Natural Gas and Renewables: Not Enemies?

Dave Roberts has a long and important post at Grist today discussing the relationship of shale gas and renewable energy sources, playing off a new Citigroup analysis suggesting that greater use of the former could actually promote the eventual ascendance of the latter:

Banking giant Citigroup recently issued a report [PDF] that ought to thrill fans of renewable energy. However, tucked inside the good news is a pill that some greens will find difficult to swallow.

The good news is that Citi expects renewable energy to triumph; it believes that typical forecasts like those from the International Energy Agency are too pessimistic. Contrary to a certain strain of conventional wisdom, it says, shale gas will not crowd out renewable energy. Quite the opposite.

The pill? Citi expects it will take lots of natural gas — more than we’re currently using, in the medium term — to get to a power system run primarily on renewables. In fact, renewables and shale gas are in a “symbiotic” relationship, the report says, each helping the other increase market share. If that’s true, a moratorium on fracking, called for by many greens, might serve to inhibit the spread of renewable energy.

Roberts goes on to evaluate the Citi report, mostly positively, and argues that expanded natural gas use will be necessary not only to supply power needs renewables aren’t yet ready to assume (particularly in non-peak usage times), but also to serve as a back-up source propping up necessary power plant capacity. But for the “symbiotic relationship” between shale gas and renewables to emerge, the former needs to get somewhat more expensive while the latter gets continuously cheaper.

That’s what Citi drills into: whether renewables are getting cheap enough, fast enough, to enter into this mutually reinforcing cycle with natural gas.

Good news: They are!

Shale gas, despite its triumphal reputation, faces substantial uncertainties. If methane emissions from fracking turn out be as bad as some of the high-end estimates, there could be serious environmental regulations coming down the pike. And the price of natural gas will not stay low forever. Citi estimates it will rise from its current absurd lows of $3 or $4 per MMBTU to around $5 or $6 or even $7, and that’s in the U.S., where it’s super-cheap. In other regions it is already considerably more expensive than that, and will stay so for the near future.

Renewables, meanwhile, are steadily, predictably heading down the cost curve toward “grid parity,” that moment when they are competitive with coal and natural gas without subsidies.

So Roberts is suggesting that supporters of clean energy should shift from a strategy of all-out opposition to fracking for natural gas to one of allowing it with strict emissions regulation (which will not only address fears about fracking but will also usefully boost the cost of natural gas enough to help make renewables competitive) with the goal being rapid reduction in coal and oil for power generation and a reasonably quick transition to the renewables-dominated future.

This strategy is certainly in line with what two recent Washington Monthly writers have suggested: Jeffrey Leonard’s November/December 2012 article urging exploitation of shale gas in combination with a major upgrading of the power grid as a pathway to clean and affordable energy; and Anne Kim’s March/April 2013 piece on prospects for “insourcing,” which notes relatively cheap natural gas is becoming a crucial competitive advantage for the U.S. in securing manufacturing jobs. There’s support for Kim’s argument in a WaPo article by Michael Birnbaum yesterday that reports on the relocation of manufacturing plants from Europe to the U.S., primarily attributable to cheaper natural gas.

If Roberts is right, energy politics can and should break through an all-or-nothing choice between a renewables-based future we cannot yet reach, and the rejection of clean energy entirely as too expensive or too self-sacrificing (or too attentive to climate change science that contradicts the Lord’s plan to bring about the End of the World, or whatever). It would certainly be nice to see some virtuous cycles in energy policy instead of the Right’s vicious cycle of atavistic economic and energy practices.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.