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Natural Gas Key in Obama Green-Economy Goal, Deutsche Bank Says

Natural Gas Key in Obama Green-Economy Goal
Cooling towers at the Calpine Corp. thermal energy power plant in Middletown, California. Natural gas creates about half as much carbon-dioxide pollution as coal. Photographer: Ken James/Bloomberg

A U.S. energy policy that shifts electric-power generation to natural gas from coal can help President Barack Obama meet his goal of cutting greenhouse-gas emissions, Deutsche Bank AG analysts said.

Boosting gas’s share of power generation to 35 percent by 2030, from 23 percent last year, is possible because of an increase in supply taken from shale, Kevin Parker, global head of asset management, and Mark Fulton, head of climate change investment research, said in a report released today.

Natural gas creates about half as much carbon-dioxide pollution as coal and, combined with wind, solar and nuclear power, might cut coal’s share of U.S. energy generation to 22 percent by 2030 from about 47 percent now, according to the report. Such a strategy would trim emissions from power plants by 44 percent from 2005 levels, the report said.

“A significant switch by the U.S. electricity sector from coal to natural gas would be the most secure, least-cost approach to lower emissions,” the analysts wrote.

The study calls for wind and solar energy to rise to 14 percent of the U.S. energy mix by 2030 from 2 percent.

Reducing coal’s share of energy generation would let Obama meet his greenhouse-gas-reduction targets through “domestically abundant and secure sources of energy based on known technology that can easily be deployed at reasonable cost,” the analysts wrote.

Obama set a goal of cutting U.S. greenhouse-gas emissions about 17 percent by 2020 and about 83 percent by mid-century.

Common Ground

The president, at a Nov. 3 news conference after Republicans won control of the House of Representatives, said promoting greater use of natural gas is an issue on which Republican and Democratic lawmakers should find common ground.

Natural gas has become a more economical fuel as an increase in the volume of shale gas causes prices to fall, the report said.

Gas from shale may total half of the U.S. natural-gas supply by 2035, up from 20 percent today, according to IHS Cambridge Energy Research Associates, an Englewood, Colorado-based adviser to energy companies.

The technique used to extract the gas, known as hydraulic fracturing, is being studied by the Environmental Protection Agency for possible contamination of drinking water.

Environmental groups such as the New York-based Natural Resources Defense Council say the chemicals used in the process are often toxic, citing cases in Wyoming and Pennsylvania where residents were told not to drink well water.

“We assume that the environmental issues associated with non-conventional shale extraction are manageable even with more restrictive environmental regulation, which we view as likely and probably even necessary to ensure best practices,” the analysts wrote.

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