February 22, 2024

One of Biden’s big climate bets follows an old logic

In a sense, the story of American natural gas is a particularly American story, a story of entrepreneurial drive, boom and bust, and the will to find opportunity where no one has looked. Of resourceful self-preservation for self-preservation’s sake alone. Of the supply that the demand needs, and of producing that demand with the available resources, even if the logic is sometimes difficult to follow. Natural gas has powered American homes, American electricity and, more recently, American plastics, an industry typically fueled by oil. As the grand ambitions for that latter endeavor begin to show signs of waning, the industry has pivoted once again, this time to embrace its potential as part of America’s climate future. When the Biden administration announced this year that natural gas would play a leading role in building facilities for hydrogen — a fuel that could help reduce emissions from heavy industry — it was hardly a surprise: The industry appears to have been working hard . to secure his place.

The gas industry has gained a lot of experience in defending itself. A few decades ago, as the US as a whole became more environmentally conscious, the newly formed Environmental Protection Agency kept an eye on the gas industry, and public health research began to suggest that gas stoves might be bad for your health. In the 1970s and 1980s, the industry went on the offensive to downplay these dangers, using the same strategies and even the same PR firms as the tobacco industry to avoid regulation, and it was largely successful. Maintaining demand for the product – gas stoves were “gateway” appliances that increased the likelihood that a home would have a gas oven, a gas clothes dryer, and so on – was critical.

The fracking boom reinforced this need and flooded the market with cheap gas. When hydraulic fracturing and horizontal drilling technologies began releasing gas from hard-to-reach shale formations, production soared. The U.S. natural gas market exploded with supply, causing gas prices to begin to fall. All that gas had to go somewhere.

But then a fortuitous twist took care of that spot: ethane, a previously unusable waste product of natural gas extraction, turned out to be useful. Over the past two decades, the industry has begun pouring resources into commercializing a method to “crack” ethane molecules, allowing them to be rearranged into ethylene, the main building block of plastics. The majority of petrochemical cracker plants built after 2012 were designed to use ethane. Drilling for “wet” gas – which has a higher ethane content and is therefore less useful as natural gas intended to be burned as fuel – became a profitable venture.

This ushered in the gas-for-plastic revolution: the industry anticipated a plastics boom and planned ethane crackers throughout the Ohio River Valley and on the Gulf Coast. In 2018, the International Energy Agency predicted that petrochemical production – most of which consists of plastic – would account for almost half of total fossil fuel demand growth by 2050. As of February 2020, some 343 new plastic production plants and expansions were permitted or planned in the U.S., according to the American Chemistry Council, a top trade organization for U.S. plastics companies. Shell’s cracker, a massive operation on a sprawling 384-hectare campus, came into operation last year, with its own ethane pipeline snaking out of the shale gas fields to supply them. “What led to the boom in the construction of new plastics facilities in the U.S. was not the rise of massive public demand for plastics, but the fact that natural gas feedstocks became incredibly cheap,” said Carroll Muffett, president of the Center for International. Environmental Law, a nonprofit human rights and environmental law firm, told me in 2020. “The fracking boom sparked the renaissance of the US plastics industry”

Yet the production of plastic is no guarantee; Almost every boom eventually collapses, and the market begins to show tentative signs of decline. Some of the planned plastic factories never came to fruition, either because they failed to find an investment partner or because they faced falling commodity prices and allegations of corruption. There are indications that demand is currently slowing, leading to tighter margins for plastics makers (although there is no shortage of predictions that the industry will continue to grow, inside and outside the US).

Regardless of the future of plastics, the U.S. gas industry is already well into its next gamble, or rather gamble: One is the monumental scale construction of liquefied natural gas (LNG) export facilities. Within a day of Russia’s attack on Ukraine in February 2022, the gas industry had sent a letter to the White House seeking approval for pending plans to build terminals to send gas to Europe, to avert an energy crisis that has would certainly cause conflict. cause. The Biden administration largely complied, and the big fossil fuel companies saw their profits more than double year-over-year. Now LNG terminals are popping up all over the US Gulf Coast and gas exports to Europe remain high. While some still see natural gas as a ‘bridge fuel’ between more carbon-intensive fuels, such as coal and oil, and a truly clean energy future of solar and wind, that idea is widely questioned: the use of natural gas appears to be primarily a bridge to use of more natural gas. Shipping LNG abroad appears to be worse for the environment than burning coal, leading to questions about whether the Biden administration will step in to halt infrastructure buildout.

