Graph of the Year

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I suspect this is not the most closely watched contest, but my nomination for graph of the year has to be this one showing the transformation of the US electricity grid in recent years.
EIA

This rather significant shift from coal to gas is one of the reasons behind America reducing its carbon emissions more than any OECD country between 2006 and 2011. It may be difficult for some to acknowledge it, but it is now important to recognise that the US shale gas revolution has opened up the possibility for quick and easy cuts to US emissions. Gas plant capacity factors remain significantly lower than for coal plants. This opens up the possibility of pain free cuts in electricity emissions for the rest of the decade, simply by increasing the electricity from existing gas plants while reducing that from coal plants.

Instead of calling for bans on fracking, a more nuanced position is necessary. One which tries to minimise the environmental risks from fracking while hastening the switch from coal to gas.

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13 thoughts on “Graph of the Year

    Timberati said:
    December 23, 2012 at 8:25 pm

    Every environmentalist ought to have this tattooed on an arm: “The best is the enemy of good.” – Voltaire. Every energy source has downsides. The inanity of the blocking of hydraulic fracturing is it will result in more coal (or worse–wood) burning. I’d call it insane but that would be an insult to crazy people.

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    Geoff Russell said:
    December 23, 2012 at 9:22 pm

    What’s missing is nuclear: http://www.iea.org/stats/pdf_graphs/USELEC.pdf

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      Robert Wilson said:
      December 23, 2012 at 9:26 pm

      Over the long term certainly, though I was referring specifically to what has happened in the last few years. The improvements in nuclear capacity factors levelled out around 90% in the early 2000s, and no new capacity came online. So, little has changed recently.

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        Geoff Russell said:
        December 23, 2012 at 9:30 pm

        Agreed. But that second grey bar makes it look like all the oil reduction was due to coal, but it was similarly due to nuclear. It’s tough graphing percentages of a cake when the cake is also growing and trying to deduce causality!

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        Robert Wilson said:
        December 23, 2012 at 9:34 pm

        I agree with the point, however the post is about the switch from coal to gas, so this is a bit off topic.

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    dhymers said:
    December 24, 2012 at 1:31 pm

    I dont think its quite that simple. My personal opposition to fracking is not only environmentally based, its also of an economic concern for booms.
    Natural gas prices will not stay low, and are infact already choking producers with a glut, Chesepeake energy sold out of the shale gas game and Rex Tillerson refered to making no money at all. This will change when the US starts exporting gas to europe and other markets, essentually doubling domestic price
    Also, the co2 savings from gas displacement of coal are apparently negligable in relation to total emissions reductions which are much more due to recession
    “The CO2 story

    Natural gas is an even smaller factor in reducing CO2 emissions than it is in displacing coal. In fact, natural gas is the only fossil fuel that added emissions to the US inventory between 2006 and 2011 – a total of 138 million metric tons during the period (Exhibit-6).

    This figure is important because many have justified the low price of natural gas as good for our climate because it saves CO2 by displacing coal. But the portion of those emissions that displaced coal and oil emissions was limited. Table-1 shows the emissions savings involved in the price driven switching from coal andoil to gas. For coal the savings is a half-ton of CO2 per MWh displaced. For oil, it is around 0.15 tons. As shown in Table-1, natural gas displaced around 89-96 million MWh of coal electricity and 19 for petroleum. The two together generate a savings of »50 million metric tons of CO2—that seems significant at first glance, but total CO2 emissions declined by 446 Million metric tons between 2006 and 2011. The 50 million metric ton savings from natural gas accounts for just 11% of that. In other words, nearly 90% of the decline in the total CO2 emissions during the period 2006-11 should be attributed to other factors that slashed the consumption of both petroleum and coal.”
    from:http://co2scorecard.org/home/researchitem/24

    Further to this, when methane leaks are factored into fracked gas, the emissiosns story could be worse than coal.
    http://green.blogs.nytimes.com/2011/09/14/replacing-coal-with-gas-is-no-panacea-study-says/

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    Tom White said:
    December 31, 2012 at 5:35 pm

    Carbon counter as per twitter, this article, and indeed the comment left by dhmyers above tend to show that the decline in CO2 levels in recent times were as much to do with addition of renewables to the grid, as with any coal to gas conversion. Indeed a drop in demand due to recession would also seem relevant. I’m not saying that Natural Gas cannot displace coal and save CO2 – I’m saying that the stats seem more complex than at first glance.
    http://www.greenpeace.org.uk/newsdesk/energy/investigations/how-iea-and-harvard-got-it-wrong-impact-shale-us-emissions

    “On this “normalised” basis the numbers are still similar; coal power fell by 105TWh, gas generation rose by 33TWh and renewables rose by 93TWh.”

