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ResearchAbundant natural gas from the Shale Revolution transformed the electric power sector. No doubt.
But, how much did abundant natural gas..
- displace coal?
- crowd-out investment in renewables?
- reduce CO2 emissions?
PAPER THREAD
Written w/Jonathan Scott
This addresses a contentious issue:
- is NG production good or bad for
CO2?
On one side, the US EIA points to "coal-to-gas" switching as the number on contributor to CO2's decline since 2005.
On the other, a presidential front runner wants to effectively ban NG production.
- is NG production good or bad for
CO2?On one side, the US EIA points to "coal-to-gas" switching as the number on contributor to CO2's decline since 2005.
On the other, a presidential front runner wants to effectively ban NG production.
We answer this question using a novel empirical strategy.
Using the legacy interstate natgas pipeline network, from 1990, we identify which states were quasi-randomly more exposed to abundant natural gas from the Shale Revolution.
(Thank my co-author Jonathan Scott for this!)
Using the legacy interstate natgas pipeline network, from 1990, we identify which states were quasi-randomly more exposed to abundant natural gas from the Shale Revolution.
(Thank my co-author Jonathan Scott for this!)
So we separately estimate how more (plausibly exogenous) NG deliveries changes the share of electricity generated by different fuels.
We find
NG by 10 bcf/day
-NG electricity share by 4 %
-Coal and Wind electricity share by ~2% each
We find
NG by 10 bcf/day-
NG electricity share by 4 % -
Coal and Wind electricity share by ~2% each
(aside)
We find the effect on coal is in the short-run, by conditioning on fuel-specific generation capacity.
And the effect on wind turbines is in the long-run, only having an impact on install capacity.
We find the effect on coal is in the short-run, by conditioning on fuel-specific generation capacity.
And the effect on wind turbines is in the long-run, only having an impact on install capacity.
With these estimate we present a counterfactual:
What would the energy mix look like if the Shale Revolution never happened?
We would see less gas, more coal, & more wind!
Most interesting,
- Natural gas stalled the transition to renewables
- Coal declines by some regardless
What would the energy mix look like if the Shale Revolution never happened?
We would see less gas, more coal, & more wind!
Most interesting,
- Natural gas stalled the transition to renewables
- Coal declines by some regardless
What does this mean for CO2 emissions?
We estimate the effect of more NG deliveries on CO2 emissions, and present a counter factual.
More NG deliveries decreases CO2 . But! CO2 would have decline anyway.
So there's enivro benefits, but they're smaller than EIA suggests.
We estimate the effect of more NG deliveries on CO2 emissions, and present a counter factual.
More NG deliveries decreases CO2 . But! CO2 would have decline anyway.
So there's enivro benefits, but they're smaller than EIA suggests.
We're not done! More NG production has costs in the form of methane leakage. Methane has greater global warming potential than CO2 in the short run.
We calculate what "leakage-rate" equates the benefits of NG production (
CO2) with the costs (
CH4).
We calculate what "leakage-rate" equates the benefits of NG production (
CO2) with the costs (CH4).
We find a leakage rate >3.3% obliterates the enviro benefits of more natural gas production.
This is smaller than tech-based estimates (5% to 9%).
Actual leakage estimates range from 1.4 to 2.3%. So NG production provides net-benefits, but there's little room for error!
This is smaller than tech-based estimates (5% to 9%).
Actual leakage estimates range from 1.4 to 2.3%. So NG production provides net-benefits, but there's little room for error!
So, yes, natural gas has some enviro benefits.
But it is important to remember:
- Natural gas & renewables are substitutes in the LR
- Directed enviro policies can achieve same (better) results (ahem, carbon tax)
- We really need to minimize methane leakage
But it is important to remember:
- Natural gas & renewables are substitutes in the LR
- Directed enviro policies can achieve same (better) results (ahem, carbon tax)
- We really need to minimize methane leakage
Thank you for coming to my Mat Talk. Paper's here: https://drive.google.com/file/d/1TSbH8T-MAtyMI1tb-CJVK1E5uSWr-lW7/view
Jonathan Scott (my co-author) is a fantastic colleague on the Job Market this year. Check out his portfolio, interview him in San Diego, and hire him. https://www.jon-sc.in/
Enjoy a picture of my cat.
Jonathan Scott (my co-author) is a fantastic colleague on the Job Market this year. Check out his portfolio, interview him in San Diego, and hire him. https://www.jon-sc.in/
Enjoy a picture of my cat.
