, Texas, signed a 25-year purchase agreement contract with a 150-megawatt solar plant. The cost? Less than 5 cents per kilowatt hour. As one analyst reflected:
The price reflects the benefit of the federal investment tax credit, but even without the credit the price would be 7 to 7.5 cents/kWh—still competitive with the utility’s cost estimates for power from natural gas (7 cents), and well below the cost of coal (10 cents) and nuclear (13 cents) power.
Without the tax credits, you might argue, Austin Energy would have signed up with a gas plant. After all, gas is half a cent cheaper. But there are good reasons for believing that solar represents a better deal, not least of which is the fact that solar runs on a zero-cost fuel stock. The gas market is notoriously volatile, and almost every analyst involved in the sector believes that costs will increase in the future.
Overall, in much of the US, in the short term at least, gas seems to have the economic advantage. Yet not all agree that the current situation is sustainable. Jeremy Leggett, green energy entrepreneur, notes that:
Outside the US, shale gas is an increasingly contentious issue, and that is slowing its development. Much of Western Europe, for example, looks set to reject the industry. In Australia some states have rejected it, while others have embraced it. China hopes for great things from it, but has made little progress exploiting it. Almost everywhere, farmers fear its impact on ground water. And, among younger people, there’s a widespread perception that shale gas is ‘fossil fuel-lite’—but still a fossil fuel—and so something they don’t want.
Will the boom in gas make climate change better or worse? A recent study, using complex models, found that ‘market-driven increases in global supplies of unconventional natural gas do not discernibly reduce the trajectory of greenhouse gas emissions or future climate change.’ In other words, gas is definitely not going to solve the climate problem. The models assume that the consumption of gas will have increased by up to 170 per cent by 2050. This might result in global greenhouse gas emissions in 2050 decreasing from what might otherwise have occurred, by 2 per cent at most. Or it might see them increase by up to 11 per cent. So, whatever else is claimed for it, we know that the gas boom will not alter our current trajectory from its worst-case scenario progress towards catastrophic warming.
Excerpted from "Atmosphere of Hope: Searching for Solutions to the Climate Crisis" by Tim Flannery. Published by Atlantic Monthly Press. Copyright 2015 by Tim Flannery. Reprinted with permission of the publisher. All rights reserved.