***Gas Specific Stuff for Renewables DA***

AT: No Tradeoff

"Shale gas is a great advantage to the U.S. in the short term, for the next few decades," said MIT economist Henry Jacoby, lead author of the new study. "But it is so attractive that it threatens other energy sources we ultimately will need."

But green groups warned that relying on gas would raise energy prices and fail to tackle climate change, and could fatally stunt the growth of the renewables industry. Gas is a fossil fuel – but because it generates less carbon dioxide when burned than coal, gas industry lobbyists have been touting the fuel as a lower-carbon alternative to coal.

The document seen by the Guardian has been agreed by member states and sets out the framework for Horizon 2020, billed as a €80bn programme for research and innovation for the years 2014 to 2020. Of the funds available, more than €30bn are supposed to flow to "address major concerns shared by all Europeans such as climate change, developing sustainable transport and mobility, making renewable energy more affordable, ensuring food safety and security, or coping with the challenge of an ageing population", according to the European Commission.

As part of this mission, Horizon2020 will dispense billions of euros in funds to research and development projects, and is intended to "support research and innovation activities, strengthen the European scientific and technological base and foster benefits for society". Clean energy is a key part of this, according to the document: "The specific objective is to make the transition to a reliable, sustainable and competitive energy system, in the face of increasingly scarce resources, increasing energy needs and climate change."

But the original document has been altered by officials to include explicit references to funding for gas – despite gas being a fossil fuel and a mature technology.

The document refers to an EU roadmap published last year that showed emissions from the power sector would have to be cut by 90% by 2050, to meet the EU's targets. To this has been added a new sentence: "The roadmap also shows that gas, in the short to medium term, can contribute to the transformation of the energy system."

The document carries on to include gas as a low-carbon source of power: "To achieve these ambitious reductions, significant investments need to be made in research, development, demonstration and market roll-out of efficient, safe and reliable low-carbon energy technologies, including gas, and services." The reference to gas has been added. Though it is impossible to tell which member state asked for the amendment, Brussels insiders said it was likely to have needed the support of several member states.

This reference shows that gas is now being considered in an official EU programme as a "low-carbon" form of energy, equivalent to renewables or nuclear power – despite its status as a fossil fuel.

Finally, the last paragraph of the document shows that the R&D funding programme originally intended only to support renewables has been altered to explicitly include fossil fuels. It reads: "Activities [of the research and development programme] shall focus on research, development and full scale demonstration - of innovative renewables, efficient and flexible fossil power plants (including those using natural gas) and carbon capture and storage technologies." The reference to fossil fuels has been inserted.

While the Horizon2020 project is likely to result in several billions of spending on R&D between 2014 and 2020, the significance of the changes goes much further, according to Brussels experts. The changes show that the gas industry has succeeded in its aim of having gas considered a low-carbon fuel, at least in some parts of the European Commission – and this is likely to be disastrous for the renewables industry, as well as having massive implications for greenhouse gas emissions and the fight against climate change.

Renewables compete with fossil fuels such as gas for investment, and if investors see that gas - which is a mature technology with low risks and high returns on investment - is favoured, they are likely to prioritise gas investment over renewables.

Abundant gas discourages investment in clean energy and perpetuates fossil fuel addiction.

Friedman 12 – (8/4/12, Thomas, degrees in economics and middle east studies, winner of three Pulitzer prizes, foreign-affairs Op-Ed columnist for the New York times and former chief economic correspondent, “Get it Right on Gas,” http://www.nytimes.com/2012/08/05/opinion/sunday/friedman-get-it-right-on-gas.html?_r=1&ref=thomaslfriedman)

That is the question — because natural gas is still a fossil fuel. The good news: It emits only half as much greenhouse gas as coal when combusted and, therefore, contributes only half as much to global warming. The better news: The recent glut has made it inexpensive to deploy. But there is a hidden, long-term, cost: A sustained gas glut could undermine new investments in wind, solar, nuclear and energy efficiency systems — which have zero emissions — and thus keep us addicted to fossil fuels for decades.

That is why on May 29 the British newspaper The Guardian quoted Fatih Birol, the chief economist for the International Energy Agency, as saying that “a golden age for gas is not necessarily a golden age for the climate” — if natural gas ends up sinking renewables. Maria van der Hoeven, executive director of the I.E.A., urged governments to keep in place subsidies and regulations to encourage investments in wind, solar and other renewables “for years to come” so they remain competitive.

