Significant price differences between regional natural gas markets have driven many European countries to increase coal consumption while decreasing use of natural gas (Source: BP).

Coal, natural gas, and oil accounted for 87 percent of global primary energy consumption in 2012 as the growth of worldwide energy use continued to slow due to the economic downturn. The relative weight of these energy sources keeps shifting, although the change was ever so slight. Natural gas increased its share of global primary energy consumption from 23.8 to 23.9 percent during 2012, coal rose from 29.7 to 29.9 percent, and oil fell from 33.4 to 33.1 percent. The International Energy Agency predicts that by 2017 coal will replace oil as the dominant primary energy source worldwide.

The shale revolution in the United States is reshaping global oil and gas markets. The United States produced oil at record levels in 2012 and is expected to overtake Russia as the world’s largest producer of oil and natural gas combined in 2013. Consequently, the country is importing decreasing amounts of these two fossil fuels, while using rising levels of its natural gas for power generation. This has led to price discrepancies between the American and European natural gas markets that in turn have prompted Europeans to increase their use of coal for power generation. Coal consumption, however, was dominated by China, which in 2012 for the first time accounted for more than half of the world’s coal use.

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China, coal, Europe, India, natural gas, oil, Russia, shale gas, United States

A video circulated recently in which a Fox Business Network analyst made the laughable assertion that Germany’s success with solar power is due to its abundant solar resources (for those missing the humor here, Germany has about the equivalent solar resource of Alaska). While the gaff elicited plenty of chuckles from around the energy sector, the analyst also made another claim that received less attention, but may be similarly incorrect.

Shale gas operations, such as the one above, are multiplying across the U.S. But will unconventional gas resources produce as much energy as is typically touted? (Source: Flickr user Nexen)

In trying to make the argument that the United States should pursue natural gas as opposed to solar power for electricity generation, the Fox analyst states: “Now people are saying, well, solar may be dead in the water. What’s going to happen with nat. gas? You guys know this very well; we have a hundred years of energy.… Let’s take our focus off of solar, let’s move it to nat. gas, and let’s get this economy going.” (We can, for the sake of argument here, ignore the many other nuances in this debate, such as the fact that the U.S. Southwest has some of the best solar resources in the world, and that natural gas and solar are actually complementary technologies and are in no way mutually exclusive.)

The claim that natural gas resources will provide the United States with 100 years of energy is often thrown around (and not just by a fossil fuel-happy news organization like Fox) thanks to recent technological advancements in hydraulic fracturing and horizontal drilling techniques that sparked the so-called “shale revolution.” Shale gas now accounts for almost 40 percent of U.S. natural gas production and has reversed the trend of declining gas production numbers.

However, the estimated amount of natural gas that is available is not a hard number, and the upswing in gas production may not be as long-term a trend as many people believe. In January 2012, the U.S. Energy Information Administration slashed its estimate of unproven technically recoverable shale gas resources by 42 percent. This new estimate, along with proven shale gas reserves, amounts to 579 trillion cubic feet of available natural gas.

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energy, LNG, natural gas, renewable energy, shale gas, unconventional gas, United States

The recent increase in U.S. oil production after four decades of decline has attracted great excitement in the energy industry and beyond.  The International Energy Agency, projects that North America could become a net oil exporter within the next few decades.

While these developments are undeniably dramatic, they may be obscuring some other unexpected and potentially transformative changes with large implications for the U.S. economy and the global environment.  They include:

1.  U.S. energy consumption declined in 2012 for the fourth time in the last five years—even as economic recovery began to take hold.  According to preliminary Worldwatch estimates, total energy use in 2012 was a full 7 percent below the 2007 level, the steepest five-year decrease in at least 60 years.  Most of this decline results from advances in U.S. energy productivity—dominated by gains in transportation fuel economy and building efficiency.

2.  Reliance on natural gas is growing rapidly, particularly in power generation.  Falling natural gas prices, sparked by the shale gas boom, has led electric utilities to switch from  coal to gas while many manufacturing companies have been replacing oil with gas.  (Not surprisingly since gas prices averaged the equivalent of $18 per barrel in 2012 while oil hovered at $100.)  Natural gas provided the U.S. with 27 percent of its total energy in 2012, compared with just 18 percent from coal.

