Why Banning Fracking Promotes Coal

Bernie Sanders has recently tried to make his opposition to producing natural gas via a process called fracking, and Hillary Clinton’s supposed support for it, into a major reason to support him in the New York primary. New York state has already banned fracking and presumably Sen. Sanders thinks this position is also right for the rest of the US. This position is supposed to be good for the environment and for progress in arresting global warming and these issues are important to all progressives. But the logic here seems pretty muddled. Let’s dig into this issue and try to clear up some of the muddle.

Fracking is an oil and natural gas production technique that has been developed and adopted widely within the US, especially over the last decade. There are major formations of natural gas bearing rock around the country where the gas (and oil) is trapped in strata of hard rock shale that can be produced by pumping fluids under high pressure into these formations. This fractures the rock, allowing the gas (and/or oil) to flow to the well through the fractures. Fracking can also be used to produce oil and natural gas from tight sandstone formations.

US Natural Gas Production by Source

Fracking has already reversed the decline in US oil and gas production and is forecast to provide the majority of gas production over the next few decades. Without fracking, natural gas production would decline significantly.

Fracking does have significant down sides in that the fluid used to fracture the rock can migrate into ground water, posing a risk to human health. Fracking is also thought to have caused many small and some medium sized earthquakes in Oklahoma and elsewhere. And who wants to live right next door to a producing gas or oil well? There are therefore environmental and other advantages to reducing fracking. But what about trade-offs?

Daily Demand for Electricity

To understand the importance of shale gas, we need to study the nature of demand for electricity. Demand for electricity is higher during the day than during the night, when people are sleeping. Furthermore, during the summer, air conditioning demand peaks during the afternoon and there is a comparable effect for heating in the winter. Although it may be possible to shift some industrial usage to off hours, our current system allows users to consume electricity whenever they want to (on demand). While some environmental advocates say we will have to change our lives to accommodate such limitations (demand limited by availability), it might be a hard sale for many consumers, and is not required given the options available. Whatever we do, it is clear to me that we must stop nearly all fossil fuel consumption by 2050 in order to avoid the most damaging effects of climate change. Let’s see how we can configure our generation system so that we can continue to have a high quality on demand system.

Here are some characteristics of generation methods that profoundly effect how we can configure generation:

  • Dispatchability — This refers to whether the method can rapidly spin up additional capacity. A method must be dispatchable if it is to be called upon to service the variable demand above the day’s base load.
  • Reliability — Reliable energy sources are ones that produce a known quantity of power per time. The opposite of reliable are intermittent sources, such as wind and solar.
  • Greenhouse gas pollution — Fossil fuels cause CO2 and methane pollution which must be curtailed as quickly as possible.
  • Cost and Externalities — Different generation methods have different inherent costs but they also vary in the extent that their adverse side effects (externalities) are priced into their generation costs. Fossil fuels do not include these costs whereas nuclear power does.
  • Scalability — Some sources can be scaled up nearly indefinably, whereas others are already supply limited.

US Generation by Source

Now let’s review the major generation methods, identifying the characteristics of each.

  • Coal — Coal fired power plants today provide the largest share of base load power, because they are reliable, not supply limited (in fact most of the know deposits of coal will be stranded and have to be left in the ground) and scalable. Coal is the dirtiest power source but it is still cheap because its externalities are not included (for example the cost of the estimated 13,000 annual premature deaths). Coal generated power is not dispatchable, because a coal plant is designed to produce the same amount of power continuously and cannot be throttled up or down.
  • Natural gas — Gas is currently overtaking coal as the largest share of power production. Gas plants produce about one half as much CO2 per kilowatt hour as do coal plants. However, natural gas is a greenhouse gas (methane), which is many times more powerful than CO2. If as little as 3% of natural gas escapes during production, gas loses its greenhouse gas advantage over coal. Gas is currently cheap because of the fracking boom, but like coal, its price does not include externalities. Gas is highly dispatchable, is currently not supply limited and is highly scalable.
  • Nuclear — Nuclear is ideal for base load power generation. It emits no greenhouse gases in operation. Nuclear power is not dispatchable. It is currently expensive because it includes the costs of all its externalities. Nuclear power currently has great political opposition due to concerns about safety, even though it is the safest method by far, in terms of deaths per kilowatt hour generated. Nuclear is highly scalable and is not fuel supply limited.
  • Hydro — Hydro power is great for base load generation and is dispatchable. It emits zero greenhouse gases and is cheap in operation. However, most hydro sites have already been developed and those sites not currently developed have severe environmental trade-offs. Hydro is currently reliable but climate change is expected to significantly redistribute rainfall, with the result that some sites will lose capacity and other will have too much.
  • Oil — Petroleum is currently too valuable for transportation to use for power generation and will have to be phased out in a few decades anyway.
  • Wind and Solar — Non hydro renewable energy does not produce greenhouse gases in operation and is rapidly declining in price. It is scalable but is best limited to places that have good sunshine or wind. Because it is intermittent, it is neither reliable or dispatchable. Both wind and solar are very diffuse and would require large tracts of land to serve a large portion of demand. Wind and solar will require major technology breakthroughs, which are not currently in sight, in energy storage and smart distribution to become the dominant source of generation.

Now let’s apply sources to demand. To supply base load power, we need to choose among coal, gas, nuclear and hydro. Coal is too dirty, if any of the other sources are available. But hydro cannot be scaled up and nuclear cannot be built fast enough to meet immediate needs. So the best option in the short term is gas, while the best option in the long term is nuclear. If gas is not available, the only good short term option is coal.

For the variable part of daily demand, gas and hydro are the available dispatchable options. Hydro is supply limited, so in many cases, the only option is gas. Wind and solar could be made dispatchable, if coupled with energy storage and a smart, wide scale grid (which might both be a decade or more off). However these requirements increase the effective price for these method which, by themselves are just now entering the truly competitive range.

Some power operators are currently forced to accept whatever wind and solar power are dumped onto the grid, which adversely effects the more manageable options. What happens if the daily renewables cut into base load generation? Then the operator will permanently have to cut back on reliable generation (coal, gas, nuclear and hydro) below the base load to accommodate the renewables while also needing to cover all other variable demand with dispatchable sources, since wind and solar can each go to zero at almost any time. This redundant capacity raises the effective price of renewables.

So what does this have to do with fracking? The most immediate impact is that if we ban fracking and therefore dramatically reduce our natural gas production, then our only short range option for base load power generation will be coal. Is promoting the wider use of coal a good idea? Over the longer term our better option will be to expand nuclear, but Bernie also wants to phase out nuclear power. How is that going to work? Is that letting emotion overwhelm logic?

Over the long term, the best option is nuclear and hydro (where available) for base load and renewables for the rest. But that will only work if we can phase out gas by eventually making renewables dispatchable, using storage and a widespread smart grid.

Banning fracking is fine for states like New York, where the land is rich and beautiful, which results in high population density. But there are parts of the country where the land is cold and treeless and where the population density and economic opportunity are low and where the people who live there might makes very different trade-offs about developing their natural resources than the people of New York.

These issues are complex and there are many trade-offs. This is why it is not enough to identify a problem without also developing detailed plans to address the problems. This can lead to very bad ideas like promoting coal generation because you object to natural gas production and nuclear generation. That’s not moving in the right direction.

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