Note first that the shale resource has a positive effect on economic growth and energy use. Total energy is 8% higher in 2050 than with no shale, and sums to a 3% addition to energy use over 2010–2050. In the no-shale scenario electricity prices under the regulatory scenario rise above those projected with no policy (Figure 6), yielding an 8% reduction in demand by 2050. Without the shale resource, the gas price would be projected to rise substantially, to a 2050 level some 20% higher than if there were no regulatory constraint.4 Even at its higher price, however, gas use in electricity generation would increase, to replace the declining coal output. In addition, toward the end of the period renewable generation would be driven above the mandated 25% level. Nuclear output would be at its limit, and there is not much flexibility in the hydro source in any case.

In the new issue of Wired, Julie Eilperin writes that clean-technology investment is in the throes of going bust, at least in the United States. That includes solar, wind and biofuels. A U.S. presidential election year and the continuing Solyndra bankruptcy scandal are combining to seriously undercut federal subsidies, she reports. As usual, China is providing stiff competition (the New York Times' Charles Duhigg and Keith Bradsher produce a long, must-read dive into why China and not the U.S. is likely to continue to dominate manufacturing). But the main culprit is cheap natural gas, Eilperin asserts. The shale gas boom, allowing for electricity prices of 10 cents a kilowatt-hour, has eroded the chances of solar and wind to compete. As discussed over the weekend, Citi Group analyst Edward Morse concludes that shale gas (pictured above, part of a hydraulic fracturing operation in South Montrose, Pa.) could fuel a U.S. industrial renaissance, specifically in energy-intensive products such as chemicals, plastics and housewares. But to the degree that Morse is right, it is coming at a cost, which is a "clean tech meltdown," according to Eilperin: Because natural gas has gotten so cheap, there is no longer a financial incentive to go with renewables. Already, shale gas has seriously undermined Russia's petro-fueled influence in Europe. Now Eilperin suggests some of the most highly promoted technology of recent years is under challenge. The confluence of reports of turbulence in the energy space is striking. Eilperin's account of a bursting clean-tech bubble coincides with a parade of reports of a fresh surge in South and North American oil production, and animated forecasts of regional fossil fuel self-sufficiency in the coming decade or so. How consequential is this tradeoff -- a clean-tech economy for a fossil fuel-based boom? First, the calculus may be false: If you read the Duhigg-Bradsher piece from yesterday's NYT, you are likely to deduce that almost no one except China and a few other Asian states are capable of manufacturing competitively at scale. Yet, for those who are not as pessimistic about U.S. and western economic prowess (this Associated Press piece suggests that manufacturing is picking up), there is a raw philosophical divide on U.S. industrial policy. We hear full-throated voices arguing both that the U.S. ought to abandon fossil fuels in favor of clean energy technology, and that it is exceedingly premature to rely on renewable energy, so that oil and gas must be encouraged. That debate is likely to remain robust.

However, James Bradbury, a policy analyst at the World Resources Institute, said energy policymakers face new challenges due to shale gas.

"The longer it takes for the [United States] to pass climate policy," he added, "the more likely it is that we will see . . . gas-related infrastructure become effectively locked in to our energy system for decades."

AT: Aff Solves

Reliance on unconventional oil causes warming and furthers dependence

Gordon and Anderson 12 (Deborah Gordon, senior associate, Carnegie Endowment for International Peace and Steven M. Anderson, chief marketing officer, “Insecurity in Unconventional Oil,” 6/5/12) http://carnegieendowment.org/2012/06/05/insecurity-in-unconventional-oil/b64w

