President Obama, Coal Killer

Last week, President Obama forcefully put natural gas at the center of his agenda to deal with climate change. “Sometimes there are disputes about natural gas,” he acknowledged, recognizing the local controversies over fracking, “but let me say this: We should strengthen our position as the top natural gas producer because, in the medium term at least, it not only can provide safe, cheap power, but it can also help reduce our carbon emissions.” 

Observing that trend over very long time horizons can make it seem automatic; it is anything but. Public policies help bring new technologies to market, build infrastructure to allow those technologies to proliferate, and tilt markets toward cleaner and more efficient technologies and away from dirtier ones.

The rapid shift from coal to gas in recent years is no exception. Sustained public policy, including billions of dollars in federal funding for everything from basic research to applied R&D, cost sharing on demonstration projects, and tax policy support for deployment, made the shale gas revolution possible. Stronger air pollution laws helped tilt electricity markets away from coal. And a dense network of gas pipelines and generation capacity made it possible for new gas reserves to get to market quickly. 

Obama’s determination to regulate carbon dioxide emissions from existing power plants will likely further accelerate this transition from dirty coal to cleaner gas. Gas prices have been rising in recent months, as producers pulled back after overproducing, and coal has gained back some of its lost market share. But the specter of forthcoming carbon dioxide regulations will likely accelerate the closing of older coal plants and provides greater certainty for gas producers that any comeback from coal will be limited.

Low cost, abundant gas will mitigate the costs associated with shutting down coal plants and should provide policymakers with strong incentives to continue to strengthen both conventional air pollution laws and carbon dioxide regulations.  

The President’s speech should also, for all intents and purposes, mark the end of the fracking wars. For all their talk about methane leaks and water contamination, national environmental leaders offered unqualified praise for the President’s speech. 

Gas is no environmental panacea, but by virtually every environmental measure, natural gas is preferable to coal. Measured in terms of lives lost, water used, air and water polluted, and effect on global warming, a new Breakthrough Institute report, Coal Killer, finds natural gas is far better and cleaner than coal — a sponge rock of toxic minerals including mercury — sometimes by an order of magnitude. Coal Killer, further argues that cheap gas is a boon to zero-carbon innovation, not an obstacle to it.

If many environmental leaders have quietly and grudgingly accepted that gas, for the foreseeable future, will take center stage in America’s efforts to reduce emissions, some fractivists haven’t. Gasland director Josh Fox told John Oliver of the Daily Show that Obama had sold out environmentalists, siding with the fossil fuel industry over renewable energy alternatives. But given that the President continues to strongly advocate heavy subsidies for renewables, it is hard to conclude that he has given up on them.

The reality is that renewables have failed to displace coal or gas even with heavy state and federal subsidies and ambitious state deployment mandates. Responding to demands from environmentalists that he act now to reduce emissions, the President functionally chose a fairly straightforward approach: increase the regulatory cost of burning coal in order to further tilt the energy system towards gas. 

That decision would have been the same with or without the cooperation of Congressional Republicans. Had cap and trade legislation passed the Congress in 2010, its primary effect would have been the same as the Clean Air Act regulations that the President announced last week: accelerating the shift from coal to gas. So would proposals to establish a federal carbon tax as part of potential reform of the federal tax code. 

That is the ultimate lesson of decarbonization and energy transitions. Energy technologies that are cheaper and cleaner replace older technologies that are dirtier and more costly. Public policy can help new technology along, supporting innovation, building necessary infrastructure, creating early markets, and placing a finger on the scale (or pedal) to speed the transition. 

But until new technologies come along that offer real economic and performance benefits over the old, no amount of public policy will succeed in displacing the incumbent energy technology. If America’s natural gas revolution proves anything, it is that once we have energy technologies that are better, cheaper, and cleaner, it is possible to make significant progress on emissions fairly quickly.  

For this reason, gas should continue to deliver substantial emissions benefits over the next several decades. To continue to make progress beyond that, we will need to pay the gas revolution forward by investing in nuclear and renewables. 

That may not be the reality that many Americans want, some of whom are quite understandably upset with the ways in which fracking has changed landscapes that they love.  But it is the one that we have. Obama, to his credit, not only understood that reality but was courageous enough to be honest about it. 

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