CAMBRIDGE ― Against all expectations, U.S. emissions of carbon dioxide into the atmosphere, since peaking in 2007, have fallen by 12 percent as of 2012, back to 1995 levels. The primary reason, in a word, is “fracking.” Or, in 11 words: horizontal drilling and hydraulic fracturing to recover deposits of shale gas.
No other factor comes close to providing a plausible explanation. Unlike the European Union, the U.S. never ratified the Kyoto Protocol, in which participating countries committed to cut CO2 emissions by roughly 5 percent, relative to 1990 levels, by 2012. Nor is America’s continued emissions reduction a side effect of lower economic activity: While the U.S. economy peaked in late 2007, the same time as emissions, the recession ended in June 2009 and GDP growth since then, though inadequate, has been substantially higher than in Europe. Yet U.S. emissions have continued to fall, while EU emissions began to rise again after 2009.
One can virtually prove that shale gas has been the major influence driving the fall in U.S. emissions. Just 10 years ago, the natural-gas industry was so sure that domestic production was reaching its limit that it made large investments in terminals to import liquefied natural gas (LNG). Yet fracking has increased supply so rapidly that these facilities are now being converted to export LNG.
Natural gas emits only half as much CO2 as coal, and occupies a rapidly increasing share of electricity generation ― up 37 percent since 2007, while coal’s share has plummeted by 25 percent. Indeed, natural gas has drawn close to coal as the number one source of U.S. power. Renewables still constitute only 5 percent of power generation in the U.S. ― less than hydroelectric and far less than nuclear, let alone coal or gas.
Meanwhile, the share of coal ― the dirtiest fuel ― has been rising, not falling, in the rest of the world’s energy mix. Since 2010, coal dependence has risen even in Europe, where some countries are phasing out emission-free nuclear power and no natural-gas boom has materialized (though CO2 emissions remain far higher in the U.S. than in Europe).
The advent of shale gas has had a variety of implications ― more good than bad ― for the U.S. economy, national security, and the environment. The economic benefits include job creation in the short term, “re-shoring” of some manufacturing activities in the medium term, and, lower macroeconomic vulnerability to global oil shocks in the long term.
Moving beyond economics, America’s reduction in net energy imports ― which have already fallen by one-half since 2007 ― means that its foreign policy will be less constrained by events in the Middle East. In Europe, the new technology could similarly break Russia’s politically troublesome stranglehold on natural-gas supplies.
The net environmental effects of growing reliance on shale gas appear beneficial as well. The substitution of natural gas for coal has put the U.S. on track to meet the Obama administration’s international commitment to reduce CO2 emissions 17 percent below 2005 levels by 2020. Gas is also better for local air quality, owing to the absence of the sulfur dioxide, nitrous oxide, mercury, and particulates emitted by burning coal.
Yet environmentalists are overwhelmingly opposed to fracking, evidently for three reasons. None, however, is persuasive.
First, fracking’s opponents worry that shale gas will displace renewable energy sources such as wind and solar power. But the fact is that CO2 emissions cannot be reduced without cutting coal use, and shale gas is already displacing coal in the U.S. This is not speculation; it is happening now. Even if some cleaner source becomes viable later, we would still need natural gas as a bridge to get us from here to there.
Put differently, if the world continues to build coal-fired power plants at the current rate, those plants will still be around in 2050, regardless of what other technologies become viable in the meantime. Solar power cannot stop those coal-fired plants from being built today. Natural gas can.
Moreover, natural gas also heats buildings. As the graph below shows, it now accounts for 31 percent of overall primary energy production, surpassing coal at 26 percent, while for solar and wind combined account for just 2 percent.
Second, environmentalists worry about local risks, especially to water supplies. There are also fears of methane leaks and induced seismicity. Such concerns cannot be dismissed. It is not enough to proclaim that fracking should be safe if operators are responsible and regulators do their job. One must consider the likelihood that in some under-regulated U.S. state, someone will not act responsibly and some local water supply will become contaminated. The industry should follow best practices, including making public the chemicals that it uses. High-quality environmental and safety regulation ― and vigorous enforcement ― are essential.
But, in deciding whether to allow fracking (France has banned it, for example, and New York state has a moratorium), one must compare the risks to health, safety, and the environment with those of the alternatives. Even a serious fracking mishap would be unlikely to cause as much damage as the Deepwater Horizon oil spill in 2010, the Fukushima nuclear catastrophe in 2011, or coal-mining tragedies that play out dramatically in frequent explosions and collapses (and more insidiously in the form of lung disease, water pollution, and soil erosion).
Finally, some, especially in Europe, fear new and unfamiliar technologies in general; adhering to what is sometimes called the “precautionary principle,” they place the burden of proof on the innovation, rather than symmetrically on the status quo. But, while it is true that a fundamentally new technology poses risks that are unknown, that is no excuse for neglecting to weigh the known risks of the existing technology.
The precautionary principle is hard to dislodge. Is it really true that new technologies are necessarily riskier? By this logic, men who worry about their virility should hesitate to try the unfamiliar new technology, Viagra, and instead stick with powdered rhino horn.
By Jeffrey Frankel
Jeffrey Frankel is professor of capital formation and growth at Harvard University. ― Ed.