The deeper we drill down, the more apparent it becomes that new domestic oil supplies cannot guarantee U.S. geopolitical and economic security. What’s more, the heterogeneous assortment of oils, if pursued absent cautious, deliberate guidelines, could cause collateral damage. New hydrocarbon resources that can be reached or transformed into oil raise the specter of climate security risks. There is precious little public information available about the vast pools of carbon contained in oil sands, oil shale, and other new oil supplies. At a time when the world is struggling to limit carbon emissions, prying open new carbon sources before we fully understand what they are and how to manage them could be a serious security miscalculation. New oils are being produced from increasingly heavy, complex, isolated, and carbon-laden resources. These stores are often locked up deep in the earth, in remote and harsh environments, tightly trapped between or bound to sand, tar, and rock. They require increasingly capital-intensive infrastructure to extract, involve more intensive processing and additives, and yield more high carbon byproducts. The high carbon contents and unfavorable energy balances of many new oils impose high climate burdens. Despite the political rhetoric in the United States about the science of climate change, it is a legitimate threat to U.S. national security. Climate change is a threat multiplier that accelerates global conflict through droughts, desertification, floods, famines, and crop failures. Empirical evidence suggests that climate change can cause domestic and international disputes. Scientists have determined that long-term fluctuations of war frequently follow cycles of temperature change. According to United Nations Environment Programme, climate change exacerbates military conflict—instigating mass migration, armed insurrection, and a further destabilization of volatile regions. Concerns of climate-driven conflict pose a real and present danger. As such, the higher the carbon burden of new oil, the higher the cost in terms of global security. Policymakers have a responsibility to protect the public, bringing solutions to bear. The more new sources of oil deviate from conventional crude, the more citizens will rely on policymakers and industry to demystify oil resources and the risks they pose.

AT: Gas = Low Emissions

Costs outweigh the benefits – makes it impossible to solve climate change

Schrag 12 – (2012, Daniel, PhD, Sturgis Hooper Professor of Geology and Professor of Environmental Science and Engineering at Harvard University, Director of the Center for the Environment, serves on President Obama’s Council of Advisors on Science and Technology, “Is Shale Gas Good for Climate Change?” http://schraglab.unix.fas.harvard.edu/publications/128_Schrag.pdf)

Another serious concern is the impact of low-priced natural gas on the electricity sector for technologies beyond coal– specifically renewable technologies such as wind and solar–and for investment in R&D in renewable and low-carbon energy systems. If the goal is to minimize cumulative emissions and reach near-zero emissions as soon as possible, renewable energy technologies must play a much larger, perhaps even a dominant role in the world energy system. And to do so, the cost of these technologies must compete with fossil fuel systems. Driving down their price will likely come only through wider deployment and through development of new technologies. Both of these actions have been adversely affected by the shale gas boom in the United States, with natural gas prices currently hovering below $3 per thousand cubic feet. The negative impact of low gas prices on renewable energy is not significant if we measure climate progress by looking only at near-term emissions; renewable electricity makes up too small a fraction of the overall electricity sector. But if our goal is to minimize cumulative global emissions over the next century, the delayed investment in renewable technologies may set us back more than the climate benefits achieved from a marginal reduction in U.S. coal consumption. Low gas prices have similarly inhibited investment in nuclear power and carbon capture and storage, both of which are likely to be needed to achieve a near-zero carbon emissions society.17 Of course, these technologies have faced challenges independent of the competition with low-priced natural gas for electricity generation.

There are enormous benefits in having cheap, abundant natural gas for the United States in terms of the competitiveness of U.S. industry and economic growth in general. But from the climate perspective, the negative impacts on innovation in low-carbon technologies appear to outweigh the benefits of a marginal reduction in emissions from reduced coal consumption.

Displacement of low-carbon alternatives prevent gas from solving climate issues alone.

IEA 11 – (International Energy Agency, report designed and directed by Fatih Birol, PhD in energy economics, Chief Economist and Director of Global Energy Economics at the International Energy Agency, analysis was co-ordinated by John Corben, contributors were Maria Argiri, Marco Baroni, Anne-Sophie Corbeau, Laura Cozzi, Ian Cronshaw, Dan Dorner, Matthew Frank, Timur Gül, Paweł Olejarnik, Timur Topalgoekceli, Peter Wood, David Wilkinson and Akira Yanagisawa, edited by Robert Priddle, “ARE WE ENTERING A GOLDEN AGE OF GAS?” http://www.worldenergyoutlook.org/media/weowebsite/2011/WEO2011_GoldenAgeofGasReport.pdf)

An increased share of natural gas in the global energy mix is far from enough on its own to put us on a carbon emissions path consistent with an average global temperature rise of no more than 2°C. Natural gas displaces coal and to a lesser extent oil, driving down emissions, but it also displaces some nuclear power, pushing up emissions. Global energy-related CO2 emissions in 2035 are only slightly lower than those in the New Policies Scenario, at around 35 Gt. This puts emissions on a long-term trajectory consistent with stabilising the concentration of greenhouse gases in the atmosphere at around 650 ppm, suggesting a long-term temperature rise of over 3.5°C. To limit the increase in global temperature to 2°C requires a greater shift to low-carbon energy sources, increased efficiency in energy usage and new technologies, including carbon capture and storage. The GAS Scenario assumes that support for renewables is maintained but, in a scenario in which gas is relatively cheap, there is a risk that governments’ resolve in this respect might waiver, pushing gas demand even higher than projected here.

