May 9, 2023

The Pros and Cons of Natural Gas

The Role of a Fossil Fuel in Sustainable Power Generation

Unlike wind, solar, hydropower, or nuclear, natural gas is a fossil fuel that must be burned to release energy. It is non-renewable and releases high levels of greenhouse gas emissions.

That makes natural gas unique in our ongoing series of alternative energy sources. However, natural gas will likely play an important role in the transition toward sustainable energy. It has significant advantages over oil and coal and has the added benefits of being widely available, easily dispatchable, and relatively cost-effective.

This article will explore how natural gas is currently used in the global energy mix and introduce some of the pros and cons of using natural gas alongside other energy sources.

How Is Natural Gas Currently Being Used?

Natural gas makes up 24 percent of the global energy mix. On its own, natural gas makes up a larger share of global energy consumption than all low-emission and sustainable energy sources combined.

The United States is by far the world’s largest consumer and producer of natural gas, producing nearly a quarter of the world’s supply of natural gas and consuming more than 830 billion cubic meters (BCM). Russia, China, Iran, and Saudi Arabia follow, while Canada consumed 112 BCM in 2020.

Trinidad and Tobago gets nearly 90 percent of its total energy from natural gas. Uzbekistan, Turkmenistan, Qatar, and Bangladesh all rely on gas for more than 70 percent of their total energy requirements.

Because of falling demand and lower energy usage caused by the pandemic, natural gas production dropped to 3.9 trillion cubic meters (TCM) in 2020. However, this short-term drop is not expected to be an ongoing trend, and by 2040, gas production is expected to grow by 24 percent to 4.85 TCM.

The Advantages of Natural Gas

Low Construction Cost

Though the average cost varies depending on the type of facility and the technologies used, natural gas-fired plants are relatively straightforward and cost-effective to build, especially when compared to other power-generating facilities.

Combustion turbines burn natural gas to spin a turbine. According to the U.S. Energy Information Administration (EIA), combustion turbine facilities can range from as low as $709/kilowatt (kW) of generating capacity for industrial frame turbines to $1,169/kW for aero-derivative turbines.

Combined-cycle plants use a mix of combustion turbines and steam turbines. Waste heat from the gas turbine is harnessed to turn a nearby steam turbine, increasing efficiency and lowering operating costs. The average cost of a combined-cycle facility is around $1,000/kW, though this can rise to $2,471 for a facility built with 90 percent carbon capture or sequestration (CCS).

Despite this variation, natural gas plants are among the cheapest facilities to construct, making them a highly attractive way to increase capacity.

Widespread Availability and Role in Energy Transition

As we transition toward renewable and low-emission energy sources, we still need to ensure robust, reliable, and affordable access to electricity.

The energy currently produced by burning oil and coal must come from somewhere, and, at least in the short-term, today’s renewable energy and storage technologies can’t make up the difference.

Natural gas can be viewed as a bridge to help accelerate away from comparatively worse oil and coal and ease the transition to wind, solar, hydro, and nuclear power. Natural gas releases nearly half the CO2 emissions of coal and produces significantly fewer pollutants, while technologies such as CCS can further reduce emissions. Though it’s not perfect, it’s a significant improvement.

The widespread availability of natural gas resources also makes it an attractive alternative. There are an estimated 205.4 trillion cubic meters of proved reserves that can be reasonably recovered under existing economic and operating conditions.

For countries rich in natural gas resources, like the U.S., natural gas also provides a level of energy independence that reduces the need to rely on oil imports, though, as we will see below, this is not true for every country or region.

Easily Dispatched in Response to Demand

The greatest advantage of natural gas facilities is that they can easily be turned on or off within minutes to respond to fluctuations in demand. As variable power sources such as wind and solar become more prominent, the ability to dispatch power when it’s needed in response to daily spikes, seasonal trends, or short-term capacity requirements is vital to ensuring reliable access to power.

The different types of gas-fired plants can be used to meet different energy needs. Combined-cycle plants are more efficient, making them well-suited to providing baseload power. Combustion turbines, on the other hand, are less efficient and can be turned on for peak times and turned off when demand is low.

The Disadvantages of Natural Gas

Greenhouse Gas Emissions and Leaks

Though better than oil or coal, natural gas is still a fossil fuel and still emits greenhouse gases such as CO2. When burned, natural gas has a lifetime emission rate of 78 grams of CO2 equivalent per kilowatt-hour (g CO2e/kWh), far lower than coal at 109 g CO2e/kWh. However, natural gas is mostly methane, a highly potent greenhouse gas that is 25 times worse than CO2 over a 100-year period. Unburned natural gas released into the atmosphere due to leaks or other waste can quickly overwhelm the savings.

