Revolution has been an overused, and often quite inappropriately applied, term in many recent writings about technical advances in general and about energy transitions in particular. But there are phenomena, which deserve this description. Two prominent examples include the return of the United States to global dominance in the extraction of hydrocarbons and the concurrent transformation of America’s electricity generation.
Following many decades of global dominance, US oil production was surpassed by the Soviet output in 1975 (and by Saudi production in 1977), and in 1983 the USSR also became the world’s largest natural gas producer. Decades of America’s falling crude oil output engendered concerns about massive import deficits; even as recently as 15 years ago the consensus envisaged the need for large-scale and costly LNG imports.
Fracking (more accurately the combination of horizontal drilling and hydraulic fracturing) changed all of that. In 2012, the US regained global primacy in natural gas extraction by surpassing Russia, and in 2017 it became once again the world’s largest producer of crude oil. The US Energy Information Administration sees further increases, with crude oil output forecast to rise by nearly 10 per cent between 2018 and 2020 and natural gas set to increase by about 3 per cent.
The surge in crude oil output made the US, once again, an oil exporter, while the abundance of inexpensive natural gas (in April 2019 it was 35 per cent cheaper than in April 2010) has enabled another energy revolution by accelerating the retreat of coal from the country’s electricity generation.
At the beginning of the 21st century, the US generated about 52 per cent of its electricity from coal, and that share declined to 45 per cent in 2010, 33 per cent in 2015 and 27 per cent in 2018. And 2019 will be the first year when it will drop below 25 per cent as the share of natural gas approaches 37 per cent.
As I expected, this major fuel substitution, driven by inexorable economic and technical imperatives, has not been affected by the President Donald Trump’s pro-coal rhetoric (and it will continue even if he were to secure the second term).
The transition has already led to welcome environmental benefits. Natural gas emits much less CO2 per unit of energy than coal. In the US it averages 56 kilograms per gigajoule, compared to 98 kg CO2/GJ for hard (bituminous) coal and about 103 kg CO2/GJ for American lignite (soft coal).
Moreover, combustion of the gaseous fuel in combined-cycle gas turbines can now proceed with efficiencies of up to 62 per cent compared to 38-42 per cent in a typical coal-fired boiler-steam turbogenerator units. This means that CO2 emissions per unit of electricity can be just a third of those generated by coal-fired plants. This large relative gain has been translated into an impressive absolute decline in emissions.
US CO2 emissions from electricity generation peaked in 2005 and by 2018 they had declined by nearly 30 per cent, reaching the lowest level since 1987. Adding non-carbon sources (above all new wind-generating capacities) accounted for 49 per cent of this decline, with the rest coming from the switch to different fuels (dominated by the ascent of natural gas).
In contrast, between 2005 and 2017, CO2 emissions from Germany’s energy sector declined by less than 18 per cent. "Energiewende", the heavily subsidised and costly push toward greener generation, has now installed more generating capacity in renewables than in fossil-fuelled plants (by 2019 about 120 GW vs. less than 80 GW) but it has not been able to match the rate of CO2 decline resulting from the US substitution of gas for coal.
The lesson is obvious: the most effective early move on the long road to decarbonising electricity generation is to replace coal burned in large central stations by natural gas in combined-cycle turbines.