AT: Transitional Fuel

Renewables are more important and the substitution effect doesn’t occur globally.

Broderick et al. 11 – (Nov. 2011, John, PhD, Research Fellow, Tyndall Study for Climate Change Research, Professor Kevin Anderson, Deputy Director of the Tyndall Centre for Climate Change Research;[1] holds a joint chair in Energy and Climate Change at the School of Mechanical, Aerospace and Civil Engineering at the University of Manchester and School of Environmental Sciences at University of East Anglia; and is an honorary lecturer in Environmental Management at the Manchester Business School, adviser to the British government on climate change, Ruth Wood, PhD, Tyndall Center, Paul Gilbert, PhD, Tyndall Center, Maria Sharmina, Tyndall Center, Anthony Footitt, Independent Consultant, Steven Glynn, PhD, Sustainable Change Co-operative, and Fiona Nicholls, Sustainable Change Co-operative, “Shale gas: an updated assessment of environmental and climate change impacts,” http://www.co-operative.coop/Corporate/Fracking/Shale%20gas%20update%20-%20full%20report.pdf)

The argument that shale gas should be exploited as a transitional fuel in the move to a low carbon economy seems tenuous at best. EIA projections for the US do not anticipate that shale gas will substitute for coal in the medium term. Further, in the UK currently, a little under two thirds of coal consumption is imported from the global coal market; accordingly any reduction in coal demand from the UK will, ceteris paribus, trigger reductions in global coal prices. The supply-demand relationship of relatively liberalised markets makes clear that a reduction in the price for coal will facilitate increased demand elsewhere. Consequently, whilst the UK may be able to reduce its national emissions through indigenous shale gas consumption, this risks triggering a net increase in global emissions; with the atmosphere receiving relatively unchanged emissions from coal and additional emissions from shale gas.

It is possible that some level of substitution may occur in other countries but, in the current world where energy use is growing globally and expected to continue to do so, without a meaningful constraint on carbon emissions, there is little price incentive to substitute for lower carbon fuels. It is difficult to envisage any situation other than shale gas largely being used in addition to other fossil fuel reserves and adding a further carbon burden. This could occupy over a quarter of the remaining carbon budget for keeping below 2^oC warming, and lead to an additional 16ppmv of CO2 over and above expected levels without shale gas – both figures that will rise as and when the additional 50% of shale gas is exploited. It should be stressed the extraction process does not necessarily result in significant emissions itself compared to conventional extraction but there is the potential for substantial fugitive emissions. However, given the urgent and challenging requirements facing us with regards to carbon reductions, any additional fossil fuel resource just adds to the problem.

The idea that we need ‘transitional’ fossil fuels is itself open to question. For example, in the International Energy Agency scenario that outlines a path to 50% reduction in carbon emissions by 2050, fuel switching coupled with power generation efficiency, only accounts for 5% of the required reductions (IEA, 2010). If globally we are to achieve the considerable reductions in carbon emissions that are required then it is energy efficiency, carbon capture and storage, renewable energy etc that will make the difference.

AT: Just the US

US gas lock in spreads globally – kills efforts to solve warming

Inglesby et al. 12 – (Summer 2012, Tommy, Principal in McKinsey’s Houston office the leader of the Firm’s North American Natural Gas practice and Global Unconventional Oil & Gas service line., worked extensively in upstream oil & gas portfolio strategies and transactions, Rob Jenks, some dude at McKinsey, Scott Nyquist, MBA from Harvard Business School, Director in McKinsey & Company’s Houston Office and a leader in McKinsey’s Energy Practice, co-leads McKinsey’s Global Energy and Materials Sector, Dickon Pinner, Partner in McKinsey's San Francisco office where he co-founded McKinsey's Global Cleantech Practice, “Shale gas and tight oil: Framing the opportunities and risks,” pdf available online)

However, the potential benefits need to be considered alongside potential risks. Natural gas is still a hydrocarbon that emits greenhouse gases, although in lower amounts than those of current coal technologies. In addition, methane leakage can worsen the carbon footprint of natural gas. The process of setting up and conducting hydraulic-fracturing operations required to free gas and oil from low-permeability rock creates environmental risks, including water contamination, local air pollution, and land degradation— some of which may be serious and some of which have yet to be fully understood.