One study found that a leakage rate of just 2.7 percent is enough to wipe out the climate benefits of using natural gas. Though leakage rates are disputed by industry, governments, and environmental groups, a separate study conducted using satellite data found that 3.7 percent of the gas produced in the Permian Basin leaked into the atmosphere, indicating that emission levels are higher than otherwise reported. In the U.S., 30 percent of methane emissions result from natural gas and petroleum systems.

Environmental Costs of Fracking

Natural gas deposits are located underground. Convention natural gas deposits are fairly simple to access using traditional drilling techniques. But as these easily accessible reserves have been used up, new techniques have been developed to access gas trapped in non-porous rock.

Hydraulic fracturing, commonly known as fracking, uses large volumes of water mixed with chemicals and sand to fracture the material surrounding the gas. Fracking is highly water-intensive, and a single well can use up to 9.6 million gallons of water. Toxic chemicals added to the water or dissolved from the naturally occurring materials in the rock mean that most of the water cannot be restored or treated. It ends up stored underground or in tailing ponds, where it can leak into nearby drinking water supplies.

In 2013, approximately 9.4 million people in the U.S. lived within one mile of a hydraulically fractured well, where they are at risk of increased air pollution and exposure to toxic chemicals known to cause illness, cancer, organ damage, nervous system disorders, or birth defects.

Subject to Market Prices and Shortages

Until recently, the low cost of natural gas was part of its advantages over other energy sources. However, as a globally traded commodity, natural gas is subject to price fluctuations and swings caused by supply and demand.

Natural gas prices have risen significantly in 2021, especially in Europe, due to supply disruptions caused by the pandemic, an unexpectedly cold winter, and dwindling storage levels. By mid-October 2021, gas prices in Europe were up 500 percent, while the U.S. saw price increases of 150 percent.

Europe, which relies on imports for 90 percent of its gas, is especially vulnerable to rising prices and reductions in supply from countries like Russia. Already, Europeans are seeing skyrocketing energy costs for electricity and heating. High natural gas prices can also lead to inflation as the cost of sourcing, producing, and distributing goods and services increases.

An Alternative Energy Source That Will Fill a Gap in the Global Energy Mix

In the quest for a more sustainable future, natural gas is just one step on the journey – not the end destination. It will play an important role in the coming years as we move toward more renewable sources of power. With more than 60 percent of current global energy produced by oil and coal, natural gas can help ease the transition while filling a vital gap and ensuring reliable and affordable access to power.

That said, recent price increases, supply shortages, and a growing recognition of the environmental impacts of fracking and leakages will likely temper some of the excitement for natural gas. To successfully reduce greenhouse gas emissions, natural gas should be used alongside continuous investment in other energy sources.

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Is Canada Really in a Recession?

December 23, 2023

Context A CBC News article discussed the possibility of the Canadian economy heading into a recession, or whether the country has already passed that threshold. The article discussed this possibility based on slowed growth, high inflation, and the Bank of Canada’s continued interest rate hikes. Analysis A recession is a significant reduction in economic activity that occurs over a length of time, usually months or years. One of the most accepted definitions of a recession comes from the economist Julius Shiskin in 1974, who identified the threshold to an economic recession as two consecutive quarters of declining GDP, although economists often argue about the comprehensiveness of this measure. The causes of a recession can be quite complicated and have many contributing factors. Some common examples include a sudden economic shock such as the recent COVID-19 pandemic, excessive debt, asset bubbles, inflation, deflation, or large technological changes. One major factor influencing the probability of an economic recession includes rising interest rates from the Bank of Canada, which has implemented the highest hike in the shortest amount of time in all of the bank’s history, raising the rate over eight times since 2022. The Bank of Canada increased interest rates in order to curb inflation since rising interest rates discourage taking on debt and spending. This further encourages companies to lower prices or slow inflation to increase demand. Currently, the Bank of Canada is keeping at the 5.0 percent rate but has said that further hikes are not off the table as inflation may continue to exceed acceptable rates. Increases in interest rates can certainly contribute to or precede a recession. In fact, the Bank of Canada has raised interest rates three times to slow inflation since the 1960s and all three times this action led to an economic recession. Current fears of a looming economic depression are also not unique to Canada, as following the COVID-19 pandemic, the global inflation rate increased to 8.73 percent in 2021. This was due to supply chain issues, as well as the effect of the Russia-Ukraine War creating rising food and energy prices, as well as general fiscal instability. A majority of the World Economic Forum’s lead economists agreed earlier this year that we could see the beginning of a global recession starting in 2023, which would certainly affect the Canadian economy. The article also discusses the Canadian economy’s slowed economic growth, as the GDP has stagnated in the second quarter of this year. However, it suggests other factors may explain the decrease, including striking port workers in British Columbia, and the resulting negative effect on economic activity. An RBC report mentions how on a per-person GDP basis, there has already been a decline for four straight quarters despite a surge in population growth, and concludes overall predictions for GDP growth do not look promising despite local factors including Canadian wildfires and strikes. They also point to a 0.5 percent increase in the unemployment rate over the past few months, which has historically tended to indicate a looming recession.

