Why fossil fuel companies are still betting on gas

Bill McKibben and Sammy Roth, July 2020

The fallout from last week’s epic pipeline defeats continues. Activists celebrated when the Secretary of Energy blamed them for the fossil-fuel industry’s recent losses; a writer in the Financial Times used the three reversals as an opportunity to ask, “Is the party finally over for US oil and gas?” (His answer: yes, and if Joe Biden wins he “will inherit an energy market that, despite Mr. Trump’s efforts, is primed for a transition that will be backed by investors increasingly obliged to bet on clean energy.”) But there was one discordant note: even as Duke Energy and Dominion Energy announced that they are cancelling plans for the massive Atlantic Coast gas pipeline

Sammy Roth, writing for the L.A. Times, provided the best guesses why some are still in/betting on gas. In truth, gas has always been Big Hydrocarbon’s fondest hope for an exit strategy: coal is so clearly filthy that even Trump’s efforts have done nothing to stem its decline, and oil has probably hit its peak, as electric vehicles beckon. Gas is the remaining possibility for growth—and, indeed, it has grown sharply in the past decade, partly due to its reputation as a clean fuel. (Check out the industry’s Web page, with its sprightly trademarked slogan “Propane Can Do That.”) But that reputation was always overblown at best. Scientists have spent the past decade learning that natural-gas production spews methane into the air at dangerous rates; those molecules join with carbon dioxide in the atmosphere to accelerate the climate crisis. In recent days, analysts reported that, worldwide, nearly half of all big projects to export liquefied natural gas are now in trouble, thanks to climate concerns and a COVID-related reduction in demand.

As drillers go bankrupt, it seems possible that the fracking industry will pass its zenith without ever having produced an actual profit. (In fact, the Times warned over the weekend that some of these companies may be going bankrupt before fulfilling their obligations to seal and cap their abandoned wells, which are now leaking methane in large quantities into the atmosphere.) Last week, utilities in Arizona, Colorado, and Florida announced plans to close coal-fired power plants and go straight to renewable energy, bypassing the so-called bridge offered by natural gas. The Center for International Environmental Law reported that “oil and gas companies can no longer mask their financial frailty.”

Buffett’s bet on gas is immoral—at this point, trying to make money off hydrocarbons is essentially facilitating the collapse of the climate system—but it may also be financially unsound. Even if natural-gas backers such as Ernest Moniz, who was the Secretary of Energy under President Obama, win the fight to influence Biden’s policies (and Biden did say last week that fracking is “not on the chopping block”), there are reasons to think that the fuel’s glory days are waning fast. A CleanTechnica analysis of the Atlantic Coast Pipeline gives credit to activists for their relentless fight but also to the home heat pump, which uses modest amounts of electricity to heat homes and water. This electric appliance is common in much of the world, but is only now catching on in the United States. According to the report, “as of 2019 heat pumps accounted for 40% of new single family residential construction and 50% of new multi-family buildings.” That’s because the device works better than its alternatives: it uses far less energy to quietly heat or cool a building than a gas furnace. (Despite its name, a heat pump also works as an ultra-efficient air-conditioner, which is useful given the current “relentless” heat wave that forecasters have said will be hitting most of the country for “multiple weeks.”) Like an electric car, a heat pump is simply a more elegant technology, not to mention cheaper to operate. Yes, inertia will keep many people from making the switch in their existing homes, unless good government policy makes it easier. But such policies are not hard to imagine, and the Rocky Mountain Institute lays out some proposals in a new report, highlighting a Maine initiative to install a hundred thousand pumps around the state in the years to come.

The political power of the fossil-fuel industry is on the decline, which means that all the engineers with good ideas about the future will get an increasingly fair hearing for their plans. In addition, every time a new electric appliance is installed, the wealth—and hence the political power of the fossil-fuel industry—declines a tick further, in the kind of virtuous cycle that we badly need to keep accelerating. Hail the humble heat pump.

As feedback loops go, this one’s pretty simple: heat and drought lead to fire, and when you burn a forest you pour a lot of carbon into the atmosphere. According to the Times, the Siberian wildfires that occurred after temperatures topped a hundred degrees Fahrenheit north of the Arctic Circle apparently “released more polluting gases into the Earth’s atmosphere than in any other month in 18 years of data collection.”