Is natural gas the next ethanol?

(Dan here) Ceres has published a recent report on growing corn for ethanol costs-relating to water use, where corn is grown, and why. The report includes the impact on global food prices.

David Zetland at Aguanomics points us to a growing concern about the increasing use of natural gas (and fracking).

Is natural gas the next ethanol?

Corn ethanol was a “win-win” alternative fuel that would allow Americans to drive as before, using less carbon, while supporting American farmers.
It turned into (and still is) an ecological disaster* that mostly helped agribusiness (e.g., ADM and Cargill) more than Farmer John down the road.
Many people see the natural revolution (or the “shale gale”) as a win-win that will allow Americans to use energy as before, emitting less carbon, while supporting American energy companies (not nasty terrorists).
I worry that this optimism is misplaced for the following reasons:**

  • An increase in supply of cheap natural gas means an reduction in the price of energy — and thus an increase in its consumption, which will displace conservation and alternative energy sources.
  • Sloppy production and movement of natural gas means more leaks of methane, which is 20-35x worse for global warming than CO2. Natural gas produces abouthalf the CO2 output as coal, per MWh of electricity produced, which means that a 4 percent rate of leakage in the supply chain (25×4% = 100%) would double the carbon impact from natural gas. EDF comissioned a 16-partner study to look into methane emissions and estimates a 2.6-5.6 percent leakage rate. That’s bad enough, but don’t forget that methane is routinely vented (released) and flared (burnt, reducing emissions) at oil producing sites.
  • Finally, there’s the strong possibility that drillers and investors, eager to flip fracking leases into cash will (1) produce too fast (releasing extra methane) or overstate their reserves (leading to a financial crunch for suckers who buy late).

Bottom Line: A carbon tax is technology-neutral. It would NOT have supported the ethanol fiasco and would dampen the negative impacts of the natural gas revolution. It’s a pity that we’re ignoring these virtues in favor of picking winners in the (losing) race to a low-carbon future.

* Ethanol requires energy to grow and process the corn, but industrial corn production depletes aquifers, uses lots of fertilizers and pesticides, and pollutes ground and surface waters. The displacement of other crops increased risk in the food production system. The use of previously-fallowed land increased ecological stress. The demand for corn for ethanol has raised the cost of living for poor people dependent on corn.
** I only “worry” in the sense of government policies and interventions that turn out to be totally misguided.
Addendum: I thought of this post a few days ago. The New York Times covers similar points today.