Switching from Coal to Natural Gas Best Bet for Reduced Greenhouse Gas Emissions

A new report from Deutsche Bank AG indicates that replacing coal as the primary resource for electric-power generation with natural gas could significantly reduce greenhouse-gas emissions in the United States. Analysts Kevin Parker and Mark Fulton point to the new natural gas supply acquired from shale extraction to make the case for the switch. The recent abundance of natural gas makes the swap of resources a realistic possibility. Parker is Deutsche Bank’s global head of asset management and Fulton is the current head of climate change investment research.

The report suggests gas could reach a 35 percent share of power generation by 2030, an increase of 12 percent from the 2009 level. If combined with solar, wind and nuclear power, gas use could trim coal’s share of generation to 22 percent by 2030. Coal currently accounts for approximately 47 percent of power generation. According to the analysts, implementing that strategy would cut power plant emissions by 44 percent from the levels recorded in 2005.

Such a dramatic decrease would help President Obama achieve his goal of substantially reducing greenhouse-gas emissions. Emission targets could be met by “domestically abundant and secure sources of energy based on known technology that can easily be deployed at reasonable cost,” said Parker and Fulton in their report. Obama has called for a 17 percent cut in greenhouse-gas emissions by 2020 and an 83 percent cut by 2050.

In order to achieve these levels, the analysts call for a sizeable jump in solar and wind energy. The alternative sources presently only provide 2 percent of the energy mix. The combination of wind and solar generation needs to rise to 14 percent of total energy generation by 2030.

Natural gas prices are falling as the volume of shale gas increases. By 2035, natural gas from shale may make up 50 percent of the U.S. gas supply. Continued production may be slowed by environmental and drinking water concerns. The Natural Resources Defense Council cites the toxicity of the chemicals used in the fracturing process as a major source of worry. Drinking water wells in shale-rich states have tested positive for gas and chemical contamination.

The analysts believe that these issues are manageable and that regulation will catch up with production to ensure safety.  The potential benefits of tapping into this vast resource far outweigh the environmental concerns at this point. The drastic cut in greenhouse-gas emissions makes the continued exploration and drilling of shale fields attractive for investors and lawmakers. “A significant switch by the U.S. electricity sector from coal to natural gas would be the most secure, least-cost approach to lower emissions, ” the analysts concluded.