    Add in the increased emission leaks from Shale Gas, and GHG potential is a lot higher.

    Wrt to Shale Gas in UK, an economic factor currently being overlooked by many is the lower calorific value of Shale Gas compared to North Sea Gas / LNG ..
    This shows different composition of Shale Gas in US including flucuating wobbe numbers.. http://www.pipelineandgasjournal.com/shale-gas-measurement-and-associated-issues?page=show
    This from a CNG company with reference to UK Shale Gas. http://www.cngservices.co.uk/assets/Presentations-2/SMI-Shale-Gas-Environmental-Summit-23-May-2012.pdf

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      Robert Wilson said:
      December 31, 2012 at 6:15 pm

      This Greenpeace article fundamentally misunderstands the issues. What they don’t understand is how fuel switching from coal to gas works.

      To simplify: the US peak capacity is 1000 GW (figure is a bit higher.) To meet this you need 1000 GW (and a bit spare) of conventional capacity installed. However, because demand varies massively throughout the year plants don’t have to run most of the time. In 2006, US coal plants ran on average 72.6% of the time. The figure for 2009 however was 63.8%. In 2006 gas plants ran 38.8% of the time, but in 2009 ran for 42.2% of the time.

      So, getting back to what Greenpeace is claiming. In 2009 they say renewables reduced emissions more than gas. Let’s look however at the huge reduction in coal use. If the fossil fuel mix in 2009 had been the same as in 2008 the reduction in gas use and coal should be similar. Instead gas is increasing.

      What happened in 2009 is that coal’s capacity factor went from 72.2% to 63.8%, a huge drop. Gas’s went from 40.6 to 42.2%, an increase. If fuel switching such as this had not occured then both gas and coal use would have decreased by something like 100 TWh.

      Greenpeace also don’t bother considering the impact of new wind generation on the fossil fuel mix. For example in the UK 1 TWh of wind mostly results in 1 TWh less of gas on the grid. And as far as I understand it, wind still mostly displaces gas in the US. So, cheaper natural gas is actually offsetting reductions in gas plant output due to increased wind capacity.

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        Tom White said:
        December 31, 2012 at 6:47 pm

        I don’t think you’ve read the article … Greenpeace state that Renewables displace gas as well as coal and take that into account in their figures. Invariably the drop in emissions is more to do with recession in 2009. Coal has declined, and while gas has taken over some of the load, renewables are also contributing to less CO2. Ie if you take your last paragraph, where you say 1TWh of wind displaces 1TWh of gas, then its still CO2 reduction.. and actually Wind is quite predictable, so grid management requires less background spin reserve. (Lets face it we rarely hear the claim that a large Gas/Nuclear/Coal pwr station requires over capacity feed to grid, to cover for unlikely event of failure – but a failure none the less has to be accounted for)
        I’m also concerned about Methane leakage rates, and their particular effect on near term warming, but more study needs to be done, and Engineering solutions may be applied, however as always there will be resistance to cost.
        As regards Shale gas – not my energy of choice – see it as more PR and boom bust, than a sustainable industry. The US market is completely cocooned, therefore what happens there, unlikely to happen in European market..Tory tax incentives aside. Many economists seem to agree that it will be more of a challenge to get Shale Gas to market at a reasonable price, while personally I doubt the Resources exist, nor indeed the technology to turn those Resources into reserves, economically, and in an environmentally safe manner, is available currently.

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        Robert Wilson said:
        December 31, 2012 at 6:53 pm

        Tom

        I have done the courtesy of spending time explaining why I think the article is wrong. Now, instead of accusing me of not having read the article, could you possibly try addressing the points I made.

        I am interested in quantifying emissions reductions accurately, not producing the kind of waffle you have just done. I don’t wish to be rude, but this kind of comment is just a waste of my time.