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emissions reductions, energy, natural gas, renewable energy, United States

The full text of this Vital Signs Online article can be found here.

Demand for both coal and natural gas continue to increase globally. (Source: Viral Blender)

Oil remains the world’s leading energy source – for now. In recent years, coal and natural gas have proven themselves increasingly important resources across the globe. Global consumption of coal increased 5.4 percent in 2011, to 3.72 billion tons of oil equivalent, while natural gas use grew 2.2 percent, to 2.91 billion tons of oil equivalent. Both are primary fuels for the world’s electricity market, and because they are often used as substitutes for one other, their trends need to be examined together.

The bulk of coal use is for power generation, with smaller amounts being used in steelmaking. Spurred mainly by rising demand in China and India, coal’s share in the global primary energy mix reached 28 percent in 2011—its highest point since the International Energy Agency began keeping statistics in 1971. Although the United States remains one of the world’s largest coal users, just over 70 percent of global demand in 2011 was in countries outside of the Organisation for Economic Co-operation and Development (OECD), including China and India. Consumption in non-OECD countries grew 8 percent in 2011 to 2.63 billion tons of oil equivalent.

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coal, global, natural gas, Vital Signs Online

Jamaica's current generation mix is heavily oil-dependent. New energy policies call for diversification.

Jamaica is hostage to oil and needs to diversify its energy mix. Astoundingly, in 2010, the country’s oil imports exceeded its exported goods in value by 118 percent. Like most Caribbean island nations, Jamaica has limited domestic fossil fuels and relies heavily on outside sources to meet its energy needs. In 2010, it imported 20.5 million barrels of oil at US$1.62 billion, representing 11.6 percent of GDP.

The electricity sector accounts for 32.4 percent of Jamaican oil consumption and is the country’s second largest oil consumer, after transport. Ninety-five percent of domestic installed capacity is oil-based, compared with only 5 percent for renewables. As a result, the electricity sector is heavily susceptible to oil price fluctuations, and as prices rise, the country needs to look to other energy sources to provide power. 

In 2010, Jamaica elaborated a new energy policy that includes long-term targets for fuel diversification and renewable energy use. The plan stipulates that by 2030, the primary energy mix should include a 70 percent non-oil-based supply. Options include natural gas as well as a range of renewable energy sources, including wind, solar, and biomass.

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Caribbean, electricity, energy, Jamaica, natural gas, renewable energy

More than a year-and-a-half after the tsunami and resulting nuclear disaster at Fukushima, Japanese policymakers are trying to figure out what to do about Japan’s power-generation future. In September, the government released a document titled “Revolutionary Energy and Environment Strategy,” which proposes to eliminate all nuclear generation in Japan by 2040. While the general public continues to support a transition away from nuclear power in Japan, business leaders have argued that such a change would increase energy costs, thereby making Japanese companies less competitive in an already increasingly competitive East Asian market.

Japan pays incredibly high rates to import LNG, which has become only worse since Fukushima and is driving up energy prices.

Close to one-third of Japan’s power generation came from nuclear prior to Fukushima, and before the tsunami, there had even been discussion of increasing the share of nuclear to 50 percent with hope that this would help the country reduce its greenhouse gas emissions. Now that much of the population wants to phase-out nuclear by 2040, Japan faces an interesting question of what to do with its power sector in the future.

One solution, and what Japan has largely done in the short-term, is to rely more heavily on fossil fuels. After Fukushima, Japan began importing more natural gas and oil to make up for its loss of nuclear generation, and the share of fossil fuel generation in its electricity mix rose to 73 percent (a level not seen in decades) by early 2012. The problems with this increase, however, are numerous.

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electricity, energy policy, feed-in tariff, japan, natural gas, nuclear, oil, renewable energy, sustainability

Two weeks ago, I had the opportunity to attend the 20th Annual Fall Meeting for the American Bar Association’s Section on the Environment, Energy, and Resources (SEER). The conference, held in Austin, Texas, was attended by hundreds of lawyers and professionals involved in the environment, energy, and natural resource legal fields. Unlike in previous years, the 2012 meeting was dedicated completely to U.S. energy issues, including the production of shale gas, the fate of the Keystone XL pipeline, federal energy and climate regulation, and prospects for wind and solar power.