Low-cost gas, held by some to represent a low-carbon bridge to a zero-emissions future, is resisted by others who believe it will slow near-term deployment of renewables, and—longer term—create “lock in” of natural-gas usage following large-scale deployment of the supporting natural-gas infrastructure.

Moreover, this is not just a US story. Much attention, and a great deal of money, is focused on the United States because shale-gas and tightoil resources are more extensively characterized and commercially mature there, but many countries are watching the United States to see how it develops and oversees the use of horizontal drilling and hydraulic fracturing. Countries with significant “unconventional” resources include Abu Dhabi, Algeria, Argentina, Australia, Canada, China, Colombia, Germany, India, Indonesia, Mexico, Oman, Poland, Russia, Saudi Arabia, Ukraine, and the United Kingdom.

AT: Gas Low Now

Current volatility in gas forecasts is allowing renewable energy to compete – the aff introduces stability into gas markets

Huber 12 – (8/1/12, Lisa, MBA from the Nichols School of the Environment, Duke University, intern at the Rocky Mountain Institute, “Managing Natural Gas Volatility: The Answer is Blowin’ in the Wind,” http://blog.rmi.org/blog_Managing_Natural_Gas_Volatility_The_Answer_is_Blowin_in_the_wind)

The recent shale gas boom has gained the reputation as our energy savior: clean, domestic, cheap, and plentiful. But, the attractiveness of today’s low natural gas price can cause us to overlook a serious risk: volatility.

Natural gas is one of the riskiest commodities around, historically bearing twice the volatility price risk of oil. While this is common knowledge among industry professionals and commodity traders, the long-term risk often goes ignored, despite previous attempts to put a price tag on volatility.

Why This Matters

According to RMI Chief Scientist Amory Lovins, “we must not set our sights too low and end up with a 20-year plan instead of a 21st century goal.” This logic on the importance of long-term strategy is the driving force behind RMI’s Reinventing Fire, a vision and roadmap for a 150 percent bigger 2050 U.S. economy requiring no oil, coal, or nuclear energy, and one-third less natural gas.

Without accounting for the volatility risk of natural gas, wholesale power-producing renewables don’t appear very competitive without the support of tax credits (expiring at the end of the year for wind) and renewable portfolio standards, whose incentives are less substantial than in the recent past. Investing in gas over wind without consideration of volatility would be like chasing yield without regard to risk—something a prudent investor would never dream of.

As U.S. natural gas supply grows and liquefied natural gas export terminals come online, our economy becomes more and more dependent on the success of shale; changes in natural gas prices could greatly impact the broader market. Historically speaking, natural gas tends to move opposite the market (that’s a negative beta for the finance geeks out there). As natural gas prices rise and the market falls (remember 2008?), consumers take a significant hit.

The long term risk of natural gas is preserving status quo investment in renewables like wind energy

Huber 12 – (July 2012, Lisa, MBA from the Nichols School of the Environment, Duke University, intern at the Rocky Mountain Institute, “Utility-­‐Scale Wind and Natural Gas Volatility Uncovering the Hedge Value of Wind For Utilities and Their Customers,” http://www.rmi.org/Knowledge-Center/Library/2012-07_WindNaturalGasVolatility)

*PPA = Power Purchase Agreement; PUC = Public Utilities Commission; FCA = Fuel Cost Adjustments

Although natural gas prices are depressed, the volatility inherent in the commodity remains and presents risks to consumers at all levels: utilities, industrial and commercial customers, as well as residential customers. Many utilities are already paying to hedge against the risk of an unexpected upward swing in prices in the near‐term, but remain exposed in the long run. PUCs in regulated states tend to disapprove of long‐term natural gas contracts. It is conceivable, however, they could be convinced to deem wind PPA contracts prudent as they provide a substantial hedge in the long‐term, particularly if the PUCs adopt more risk‐ weighted “lowest cost” review criteria for PPAs or new plant rate‐basing. Just as utilities can hedge with new wind project PPAs, large customers can sign direct PPAs as a hedge, and residential customers can participate in green power programs that exempt them from FCAs. These opportunities offer the chance for consumers of energy to both decrease their risk exposure to fluctuating fuel prices, as well as encourage the future development of domestic wind.

