One of the most arresting images of the year so far was the view from outer space of gas being flared from oil fracking operations in North Dakota. Apparently, gas is now so cheap in the US that it pays to get rid of it just by flaring rather than building a pipeline network to convey it to consumers.
The Financial Times newspaper, which first published the picture, said a rapid increase in fracking “has made the US one of the world’s worst countries for gas flaring. The volume of gas flared . . . has tripled in just five years, according to World Bank estimates, and is now fifth highest in the world, behind Russia, Nigeria, Iran and Iraq.”
‘Shale revolution’
The “shale revolution” in hydraulic fracturing (fracking) not only holds out serious prospects that the US will achieve energy independence, free from dependence on imports from the Middle East, but has also put paid to “peak oil” – the idea that global oil production has already peaked, meaning that prices can only go up.
The use of fossil fuels – coal, oil and gas – continues to increase, pushing carbon dioxide (CO2) emissions to record levels. According to Greenpeace, fracking in the US as well as “massive coal expansion” in Australia, China and Indonesia, Canadian tar sands and Caspian Sea gas would increase CO2 emissions by six gigatonnes.
Modelling by Ecofys for a Greenpeace report, The Point of No Return, found that the yearly emissions from these projects “will be higher than the total US emissions and will lock in catastrophic global warming”. If they all went ahead as planned, there would be no chance of limiting global warming to 2 degrees.
Coal, the most damaging fossil fuel in terms of emissions, “will come close to surpassing oil as the world’s top energy source”, according to the International Energy Agency (IEA).
It expects the production of coal to increase in every region of the world apart from the US, where it is “being pushed out by natural gas” from fracking.
Coal’s share of global primary energy reached 28 per cent in 2011 – its highest point on record. The IEA expects that China will surpass the rest of the world in coal demand during the same period, while India will become the second-largest consumer, outpacing the US, where coal exports are growing at a rate not seen since 1981.
Global temperatures
The IEA’s World Energy Outlook (2012) estimated that in order to have a 50 per cent chance of limiting the rise in global temperatures to 2 degrees, only a third of current fossil fuel reserves can be burned before 2050. The balance could be regarded as “unburnable”, according to Paul Spedding, senior research analyst with HSBC.
IEA executive director Maria van der Hoven noted that the forecast for coal made a “troubling assumption” that carbon capture and storage (CCS) will not be available during the outlook period.
“CCS technologies are not taking off as once expected, which means CO2 emissions will keep growing substantially,” she warned.
In the absence of a high carbon price, she said “only fierce competition from low-priced gas can effectively reduce coal demand”.
And there’s the rub: the price of carbon on EU markets fell below €5 for the first time on January 21st, due largely to a sharp drop in the demand for energy and an over-allocation of emissions permits.
If emissions are to be reduced, the price of carbon in the European Trading System would need to be as high as €30 per tonne to encourage companies to invest in cleaner technologies. That’s why the European Commission has proposed “freezing” up to 900 million permits to tackle the current oversupply in the market.
