TODAY’S STUDY: The Climate Problem From Too Much NatGas

A Bridge Too Far: How Appalachian Basin Gas Pipeline Expansion Will Undermine U.S. Climate Goals

July 2016 (Oil Change International, et al)

Executive Summary

This report details the increasing threat to the climate from American natural gas production. We document the emergence of the Appalachian Basin as the key source of projected natural gas production growth in the coming decades. We also identify the proposed pipelines that would enable that growth, and how this gas production would undermine national and global climate goals.

In the early 1990’s, many promoted natural gas as a “bridge” to a clean energy future. Despite 25 years of changing economics, technology, and climate science, some in government and industry still believe in this bridge over a gap that no longer exists. This report rebuts the remaining “natural gas as bridge fuel” arguments and recommends constraining gas production by applying a climate test to the permitting of all gas pipeline proposals. Energy policy must align with climate science.

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KEY POINTS

f Current projections for U.S. natural gas production – fueled by the ongoing gas boom in the Appalachian Basin – are not aligned with safe climate goals, or the current U.S. long-term climate target.

f Any analysis of the need for gas supply must be premised on national and international climate goals, not business-as-usual.

f Currently there are 19 pending natural gas pipeline projects that will increase the takeaway capacity from the Appalachian Basin and enable a doubling in gas production from the region in the coming decade. Dozens of downstream projects are also planned.

f With the 40-year plus lifespan of gas pipelines and power plants, new pipelines would lock in unsustainable levels of gas production, as investors and operators will have financial incentive to maximize production once initial investment is complete.

f Reducing methane leakage is important, but it does not provide a license to grow production.

f The Obama Administration must work to align FERC and all government agency decisions with safe climate goals. A Climate Test is essential for all decisions regarding fossil fuels: www.climatetest.org

f It doesn’t have to be this way. Clean energy technology is here now, affordable, and ready to meet our needs

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THE APPALACHIAN BASIN IS THE KEY SOURCE OF POTENTIAL U.S. GAS PRODUCTION GROWTH

In the past decade, natural gas production in the Appalachian Basin has experienced unprecedented growth – particularly in the Marcellus and Utica shale formations in Pennsylvania, West Virginia, and Ohio. As a result of the use of hydraulic fracturing (fracking) and horizontal drilling to access previously inaccessible gas formations, gas production from the Appalachian Basin has growth 13-fold since 2009, reaching over 18 billion cubic feet per day (Bcf/d) in 2015.

It is widely expected that production in the Appalachian Basin region will double over current levels by the early 2030s. In 2010, the Appalachian Basin produced just four percent of U.S. gas production, but by 2030 it could provide around 50 percent.

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THE PIPELINE RUSH WOULD UNLOCK NEW GAS

To support this planned huge expansion of production, the industry wants to build infrastructure, and in particular, pipelines. Dozens of proposed pipeline projects in the region are currently being considered for permitting by FERC. Of these, there are 19 key pending pipeline projects that would unlock at least 15.2 Bcf/d of production. Building these pipelines would enable the Appalachian Basin to expand production well beyond current levels. All together, these 19 pending pipeline projects would enable 116 trillion cubic feet of additional gas production by 2050.

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U.S. GAS PRODUCTION GROWTH IS OUT OF SYNC WITH CLIMATE GOALS

The potential for further growth in gas production represents a major challenge for U.S. climate policy. The Paris Agreement on climate change, signed by 178 nations as of June 2016, establishes the goal of “holding the increase in global average temperature to well below 2°C above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5°C above preindustrial levels.”1 The current U.S. longterm climate target – which may not be enough to achieve the ‘well below 2 degrees’ goal set in Paris – is an emissions cut of 83 percent from 2005 levels by 2050.2

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The U.S. Energy Information Administration’s (EIA) latest projection for U.S. gas supply and demand (Annual Energy Outlook 2016) shows a 55 percent increase in production and a 24 percent increase in consumption by 2040. The difference between the greater rise in production than consumption would go to export, making the U.S. a major exporter of natural gas in the coming decades. This projection also sees U.S. energy-related CO2 emissions declining only around 4 percent from 2015 levels, in stark contrast to the climate leadership this Administration has strived for.

The currently planned gas production expansion in Appalachia would make meeting U.S. climate goals impossible, even if the Administration’s newly proposed methane rules are successful in reducing methane leakage by 45 percent. Our calculations show that the rise in gas consumption projected by the EIA would alone lead to emissions that would surpass the current long-term U.S. climate target by 2040, even after accounting for methane leakage cuts. This ignores the emissions from the production (and consumption) of exported gas. In other words, even if gas were the only source of greenhouse gases in 2040, it would still blow the U.S. carbon budget. This makes it clear that the growing use of gas is out of sync with U.S. climate goals (see Figure ES-1).

New gas power plants and pipelines are designed to last at least 40 years. Once the initial capital has been spent on them, they will likely operate even at a loss to the detriment of cleaner sources. It makes more sense to avoid these investments now and instead allow clean energy technologies to fulfill their maximum potential.

When President Obama made the historic decision to deny the Presidential Permit for the Keystone XL pipeline, he did so because, in his words: “America is now a global leader when it comes to taking serious action to fight climate change. And frankly, approving this project would have undercut that global leadership. And that’s the biggest risk we face – not acting.

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RECOMMENDATIONS

Not acting to constrain gas production and consumption to within science-based climate limits is a major risk. The planned gas pipelines in the Appalachian Basin simply cannot be built if the U.S. is to achieve climate goals. Gas pipelines and other fossil fuel projects must be considered in light of climate targets. Specifically:

f All federal government agencies and departments, including FERC, should apply a climate test in the permitting processes of all fossil fuel infrastructure, including in Programmatic Environmental Impact Statements.

f No new natural gas pipeline projects should be considered unless they can pass a climate test. The climate test should be applied to all currently pending and future pipeline applications.

f The EIA should provide detailed guidance in its Outlook reports for U.S. fossil fuel supply and demand under various climate goals, including the nation’s long-term climate goal, a 2°C path, and a 1.5°C path.

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RENEWABLE ENERGY IS READY

Renewable energy is already set to become the dominant source of new generation, replacing coal and gas with zero-carbon power. In many parts of the U.S., renewable energy is today the lowest-cost and lowest-impact means to add generation capacity to our electricity system. Battery storage and grid management technology are ready to even out the intermittency of wind and solar. Widely held assumptions about the need for fossil fuel baseload power and limits to renewable energy penetration are unravelling fast. It is increasingly clear that the clean energy sector is poised to transform our energy system.

There is nothing standing in the way of building the renewable energy capacity we need to sustain our electricity needs – except maybe the entrenched interests of the natural gas industry. Renewables are the clear choice for future energy production, and natural gas is simply a bridge too far.

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