imgGasIcon Natural Gas

Discourage or encourage drilling and burning natural gas for energy. Natural Gas is a fossil fuel that is used for electricity, heating, and industry. When burned, it releases carbon dioxide (although less than coal and oil) and, if leaked into the air, it contains high amounts of methane. Natural gas drilling uses large amounts of water and can cause contamination.

Examples

  • Governments implementing laws against fracking and taxes on natural gas.
  • Financial services industry (e.g., banks) or global development institutions (e.g., World Bank) limiting access to capital.

Big Message

  • More natural gas is not an effective long-term strategy for the climate – it is less carbon intensive than coal, but its infrastructure has a long life so it competes with the adoption of lower-carbon alternatives as they scale up.

Key Dynamics

  • If gas is subsidized, high-carbon coal and oil decrease slightly and natural gas goes up. Overall, there is no net benefit to emissions.
  • If gas is taxed, in absence of other policies, the opposite of the above is true; natural gas goes down, but very high-carbon coil and oil increase, with no net benefit on emissions or temperature change. We call this the “squeeze the balloon” problem – depressing fossil fuel emissions in one area causes them to pop up in another. Adding a carbon price is a good solution to the “squeeze the balloon” problem, as it addresses all fossil fuels together.

Potential Co-Benefits of Discouraging Natural Gas

  • Gas drilling is water intensive, so limiting extraction can improve water security and quality at the source of production and protect wildlife habitats, biodiversity, and ecosystem services. [1] [2]
  • There are concerns about the health and environmental impacts of the gas drilling approach, known as fracking, that have led many places to ban it. [3] [4] [5]

Equity Considerations

  • Generally speaking, natural gas production in developed countries is disproportionately located near low-income and minority communities. [6] [7] [8]
  • There have been cases where wealthy white communities have successfully resisted natural gas development and it has shifted to low-income communities predominantly inhabited by people of color. Low income communities often have less ability to influence development. [9] [10]
  • Limited data on the placements of fracking and power plant sites in developing countries exists, yet macro-level research shows that low-income communities and communities of color disproportionately experience the negative impacts of natural gas drilling and burning. [11]

Slider Settings

The following table highlights the numerical ranges for the labelled input levels of the Coal slider. Each of the energy supply sliders is set to reflect a similar percentage cost increase or decrease for each input level.

very highly taxed highly taxed taxed status quo subsidized
Change in price per thousand cubic feet (Mcf) +$6.00 to +$3.00 +$3.00 to +$2.00 +$2.00 to +$0.30 +$0.30 to -$0.30 -$0.30 to -$1.00
Cost increase or decrease +200% to +100% +100% to +60% +60% to +10% +10% to -10% -10% to -30%

Model Structure

The cost of natural gas affects three significant decisions regarding energy infrastructure:

  1. Investment in new capacity (whether or not to build new processing and power plants);
  2. use of capacity (whether to run existing plants);
  3. retirement of capacity (whether to keep plants longer or shorter than the average of ~30 years).