As expected at a gathering of prominent lawyers, there was little agreement about the proper direction for U.S. energy policy. But one overriding theme did emerge: the country will continue to pursue a broad-based energy strategy. In his State of the Union address earlier this year, President Obama laid the groundwork for an “all-out, all-of-the-above strategy that develops every available source of American energy.” During the recent presidential debates, both Obama and his opponent Governor Mitt Romney indicated that the United States would continue down this path. Where the conference attendees, presidential candidates, and general public disagree is on the proper composition of an “all-of-the-above” energy policy.

So, what do we agree on?

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energy policy, EPA, natural gas, renewable energy, United States

Figures for the first half of 2012 show a remarkable shift in U.S. energy trends. Coal-fired power generation has plummeted to 20 percent below last year’s level and 31 percent below the peak reached in 2007.  Far from being the fossil fuel of the future (according to many industry leaders and even some environmentalists) American coal may now be in an irreversible downward spiral.

Coal’s decline has two main causes.  Electricity use has virtually leveled off in the United States since the great recession began in 2008, leaving many U.S. utilities with excess generating capacity and more latitude to choose which of their power plants will operate.  Meanwhile, the rapid decline in U.S. natural gas prices this year—averaging the equivalent of $13 per barrel of oil—has allowed utilities to fire up some of their newer and more efficient gas plants while idling many of their coal plants.

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Climate Change, coal, electricity, emissions reductions, natural gas, United States

Climate scientists were surprised to discover that U.S. carbon dioxide (CO2) emissions recently decreased to levels not seen since 1992. While renewable energy has no doubt contributed to this recent trend, it is clear that the “shale gas revolution” and the recent U.S. transition away from coal and toward natural gas generation has had a very large impact on this encouraging trend.

The LNG terminal in Santo Domingo, Dominican Republic. (Source: Chicago Bridge & Iron)

One region where interest in natural gas has grown recently is the Caribbean. Trinidad and Tobago is already a global supplier of liquefied natural gas (LNG), the Dominican Republic and Puerto Rico are LNG importers, and nations like Haiti and Jamaica are considering building LNG import terminals of their own. LNG—the liquid form of natural gas that has one-six hundredth the volume per unit of energy of naturally occurring natural gas—is the form in which gas is typically shipped overseas. LNG imports are gaining traction in the Caribbean region, where tanker ships offload the fuel to be re-gasified and used to fuel natural gas power plants.

As seen in the United States, natural gas can play a significant role in mitigating greenhouse gas emissions and climate change. Moreover, at least in the United States, a shale gas boom has led to very low natural gas prices, making it cost competitive with almost any other source of power generation. However, it is unclear whether such benefits would translate to small island nations. The question that begs analysis is whether or not natural gas—in the form of imported LNG—is appropriate for small countries like those in the Caribbean region.

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Caribbean, Dominican Republic, energy, energy security, Haiti, liquefied natural gas, LNG, natural gas

Climate scientists are getting their fair share of surprises this year, from the record-breaking ice melt in the Arctic to the fact that first-quarter U.S. carbon dioxide (CO2) emissions have hit their lowest point since 1992. CO2 emissions from energy consumption for the January-March period fell to 1.34 billion metric tons, down 8 percent from a year ago. While the depressed economy and rising renewable energy generation have contributed to emissions reductions in the past few years, the early 2012 low-point is due mainly to a combination of three factors: the relatively warm winter, reduced gasoline demand, and the continued decline in coal-fired electricity.

Natural gas and wind dominated new capacity additions in the first half of 2012 (Source: EIA)

The declining demand for coal power is especially significant. Although emissions from natural gas and petroleum each dropped nearly 3 percent from the same period in 2011 (mainly because of lower heating demands in the mild winter), coal emissions fell 18 percent, to their lowest point since 1986.

The first half of 2012 also saw significant additions of new renewable energy capacity, although natural gas plants accounted for the vast majority of new capacity in states that traditionally rely on coal power. The low price of natural gas, bolstered by the U.S. shale gas boom, has driven many power producers to shift from dirtier coal generation to cleaner natural gas-fired power plants. When burned, natural gas emits around half of the CO2emissions as coal combustion.

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Climate Change, electricity, emissions reductions, energy, natural gas, United States