Ottawa Mayor and Lansdowne Park

December 21, 2023

Context The City of Ottawa Mayor, Mark Sutcliff released a statement about a revised plan for the redevelopment of Lansdowne, an urban public park containing historic landmarks and commercial venues. The project includes the demolition of a sports arena complex, stadium stands, and the building of a new event center, residential units, and retail space. Despite suggesting the new plan has addressed the concerns of residents, many issues remain. Analysis The City of Ottawa and the Ottawa Sports and Entertainment Group (OSEG) have been in partnership to develop Lansdowne since 2012 and finished an original redevelopment of the park back in 2014. A few years later in 2019, the financial sustainability of the park came to the city council’s attention, and in 2020 the partnership was extended another 10 years with direction to develop a new plan to revitalize Lansdowne. Consultation with community members started in 2020, with the original concept released last year in 2022, and a revised version released this month. Community feedback was acquired through various platforms including public information sessions, an open email for feedback, and public surveys. A summary report of that feedback was published on October 6th, which highlighted the six most common themes of community residents’ concerns. The first concern was related to the size and number of the multiple high-rise apartments which were designed to exceed 30 floors. In the new plan , they have removed one of the three planned buildings, with fewer total units in each, and only one tower with the potential to be built at 40 stories. Residents were also concerned about the loss of greenspace due to the new event center construction. Many people suggested they wanted that greenspace allocated elsewhere, or alternatively, an accessible greenspace roof on the event center. Although in the original plan the city had conceptualized a greenspace rooftop on the event center, this was scrapped in the new plan as it was deemed too expensive to maintain. Respondents wanted a restriction of vehicles to the premises to promote pedestrian safety, a concern that has existed since Lansdowne was first renovated back in 2014. They also wanted more public transportation infrastructure to and from the park, whether that is the local city buses, trains, or cycling infrastructure to reduce congestion on connecting roads. Relatedly, residents also desired more accessible public use space from washrooms to water fountains to usable and free space for people to occupy. The new plan has reduced the number of parking spaces for the residential buildings to meet the Bylaw limit of 0.4 spaces per unit, down from 739 to 336 spaces, while they added 36 new spaces for the event center. In terms of accessible public space, the new plan includes 27,000 square feet of space originally earmarked for the third residential building, now available for an unspecified “public realm.” Residents also wanted more local and less corporate or big-box businesses, to reflect the unique local community better. The new plan does suggest the amount of retail space has been reduced from 108,000 square feet to 49,000 square feet but does not directly address the desire to attract smaller, local businesses. Finally, there was also a concern about financial transparency of how the project is being funded and the resulting impact on the City. The Federation of Citizens Association (FCA) which represents over 70 community groups voted unanimously to oppose the new plan, which comes with a very costly price tag of $419 million, increased from $332 million of the first plan. They cite that the debt comes at a time when the transit system is facing major issues, and the city is struggling with a housing affordability crisis.

Danielle Smith - Conflict of Interest

December 20, 2023

Context Newly elected Premier of Alberta Danielle Smith has defended her cabinet which is coming under fire over conflict-of-interest concerns. Environment and Protected Areas Minister Rebecca Schulz’s husband, Cole Schulz , may be lobbying the government in the areas that the Minister works in. Cole Schulz's firm is working on removing the protection of a threatened caribou range to make room for the oil and gas industry – which has raised concerns over who has Minister Schulz’s ear. Analysis The company that Cole Schulz is a partner with, Garrison Strategies, was hired by the Explorers and Producers Association of Canada and is working to influence the government on the issuing of reclamation certificates for oil and gas sites. The lobbyists are working to gain more access to protected caribou habitats to expand the oil and gas industry. They are hoping to “ address the moratorium on tenure in caribou regions ” which would effectively give them better access to land and investments. The Little Smoky and A La Peche herds in northwest Alberta were protected by a moratorium in 2013 which stopped the granting of new energy leases in this area. At the time, 95 percent of the herd’s range was heavily damaged. Phillip Meintzer of the Alberta Wilderness Association found that though records show that Garrison didn’t contact Environment and Protected Areas directly, the firm’s causes are “ too close for comfort ”. Meintzer also notes that as Garrison works on opening the protected caribou land for Alberta Energy, Environment and Protected Areas should be working on a protection plan for the federally and provincially designated threatened animal . Minister Schulz is working closely with the ethics commissioner, however, Danielle Smith confirmed that “ the ethics commissioner has looked at it, given guidance and there’s no violation [of the Conflicts of Interest Act]”. Cole Schulz also indicated that his firm wasn’t aware that Minister Schulz breached the Act at any time. Meintzer suggests that this situation “ calls for a further look ” from a third party. Sources https://globalnews.ca/news/9988998/alberta-premier-danielle-smith-rebecca-schulz/