AT: Gas Low Forever

Lower estimates now – informs policy decisions

Urbina 12 (Ian Urbina writes for the New York Times. “New Report by Agency Lowers Estimates Of Natural Gas in U.S.” January 29 2012) http://www.nytimes.com/2012/01/29/us/new-data-not-so-sunny-on-us-natural-gas-supply.html?pagewanted=all

The agency estimated that there are 482 trillion cubic feet of shale gas in the United States, down from the 2011 estimate of 827 trillion cubic feet — a drop of more than 40 percent. The report also said the Marcellus region, a rock formation under parts of New York, Ohio, Pennsylvania and West Virginia, contained 141 trillion cubic feet of gas. That represents a 66 percent drop from the 410 trillion cubic feet estimate offered in the agency’s last report. The Energy Information Administration said the sharp downward revisions to its estimates were informed by more data. “Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago,” its report said. Jonathan Cogan, a spokesman for the agency, added that Pennsylvania had made far more data available than in previous years. Under the agency’s new estimates, the Marcellus shale, which was previously thought to hold enough gas to meet the entire nation’s demand for 17 years at current consumption rates, contains instead a six-year supply. The report comes just five months after the United States Geological Survey released its own estimate of 84 trillion cubic feet for the Marcellus shale. The estimates are important because they underpin policy decisions on energy subsidies and exports. Market analysts look to these estimates in making investment decisions. Historically, they have varied widely based on assumptions about the future of technology, coming regulations on drilling and the long-term price of gas.

Production is peaking now – companies overestimated reserves

Magyar 12 (Robert Magyar reports on energy and the environment for Examiner. “With other U.S. shale gas plays in decline, is the Marcellus next?” August 15 2012) http://www.examiner.com/article/with-other-u-s-shale-gas-plays-decline-is-the-marcellus-next

This week the Energy Information Agency reported record gas production for 2011 for theMarcellus shale regions. The report is being cited by Pennsylvania supporters of hydraulic fracking as yet more evidence of all things good news when it comes to U.S. shale gasdevelopment. At the same time, the Texas Barnett and Louisiana shale gas formations appear to be peaking in production, seeing significant decreases in drilling activity while shale gas development companies such asChesapeake Energy and BHP Billiton have been quietly writing off billions of dollars of claimed shale gas reserves in those formations as they declare such reserves as no longer economically feasible to extract. Just a few short years ago, those same companies were claiming those same reserves were solid evidence of future decades of natural gas supply as part of the U.S. “Shale gas revolution”.

AT: Perm (Carbon Tax)

Shale gas + carbon tax = bad

No shale gas + carbon tax = good

Jacoby et al. 12 – (1/17/12, Henry, PhD in economics, William F. Pounds Professor of Management Emeritus Professor of Applied Economics Center for Energy and Environmental Policy Research, Francis M. O’Sullivan, PhD in electrical engineering, Lecturer in the MIT Sloan School of Management and the MIT Sloan Executive Education Program, Executive Director of the Energy Sustainability Challenge Program at the MIT Energy Initiative, and Sergey Paltzev, PhD in economics, Principal Research Scientist at MIT Energy Initiative and Assistant Director for Economic Research at the MIT Joint Program on the Science and Policy of Global Change, lead modeler in charge of the MIT Emissions Prediction and Policy Analysis (EPPA) model of the world economy, “The Influence of Shale Gas on U.S. Energy and Environmental Policy,” http://www.iaee.org/en/publications/eeeparticle.aspx?id=7)

This policy scenario, which requires a 50% GHG reduction below 2005 by 2050, involves more substantial changes in energy technology, and the imposition of a GHG price imposes a difference between the price of gas to the producer and to the consumer. Again focusing first on the electric sector (Figure 7, top left) if shale were uneconomic gas use in generation would be projected to grow slightly for a few decades, but toward the end of the period it would be priced out of this use because of the combination of rising producer price and the emissions penalty. Renewable generation would grow to 29% of total electric demand, above level mandated in the regulatory case. Coal would maintain a substantial position in generation, though reduced, to 2025; and beginning at that point coal with capture and storage (CCS) would first become economic, growing to substantial scale by the end of the period. Nuclear would be limited by the assumption of a maximum 25% growth above its 2010 level. The remainder of the required reduction would be met by cuts in electricity use.

