Fracking Gas Blazed A Trail For Renewables

A fierce competitor of both coal and renewables, shale gas has done at least one favor for solar and wind, according to a Harvard economist: it has demonstrated that the American energy system can accommodate sudden and massive influxes of supply.
Last year, energy-policy expert William Hogan penned a cautionary paper on the Clean Power Plan, arguing that its celebrated flexibility could disrupt energy markets. But he never worried, as others have, that the disruption would come from too much unreliable power.
The "shale gas miracle" has shown, he said this month, how adaptable the system can be.
"It’s a great demonstration of the fact that the system can respond extremely quickly if you can get the economics to be really competitive with the alternatives," Hogan said in a Nov. 9 lecture at the Massachusetts Institute of Technology.
"All this stuff about we can’t absorb it very fast is just—just look at this and you’ll see what happened with the shale case."
The boom in gas and oil from fractured shale has not been without damages—passionate pipeline protests, explosive train derailments, storage tanks full to capacity, massive oil and methane leaks—but the U.S. energy economy nonetheless absorbed the influx in gas, transforming America's energy portfolio, crushing prices, and slashing carbon emissions.
Shale gas succeeded, Hogan said, because it was competitive—and therein lies the lesson for solar and wind.
"The biggest barrier to entry is to try to bring in technologies that are too expensive," said the professor of global energy policy at the Harvard Kennedy School and research director of the Harvard Electricity Policy Group.
If he rewrote his paper on the Clean Power Plan today, Hogan said, it would simply say, "sayonara." to the CPP, "because of the new president."
Trump is widely expected to abandon the Clean Power Plan, but he may not be able to do so on day one. It could take a Trump administration four years to dismantle it, experts have said, likely amid a blitz of lawsuits from environmentalists. Senate action might be able to do it a sooner, or a Trump appointee on the Supreme Court, but the EPA will still have an obligation, affirmed by a conservative Supreme Court, to address carbon emissions.
"That doesn’t change the problem of carbon," Hogan said, "and we’ve got to go do it."
Hogan warned last year that the "proflierating subsidies" that have supported renewables so far could proliferate further under the Clean Power Plan, disrupting markets if subsidies are used to support alternatives that could not otherwise compete.
For example, the production tax credit (PTC) for wind caused prices to drop, Hogan said, creating other problems "that require further intervention to counteract the unintended consequences."
In some regions nuclear power found itself unable to compete with cheap gas and subsidized wind, resulting in calls for more subsidies to save the nuclear industry.
A growing web of subsidies, propping up alternatives that can't compete, can cause markets to fail, Hogan warned.
A better solution, he argues, is the carbon tax, a policy popular with economists. University of Chicago economist Michael Greenstone has said the consensus among economists for a carbon tax is even more universal than the consensus about climate change among climate scientists. Instead of subsidizing clean energy, a carbon tax would make dirtier energy pay more of its social and environmental costs.
And, Hogan said, it would be less disruptive to electricity markets.
"A national carbon tax would be a preferred policy that would reduce carbon dioxide emissions and produce little or no unwanted distortion in the electricity market."
Few observers have seen brighter prospects for a carbon tax since Nov. 8, with a president-elect who has vowed to reduce regulation on the oil and gas industries. But Hogan thinks a carbon tax is worth pursuing, even in the current political climate.
"We now have libertarian think tanks in Washington that were created in order to lobby for a carbon tax. This is a different world. In the previous Congress—the current Congress, but previously—we had a vote to motion the sense of the House is that we’re not going to have a carbon tax. That’s progress. Because before they could ignore it completely, but now they’re getting worried. So I think that’s the direction we have to keep pushing.”