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The biggest problem behind the US slate boom

Slate production in the USA is expected to increase well into the 2020s. And that's a big problem.

Oil production in the US has more than doubled in the last decade, rising from 5 million barrels per day (mb / d) to nearly 12 mb / d. Natural gas also increased significantly, rising from 21 trillion cubic feet per year (Tcf / year) in 2008 to 29 Tcf / year in 2017.

Natural gas has been compared to a "bridge fuel" that allows the US to reduce greenhouse gas (GHG) emissions while transitioning to clean energy. Cheap shale gas has killed many coal-fired power plants, and with a GHG profile half that of coal, the transition was a blessing in combating climate change.

This narrative is still up for debate. Shale gas operations emit methane, and eventually high levels of volatile methane emissions completely offset the benefit of gas over coal. Various studies, for and against, discuss how much methane is released.

But there are other reasons why coal-to-gas history is oversold. Billions in gas wells and gas-fired power plants are sucking capital out of renewable energy. Cheap shale gas has also killed nuclear power, the largest source of carbon-free electricity.

To put it in a nutshell: New power plants are long-term investments, and their owners expect them to be used for decades. In other words, the US has locked in gas, although science dictates a relatively short timetable for the energy transition.

However, cutting off coal also has advantages, and the case against gas is not clear.

But what about crude oil? The increase in oil production in the US and the resulting impact on greenhouse gas emissions has not been much studied. A new report by Daniel Raimi of Resources For the Future (RFF) examines the impact on greenhouse gas emissions from a variety of future oil production situations. Raimi is the author of the well-balanced book "The Fracking Debate".

Raimi presented several scenarios that examined the impact of greenhouse gas emissions from US oil and gas production (higher or lower production, more or less stringent climate policies, assumptions about methane), and found that greenhouse gas emissions in all scenarios, where the US produces more, the highest being oil compared to the baseline EIA reference case.

In particular, climate policy was outweighed by the exact level of oil and gas production. The Obama administration's Clean Power Plan, which called for a major overhaul of the electricity sector and a number of coal-fired power plants, was a milestone and one of the government's key efforts to accelerate the energy transition. The CPP was repealed by the Supreme Court and is being replaced by the Trump government.

Related: 2 reasons why Big Oil does not crash into renewable energy

However, according to Raimi's study, even if we assume full implementation of the CPP, emissions are still higher in the "high oil production" scenario, even if the CPP is compared without CPP but lower oil and gas production.

"In other words, low oil and gas production reduces emissions more than implementing the CPP," Raimi noted. The only caveat that undermines this conclusion is that the methane estimates were heavily overstated.

The conclusion is worth repeating. The Obama-era CPP era – Obama's climate policy and the core American participation in the Paris Agreement – has less impact on greenhouse gas emissions than the exact level of oil and gas production.

In other words, climate force in an aggressive scenario where shale production in the US continues to increase over the next ten years more than offsets the benefits of the stoppage of a number of coal-fired power plants.

The main reason for this is not CO2, but methane. It's not people who burn more gasoline in their cars because oil production is higher. Demand is relatively inelastic in the US.

Instead, the main climate sanction is due to higher methane emissions associated with upstream production. CO2 emissions are still enormous and a huge problem, but these emissions do not change very much. Methane emissions are excessively high compared to the reference case when oil and gas production exceeds the base.

Related: Is a natural gas cartel?

"In a scenario of high oil and gas production, increased methane emissions are likely to flood the greenhouse gas impacts of policies such as CPP if methane emissions are not dramatically reduced below their current levels," warned Raimi.

At the same time, higher oil production in the US has global implications, lowering prices and boosting demand. The effects are more difficult to complain about, but by 2030 the world could consume 1.6 mb / d more than would otherwise be the case under the high US production scenario. US oil is exported abroad, which lowers prices and boosts demand.

According to RFF, the world emits 200 to 50 MMT more CO2 than would otherwise be the case. In this context, Brazil issued 417 MMT in 2016. In other words, higher oil and gas production in the US could contribute to another Brazilian greenhouse effect by 2030.

Each model has many uncertainties and assumptions that need to be considered. However, the RFF study offers a clear warning. In short, the ongoing slate bonanza in the US is catastrophic for combating climate change.

A report from Oil Change International last month was more direct. The US oil and gas industry "is poised to unleash the world's largest outbreak of new carbon emissions by 2050."

By Nick Cunningham of

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