The Atlantic has what they’re calling the biggest news of the millennium. And it’s good news.
For the second year in a row, global GDP grew in 2015 while global carbon emissions stayed flat. This terminates a link that had persisted for 200 years, and it suggests that mitigating climate change won't be disastrous for the global economy. Since the Industrial Revolution, fossil fuels—coal for warmth and power; petroleum for asphalt and transport—have driven and even indicated economic growth. Given this history, and given the grave consequences of carbon emissions, it seems no exaggeration to call this the most important political-economy news this millennium. CO₂ emissions aren’t just another economic indicator.
Think about that a sec. For 200 years, the growth of our civilization has been measurable in CO₂ output. That’s because CO₂ has marked the energy we’ve used to construct buildings, transport goods, and heat our homes. So those arguing that any attempt to regulate CO₂ might affect the quality of life had a couple of centuries of if-this-then-that to fall back on.
Only now … that’s no longer true.
Additionally, 21 countries have grown their economies while shrinking their carbon emissions since 2000, according to new research from the World Resources Institute. They are all developed, post-industrial economies in Europe or the Americas… The United States is the largest country to have decoupled: Since 2010, its carbon emissions have fallen 6 percent.
Which, on the surface of it sounds like not good news … but fran-friggin-tastic news. Except that sadly, everything isn’t quite so shiny as it seems. Because one word can explain how the United States pulled off this miracle, and that word is: Fracking.
Just 10 years ago, half the electricity in the United States came from coal. At the start of 2006, coal hit a peak consumption rate of around 100 million tons per month. Since then, coal has fallen steadily. It’s down to around one-third of the county’s power production and the consumption rate is about 65 million tons per month.
That’s a staggering change. No one would have predicted that coal consumption could fall so quickly, or that the make-up of the U.S. electrical production could shift so abruptly. Republican politicians like to sum everything up with a neat “war on coal,” as if President Obama was to blame. Coal company CEOs like this pitch, as well, because it helps explain how they were blindsided by decline even as they were buying up operations around the world and predicting massive growth. Everybody hates to look like an idiot in front of the shareholders, especially when you’re taking your formerly multibillion company off to Chapter 11. But the truth is coal consumption was down almost 10 percent before Obama even moved into the Oval Office. It was the start of a trend that still hasn’t stopped.
There’s a smoking gun on the murder of the coal industry, and it comes in the shape of a leaky methane well. Hydraulic fracturing, better known as fracking, has been around since the 1950s, but it wasn’t until 1997 that Mitchell Energy put together techniques developed in other parts of the industry and tried out “slickwater” fracking in a shale formation. Their north Texas work wasn’t 100 percent successful, but it pointed the way to boomtown.
Shale is normally a very “tight” rock. It has low porosity and low permeability, meaning that the openings in the rock are small and not well connected. Finding significant deposits of oil and gas in shale had always depended on looking for structural traps—areas where faults or folds in the rock both opened up the space between layers of shale and provided a location where fuels where pinned. Locate such a trap, and you stood a chance of hitting a well that would produce very well, until the trap ran out.
Through fracking, the shale could be opened up at will. The productivity of an individual well was never going to be as great as one drilled into a prime trap, but hey—you could always drill another. And another. And another. And … you get the idea. As fracking accelerated post-2000, it turned entire states into boom areas. By 2012, it cost more to rent an apartment in North Dakota than it did to do so in London, Geneva, or Manhattan. People were willing to pay $3500 per month to live in Minot because the energy jobs seemed endless.
Until they ended (back to that in a minute).
The reason that coal was used in so many states to start with—even those with little coal of their own—was really simple: Coal was cheaper than anything else. Coal is so cheap that when factoring the cost of your coal-powered electric generation plant, the coal itself barely counts. Only everything else is expensive. To turn coal into electricity effectively, you need a massive plant with big boilers, big generators, big smokestacks, big cooling towers, big everything. Building even a modest coal plant is a multibillion dollar investment that has a payoff time in decades.
Coal is still cheap. But no one is building plants.
That’s because everyone is building gas plants. Gas power plants require a much smaller upfront investment. For decades, natural gas was used in the power industry primarily as a source of “peaking power,” that is as a supplement to coal or nuclear plants when power demand was highest. Gas powered generators were designed to be smaller, more self-contained. Easier to install, expand or relocate. In fact, these power plants had enormous advantages over the massive investment of a coal plant. There was nothing stopping anyone from using gas a primary power source… except for that to happen, gas had to get cheap and stay cheap.
Hello, fracking. In 2008, 1 million BTUs in the form of natural gas cost $13.00. But fracking was already underway. The price was around $8.00 a year later. Since then, it’s gone as low as $2. Gas has gotten so cheap that fracking has put fracking out of business. The only thing keeping gas from dropping even lower is that people simply can’t afford to drill when the returns are so low. If you were betting your retirement on North Dakota real estate futures, it might be time to reconsider that strategy.
One million BTU of coal is about $0.50 at the mine, still super cheap. But once gas went under $4 and looked like it was going to stay there, the result was “close enough.” Close enough for all the other factors to outweigh the cost of the fuel. Every single coal power plant on the drawing boards after 2008—and there were dozens in the U.S. alone— was cancelled. Instead, utilities went on a gas binge, closing old coal plants or converting them to gas as they methaned-up their delivery systems.
Which brings us all the way back to where we started, and that only kinda-sorta great news.
… have American emissions actually fallen? In a lengthy feature at The Nation this month, the climate journalist and activist Bill McKibben argues that greenhouse-gas emissions (not just carbon emissions) have possibly increased during the Obama administration, thanks to lost methane from fracking operations. He cites a new a paper that shows satellite-observed methane releases from the United States have spiked 30 percent since 2002. McKibben’s dire reading of this study tells him that America hasn’t actually decoupled at all; it’s just shifted from emitting carbon to leaking methane.
So, at least when it comes to the all important save the planet stuff, things are not nearly so good as they may have seemed at first glance.
Except … they are. And here’s why.
Scroll up. Find that place where it says no one predicted that the make-up of the United States’ electrical production could shift so abruptly. That’s the real good news. Despite a utility industry that tries to pretend that the ship cannot be turned in less than a century, the whole setup turns out to be incredibly nimble when exposed to an incentive to change. Which is great. Now we just need to give it the right incentives.