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    Tom White said:
    January 1, 2013 at 12:22 pm

    Perhaps I’m having difficulty understanding your explanation. From looking at the figures referenced in the Greenpeace report and going to EIA latest report they seem to suggest the actual figures for electricity generated. I can follow this argument through as therefore if x GWH are generated by coal at y tons of CO2 and a GWH are generated by gas at b tons of CO2 then one can work out how many tons of CO2 each emitted.
    You seem to talk about capacity, rather than generation, and don’t qualify whether capacity is total capacity, coal generating capacity, nor gas generating capacity, nor whether capacity rose or fell in the years quoted. By looking at the EIA figures one can see that total generation has gone up since 2009, and if you look at 2011 figures then it would seem coal produced roughly same amount of electricity as in 2009, while gas, hydro and wind all contributed to the extra energy.
    http://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf page 96/ table 7.2b
    From looking at that table that in 2011 compared to 2009, of the extra generation 50K GWH were added each by Hydro and Wind, and 90K by gas with small loss in coal and nuclear. ie Wind and Hydro combined was greater than gas.
    In 2012 it would seem gas has added greatly to generation [2 dollar/mcf gas] and we’re seeing a definite switch of coal directly to gas. Hydro seems to have dropped (most likely drought conditions) while wind has increased somewhat. Overall the pattern is a switch from coal to gas, but , I suspect gas prices are on their way up, so not sure whether a reversal will be seen in the future.

    I have a problem with your statement about regulation of fracking. (I don’t believe the industry can be regulated as its only with removal of clean air/water act the industry took off, and in terms of raising capital the 2009 SEC rule change allowed claiming of PUD (proved Undeveloped Reserves) without independent verification that allowed for capital investment (albeit with some crazy conditions linked to production ). The shale gas companies are losing 10bn USD a quarter (Arc research). If companies are losing money, then they cut corners, or put it this way, if everyone is losing their shirt as Exxon CEO stated, then where’s the extra expenditure for adherence to come from. A rebalancing of the price of gas has to occur, but it may not do so in the near term.
    Well decline rates are having an effect on production – although extra dry gas as condensate by product is still being added. Also while many companies have stated they have cut back, there are still shuttered wells being opened as capital rules/needs requires it. The industry is in a mess, but its co-dependent with the banks. Indeed Exxon have stated they’re going to produce more gas, as they have the cash to pick up assets cheaply. That said Chesapeake failed to find a buyer for some assets in 4Q which it needs to divest in order to meet loan repayments/capital shortfall, indicating the market pricing of assets is not at the bottom. They are paying 8-10percent on loans when QE of 80bn /month is in effect and when money has never been cheaper. [industry ave excluding CHK = 5%, Other industries eg Telecoms 2% interest on capital loans].

    General consensus is gas at 5-8 dollars/mcf is break even price dependent on shale play, but analysts foresee sub 5 dollar gas for 2013. When the ‘Minsky moment’ comes, expect sharp rise in price.

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    […] Compare this increase in coal use with what is happening in the US: […]

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    Lindsay said:
    January 21, 2013 at 1:51 am

    Hi Robert, fascinating blog you have here.

    I’ve been tempted to start commenting all over the place, but this one really drew my attention. Excuse the length comment in advance.

    Although I do think this is a lovely graph, which highlight the major shift in US power mix over the years it would be nice if it included the rest of the fuel mix. They are still a small part of the story, and by not including them this graph leaves itself open to some rather bizarre critiques.

    If you look at the last decade 2003 to 2012, (and for 2012 consider data from Nov 11-October 12), because you really should use a year of data to rule out seasonality (the IEA should no better), these are the changes in the US fuel mix for net power generation:

    Coal: – 13% (50% to 37%)
    Gas: + 13% (17% to 30%)
    Nuclear: 0% (20%)
    Hydro: 0% (7%)
    Petroleum: -3% (4% to 1%)
    Renewables: +3% (2% to 5%)

    Almost all the 3% gain in renewables is wind (choose your superlative) and the 3% drop in petroleum is liquids not coke.

    Now, with all the number we can see that as you so rightly pointed out the big story is the shift from gas to coal.

    Over this same period the carbon intensity of electricity (scope 2 only) has dropped more than 20%. If you think wind displaces coal or diesel, then the wind is good for a quarter of this drop. If you think wind displaces gas, which it seems you do, then it only claims an eighth of the credit.

    So natural gas can have 75-85% of the credit for reducing the carbon intensity of power over the last decade in the US (with a small caveat of uncertainty around methane leakage).

    This said, the power sector is only responsible for around a third of the US emissions drop in 2006-2011. A further third came in transportation (mostly driving less) and the rest was from a mix of agriculture, industry (a little due to gas) and residential.

    So there you go, I’m only giving a third of the carbon credit to fracking. An although it is a lovely graph, i would like the other sources, and can’t cope with using four winter months for 2012.

    That said, this may be the first time I’ve ever commented on a blog, so perhaps it actually was my graph of the year. Sorry about the crazy long comment.

    Lindsay

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