The effect of this 50% target on total energy use absent the shale gas (bottom left) is a reduction in demand, driven by the higher consumer gas price (Figure 8), and the introduction of advanced biofuels. Gas use declines over the period as the conventional gas, tight gas and coal-bed methane are depleted, but by a lesser fraction than in electricity generation because at these prices the gas is relatively more valuable in industrial and other non-electric uses.

The current state of nature, shown on the right-hand side of Figure 7, creates a very different energy future. Gas is substantially cheaper (Figure 8) and increasing gas generation drives conventional coal out of the system. Toward the end of the period, moreover, the increasing gas price plus carbon charge begins to force conventional gas use out of the electric generation, and in 2040 gas with CCS is first projected to become economic. In 2045, coal with CCS also begins to become economic (producing less than 1TkWh, a level too small to show in the figure)—lagging gas because of the still relatively-low gas price. Renewable supplies are lower than they would be without the cheaper gas. The electricity price is similar between the two states of gas economics (Figure 8) but the reduction in use is somewhat higher than without shale because, nuclear being constrained, the with-shale case does not benefit soon enough from the low-emission base-load source provided by CCS technologies.

In the mix of total energy use gas is expected to grow over the simulation period. To meet the needs of the transport sector, advanced biofuels take market share beginning in 2035. With current gas resources the reduction in total energy use under this policy, relative to a no-policy scenario, is about 20% in 2010 and 45% in 2050.

The U.S. economy could adjust to either of these states of the world, and under this stringent reduction the growth-inducing effect of the larger gas resource is slightly more potent than its role in smoothing the adjustment to lower emissions. Recognizing that the figures are not directly comparable since they reflect different states of the world, we can again compare the difference in cost caused by the availability of the shale gas. The cost of the policy under current expectation, calculated as above as the net present value of the reduction in welfare over the period of 2010–2050, is about $3.3 trillion (a 3.1% reduction in 2050), whereas if the shale resource were not economic that cost would be $3.0 trillion (a 2.8% reduction in 2050). The slightly lower cost in the no-shale scenario is due to the lower emissions in the corresponding no-policy reference, and therefore the lower effort required to meet the 50% target.

Note that the desired pace of technology development is strongly affected by the emergence of the shale resource. The entrance of the shale supplies has the effect of driving coal out of electric generation, whereas without the shale coal would be projected to begin to recover from a “valley of death” with the introduction of coal-CCS around 2035. With the shale source this resurrection is not projected until some 10–15 years later. Moreover, gas with CCS may under these conditions be the technology likely to first see commercial viability. And, as would be expected, the cheaper gas serves to reduce the rate of market penetration of renewable generation.

Shale gas delays renewables by 20 years even under the MOST STRINGENT carbon pricing measures.

Jacoby et al. 12 – (1/17/12, Henry, PhD in economics, William F. Pounds Professor of Management Emeritus Professor of Applied Economics Center for Energy and Environmental Policy Research, Francis M. O’Sullivan, PhD in electrical engineering, Lecturer in the MIT Sloan School of Management and the MIT Sloan Executive Education Program, Executive Director of the Energy Sustainability Challenge Program at the MIT Energy Initiative, and Sergey Paltzev, PhD in economics, Principal Research Scientist at MIT Energy Initiative and Assistant Director for Economic Research at the MIT Joint Program on the Science and Policy of Global Change, lead modeler in charge of the MIT Emissions Prediction and Policy Analysis (EPPA) model of the world economy, “The Influence of Shale Gas on U.S. Energy and Environmental Policy,” http://www.iaee.org/en/publications/eeeparticle.aspx?id=7)

Finally, the gas “revolution” has important implications for the direction and intensity of national efforts to develop and deploy low-emission technologies, like CCS for coal and gas. With nothing more than regulatory policies of the type and stringency simulated here there is no market for these technologies, and the shale gas reduces interest even further. Under more stringent GHG targets these technologies are needed, but the shale gas delays their market role by up to two decades. Thus in the shale boom there is the risk of stunting these programs altogether. While taking advantage of this gift in the short run, treating gas a “bridge” to a low-carbon future, it is crucial not to allow the greater ease of the near-term task to erode efforts to prepare a landing at the other end of the bridge.

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