The Influence of Shale gas on U.S. Energy and Environmental Policy

Abstract

http://globalchange.mit.edu/research/publications/2219The emergence of U.S. shale gas resources to economic viability affects the nation’s energy outlook and the expected role of natural gas in climate policy. Even in the face of the current shale gas boom, however, questions are raised about both the economics of this industry and the wisdom of basing future environmental policy on projections of large shale gas supplies. Analysis of the business model appropriate to the gas shales suggests that, though the shale future is uncertain, these concerns are overstated. The policy impact of the shale gas is analyzed using two scenarios of greenhouse gas control—one mandating renewable generation and coal retirement, the other using price to achieve a 50% emissions reduction. The shale gas is shown both to benefit the national economy and to ease the task of emissions control. However, in treating the shale as a “bridge” to a low carbon future there are risks to the development of technologies, like capture and storage, needed to complete the task.This paper was supported by the U.S. Department of Energy, Office of Science (DE-FG02-94ER61937); the U.S. Environmental Protection Agency; the Electric Power Research Institute; and other U.S. government agencies and a consortium of 40 industrial and foundation sponsors