The industry’s other target has also received direct support from the Biden administration, whose signature climate laws include billions of dollars in investments and tax breaks for hydrogen fuel – made from natural gas. For example, Exxon is heavily lobbying the Biden administration to give the industry access to tax credits outlined in the Inflation Reduction Act; Last month, the Biden administration announced it would invest $7 billion to create seven hydrogen “hubs,” and hydrogen from gas was central to the plan.

Hydrogen is an intriguing form of energy, if it can be made efficiently. It can be burned in engines with no CO2 emissions, or placed in a fuel cell to provide electrical power, where the only byproduct is water. It could be a climate solution, especially for the most difficult energy consumption sectors to reduce, such as steelmaking and shipping, which still rely on the world’s most polluting fuels, including coal and bunker oil. But no one has figured out exactly how to split molecules to make hydrogen without using a lot of energy. Its potential as ‘green’ energy therefore comes down to the way in which that power is delivered. Emission-free hydrogen must be made using only energy from non-combusting sources, such as solar and wind energy (insiders call this ‘green’ hydrogen), and is the gold standard for what clean hydrogen could really be. The Biden administration determined that three of the seven hubs would run on renewable energy sources, or a mix of nuclear and renewable energy. The others will – for now – run at least partly on natural gas with carbon capture (often called ‘blue’ hydrogen). And two of them will be located specifically in gas-rich regions.

The gas industry itself is enthusiastic about this and says it can be a real partner in the pursuit of lower emissions. “Natural gas companies are committed to exploring all emissions reduction options, as evidenced by the 39 hydrogen pilot projects already underway, and are eager to participate in some of the hubs,” Karen Harbert, president of the American Gas Association, said in a statement by email. “Regardless of the source of the hydrogen, one thing is certain: natural gas companies will be critical players in driving this exciting opportunity for further decarbonization.”

But refining natural gas into hydrogen is a very energy-intensive process. Natural gas is good for making hydrogen because it consists mainly of methane. Each methane molecule consists of one carbon atom bonded to four hydrogen atoms. That’s plenty of hydrogen for the taking, if you can split that molecule. Right now, conventional processes for refining natural gas into hydrogen are almost comically inefficient: According to one calculation, hydrogen made from natural gas has a total greenhouse gas footprint that is 20 percent greater than burning the natural gas itself, and uses much more energy to produce . That energy balance looks slightly better compared to the even dirtier energies that hydrogen from gas could replace, such as the coal used in steelmaking, which is why it’s on the table in the first place.

To meet federal “clean hydrogen” standards, about 90 percent of the extremely high levels of carbon dioxide released by the gas-to-hydrogen process would need to be captured. Exxon says it plans to capture 98 percent of emissions with its hydrogen project in Texas; other carbon capture efforts have reached around 60 percent – ​​suggesting the target may not yet be commercially viable. Storing the captured carbon is another challenge: a common strategy is to inject the gas under pressure into natural geological formations underground. But this is difficult to get right, and one of the world’s largest carbon capture projects has failed spectacularly at this point, transforming a potential climate solution into a major carbon emitter.

Perhaps the biggest challenge of all is that the entire gas-to-hydrogen system – from well pad to pipeline, from compressor station to hydrogen plant – must prevent virtually all methane from leaking. This seems like a very high bar, considering methane leaks are already ubiquitous in all aspects of the natural gas industry. And because the blue hydrogen process uses both methane as a feedstock and must generate additional energy to run the carbon capture system, the risk of leakage of the hyper-warming greenhouse gas is much greater.

The pitfalls seem significant. For the time being, the promise of truly clean hydrogen from gas seems far away. But in the meantime, the industry has found another gap into which its natural gas can be filled.

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