The United States emits a lot of carbon dioxide — about 5.9 billion tons in 2013 alone, second only to China’s 9.5 billion tons. It’s easy to bash the U.S. when the topic of climate change is up for discussion.
But it’s also easy to overlook this fact: The U.S. is leading the world in reducing its carbon dioxide emissions. These reductions are largely due to the innovation that is happening not only in green energy, but in the oil and gas sector’s ability to produce hydrocarbons from shale deposits.
Thanks to soaring domestic production of natural gas — up by 27 percent, or about 2.7 million barrels of oil equivalent per day since 2003 — the U.S. has been able to reduce the amount of coal it consumes for electricity generation. According to the latest data from the BP Statistical Review of World Energy, “U.S. coal consumption has declined by about 2.1 million barrels of oil equivalent per day. Put another way, the U.S. is now burning about the same amount of coal as it did back in 1987.”
The decrease in coal consumption has resulted in major reductions in carbon-dioxide emissions, even when compared to Germany, a country that many environmentalists consider an example to be imitated. During the past decade German consumers have subsidized about $ 100 billion of renewable energy programs, according to a Financial Times report.
While it’s true that Germany is now producing more solar energy than any other country, it’s also true that the U.S. has achieved far greater emissions reductions than Germany.
Since 2003 according to the latest BP Statistical Review of World Energy, “the U.S. has reduced its carbon-dioxide emissions by six times what Germany has achieved, and it has done so at a far lower cost.”
The U.S. is now the envy of the rest of the world. Over the past two years, U.S. natural gas prices, measured at the Henry Hub in Louisiana, have averaged about $4 per million BTU (British thermal unit). In the European Union, those same 1 million BTUs of gas will cost roughly three times as much. In Japan, it will cost about four times as much.
The dramatic increase in domestic oil and gas production is creating some friction. Many people are concerned about the possibility of water contamination. But remember that in 2011 the head of the Environmental Protection Agency, Lisa Jackson, in testimony before the U.S. Senate, said, “I’m not aware of any proven case where the fracking process itself has affected water.”
Continuing improvements in horizontal drilling and hydraulic fracturing are allowing the U.S. to produce record quantities of natural gas. This flood of gas is stimulating the economy, creating large numbers of jobs and attracting tens of billions of dollars in foreign investment.
Last fall, Wallace Tyner, an energy economist at Purdue University, estimated in a study that the shale revolution was adding some $473 billion per year to the U.S. economy, or about 3 percent of the gross domestic product. Energy consulting firm IHS recently estimated that more than 2.1 million jobs in the U.S. are now supported by shale-related oil and gas activity.
Over the past few years, numerous energy experts and politicians have claimed that the U.S. would see big economic gains due to breakthroughs in renewable-energy production. While it’s true that the cost of a solar photovoltaic module has fallen from more than $20 per watt in the 1980s, to less than $1 per watt today, the energy story of today is the resurgence of America’s oil and gas production.
This resurgence has occurred due to continuing innovation in everything from better drilling rigs and drill bits to improved seismic techniques and more powerful pumps. It is these improvements which may not be glamorous, but they are giving the U.S. a major competitive advantage in the world economy while also helping the country reduce its carbon-dioxide emissions.