Recent technological advances have unleashed a boom in U.S. natural gas production, with expanded supplies and substantially lower prices projected well into the future. Because combusting natural gas yields fewer greenhouse gas emissions than coal or petroleum, the expanded use of natural gas offers significant opportunities to help address global climate change. The substitution of gas for coal in the power sector, for example, has contributed to a recent decline in U.S. greenhouse gas emissions. Natural gas, however, is not carbon-free. Apart from the emissions released by its combustion, natural gas is composed primarily of methane (CH4), a potent greenhouse gas, and the direct release of methane during production, transmission, and distribution may offset some of the potential climate benefits of its expanded use across the economy.
This report explores the opportunities and challenges in leveraging the natural gas boom to achieve further reductions in U.S. greenhouse gas emissions. Examining the implications of expanded use in key sectors of the economy, it recommends policies and actions needed to maximize climate benefits of natural gas use in power generation, buildings, manufacturing, and transportation (Table ES-1). More broadly, the report draws the following conclusions:
- The expanded use of natural gas—as a replacement for coal and petroleum—can help our efforts to reduce greenhouse gas emissions in the near- to mid-term, even as the economy grows. In 2013, energy sector emissions are at the lowest levels since 1994, in part because of the substitution of natural gas for other fossil fuels, particularly coal. Total U.S. emissions are not expected to reach 2005 levels again until sometime after 2040.
- Substitution of natural gas for other fossil fuels cannot be the sole basis for long-term U.S. efforts to address climate change because natural gas is a fossil fuel and its combustion emits greenhouse gases. To avoid dangerous climate change, greater reductions will be necessary than natural gas alone can provide. Ensuring that low-carbon investment dramatically expands must be a priority. Zero-emission sources of energy, such as wind, nuclear and solar, are critical, as are the use of carbon capture-and-storage technologies at fossil fuel plants and continued improvements in energy efficiency.
- Along with substituting natural gas for other fossil fuels, direct releases of methane into the atmosphere must be minimized. It is important to better understand and more accurately measure the greenhouse gas emissions from natural gas production and use in order to achieve emissions reductions along the entire natural gas value chain.
Sector-Specific Conclusions and Recommendations
It is essential to maintain fuel mix diversity in the power sector. Too much reliance on any one fuel can expose a utility, ratepayers, and the economy to the risks associated with commodity price volatility. The increased natural gas and renewable generation of recent years has increased the fuel diversity of the power sector (by reducing the dominance of coal). In the long term, however, concern exists that market pressures could result in the retirement of a significant portion of the existing nuclear fleet, all of which could be replace by natural gas generation. Market pressures also could deter renewable energy deployment, carbon capture and storage, and efficiency measures. Without a carbon price, the negative externalities associated with fossil fuels are not priced by society, and therefore there will be less than optimal investment and expansion of zero-carbon energy sources.
Instead of being thought of as competitors, however, natural gas and renewable energy sources such as wind and solar can be complementary components of the power sector. Natural gas plants can quickly scale up or down their electricity production and so can act as an effective hedge against the intermittency of renewables. The fixed fuel price (at zero) of renewables can likewise act a hedge against potential natural gas price volatility.
It is important to encourage the efficient direct use of natural gas in buildings, where natural gas applications have a lower greenhouse gas emission footprint compared with other energy sources. For thermal applications, such as space and water heating, onsite natural gas use has the potential to provide lower-emission energy compared with oil or propane and electricity in most parts of the country. Natural gas for thermal applications is more efficient than grid-delivered electricity, yielding less energy losses along the supply chain and therefore less greenhouse gas emissions. Consumers need to be made aware of the environmental and efficiency benefits of natural gas use through labeling and standards programs and be incentivized to use it when emissions reductions are possible.
The efficient use of natural gas in the manufacturing sector needs to be continually encouraged. Combined heat and power systems, in particular, are highly efficient, as they use heat energy otherwise wasted. Policy is needed to overcome existing barriers to their deployment, and states are in an excellent position to take an active role in promoting combined heat and power during required industrial boiler upgrades and new standards for cleaner electricity generation in coming years. For efficiency overall, standards, incentives, and education efforts are needed, especially as economic incentives are weak in light of low natural gas prices.
Natural gas-related technologies, such as microgrids, microturbines, and fuel cells, have the potential to increase the amount of distributed generation used in buildings and manufacturing. These technologies can be used in configurations that reduce greenhouse gas emissions when compared with the centralized power system as they can reduce transmission losses and use waste heat onsite. To realize the potential of these technologies and overcome high upfront equipment and installation costs, policies like financial incentives and tax credits will need to be more widespread, along with consumer education about their availability.
The greatest opportunity to reduce greenhouse gas emissions using natural gas in the transportation sector is through fuel substitution in fleets and heavy-duty vehicles. Passenger vehicles, in contrast, likely represent a much smaller emission reduction opportunity even though natural gas when combusted emits fewer greenhouse gases than gasoline or diesel. The reasons for this include the smaller emission reduction benefit (compared to coal conversions), and the time it will take for a public infrastructure transition. By the time a passenger fleet conversion to natural gas would be completed, a new conversion to an even lower-carbon system, like fuel cells or electric vehicles, will be required to ensure significant emissions reductions throughout the economy.
Transmission and distribution pipelines must be expanded to ensure adequate supply for new regions and to serve more thermal loads in manufacturing, homes, and businesses. Increased policy support and innovative funding models, particularly for distribution pipelines, are needed to support the rapid deployment of this infrastructure.