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Difference Engine: Fuel for the future?

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AMERICA’S unexpected, and most welcome, bonanza of natural gas from its vast shale deposits seems to be doing as much to reduce pollution as many of the efforts introduced over the years to restrict emissions from vehicles, power stations and other sources. The biggest breakthrough the energy industry has seen in decades, hydraulic fracturing (“fracking”) combined with horizontal drilling, has released unprecedented quantities of gas from this shale. As a consequence, the spot price of domestically produced natural gas has tumbled from a high of over $12 per million British Thermal Units in 2008 to less than $2 in 2012, before settling at around $4 today (a million BTUs is roughly equivalent to a gigajoule of energy).

Increasing use of this cheap, clean gas means power stations across the country have reduced their carbon dioxide emissions to levels not seen since 1992—despite serving a population that has grown by almost a quarter since then. On a per capita basis, carbon dioxide emissions from power stations are now at their lowest since President Eisenhower left office in 1961.

This is because, when purged of impurities, natural gas (which is more or less pure methane) is the cleanest fossil fuel around. It produces 30% less carbon dioxide per unit of heat than petrol does, and 45% less than coal. Conventional coal-fired power stations churn out 900kg (1,980 pounds) of the gas for every megawatt-hour of electricity they generate. Natural-gas plants emit little more than half that amount.

Given such remarkably cheap natural gas, the outlook for coal is dire. On average, coal-fired power stations still produce the cheapest electricity. And between them, they still account for 37% of the electricity generated in America (compared with 30% from natural gas, 19% from uranium, 7% from hydro, 5% from renewables and 1% from oil). But coal-fired stations, with their belching smokestacks, are notorious polluters, and face tough new air-quality standards that will render many older ones uneconomic.

At present, natural-gas plants have lower operating costs than only 9% of coal-fired stations. But the tougher emission standards proposed by the Environmental Protection Agency (EPA) will make natural-gas plants as economically attractive as 65% of existing coal-fired stations, according to researchers at Duke University in Durham, North Carolina.

The EPA’s more stringent standards include lower emissions of nitrogen oxides, sulphur dioxide, soot and mercury. At present, natural-gas plants produce only one class of emission—nitrogen oxides—that exceeds the new EPA thresholds. Many coal-fired plants exceed all the proposed thresholds, says Lincoln Pratson, leader of the study team at Duke. That will make it more expensive—prohibitively so, in many cases—for them to comply.

Industry has got the message. A year ago, Southern Company of Atlanta, Georgia, long one of America’s biggest operators of coal-fired power stations, generated more electricity from natural gas than it did from coal. In 2010, power-plant owners across America announced plans to retire over 40 gigawatts—roughly 12%—of their coal-fired capacity in favour of natural gas.

As the transition to gas gathers pace, the need for a more comprehensive network of pipelines and storage facilities has become apparent. Such infrastructure would also assist a second—and in some ways more radical—shift in the way gas is used. For it may be the future of road transport, too.

American commercial vehicles already use a lot of natural gas. For several decades now, local-delivery vans, buses and rubbish collectors, which rarely stray far from their refuelling stations and operate mainly within towns, have been switching to compressed natural gas (CNG) to lower fuel costs and to minimise their impact on the environment. Long-distance hauliers would do likewise if there were more highway filling stations with CNG pumps. All of which is encouraging for natural-gas producers. But for real change to happen, private motorists will have to follow suit.

They might be tempted. At an equivalent in energy terms of around $2.20 a US gallon, CNG costs a little over half what Americans pay for petrol. But making the change is not easy.

First, only one car model designed to run on CNG, the Honda Civic GX, is currently available in America. And it is not cheap. The basic model costs $26,300 compared with $18,200 for a comparable petrol-engined Civic.The two models have similar fuel economy (31-32 mpg—ie, 7.6-7.4 litres/100km—on the combined city/highway cycle), but the GX is nowhere near as spritely as its petrol-powered twin.

Second, enthusiasts wishing to retrofit existing vehicles to burn the stuff face enormous hurdles. Kits to do so cost anything from $12,000 to $18,000, and have to be installed by a licensed technician. That is because it is illegal in America for private individuals to tamper with a vehicle’s emission system—which is what has to be done to enable a petrol or a diesel engine to run on natural gas.

Third, it is not just the up-front cost that puts many motorists off CNG. The paucity of filling stations is an even bigger deterrent. America has around 600 natural-gas stations open to the public, compared with 118,000 petrol stations. The Honda GX’s pressurised natural-gas tank (holding the energy equivalent of an eight-gallon petrol tank) is good for about 240 miles (380km). Trips out of town have therefore to be planned strategically, via CNG filling stations spaced few and far between.

This third objection could be overcome if CNG vehicles were hybrids, able to run on petrol as well as natural gas. That is one of the goals of America’s Natural Gas Alliance (ANGA), a trade group in Washington, DC. ANGA has had popular models from half a dozen manufacturers, including BMW, Ford, Chrysler and General Motors, retrofitted to run on both fuels. A number of these “bi-fuel” demonstrators were previewed at a Southern California Gas facility in Los Angeles on May 21st. To drum up further interest, the trade group intends to introduce its bi-fuel lineup to the wider public at events around the country over coming months.

Which fuel actually will power the car of the future is up for grabs. A century ago, lead-acid batteries and even steam engines vied with diesel and petrol as serious alternatives in the emerging automobile industry. Now lithium-ion batteries, hydrogen-powered fuel cells and methanol, as well as methane, are queuing up to take on the older fossil-fuel contenders. Two things are clear, though: there is a lot of natural gas out there; and it is extremely cheap. In both electricity generation and road transport, it will be a hard act to beat.

the economist

5 Comments on "Difference Engine: Fuel for the future?"

  1. James on Tue, 28th May 2013 2:49 am 

    So why doesn’t my electric bill go down? I assume the electric company uses N.G. to make steam to generate electricity.

  2. BillT on Tue, 28th May 2013 3:53 am 

    “… for real change to happen, private motorists will have to follow suit…”

    Simple answer: They won’t.

    The age of personal vehicles is drawing to an end, not a Renascence. Incomes are dropping in the Western countries. All of them are bankrupt along with most of their citizens. The rest of the world growth is grinding to a halt. GDPs are kept up by trickery, lies, and hope, not real growth. That game can only last until the first domino falls.

    But this is a puff piece by a money rag that cannot print the truth as it would be out of business next week.

  3. GregT on Tue, 28th May 2013 6:11 am 

    100 years of natural gas, at ‘current rates of consumption’, doesn’t look that great if we start consuming it 20 times as fast.

  4. Beery on Tue, 28th May 2013 12:07 pm 

    Whenever someone starts using the word ‘vast’ in connection with oil or gas reserves, my BS detector starts going apeshit.

  5. SilentRunning on Wed, 29th May 2013 4:14 am 

    GregT said: “100 years of natural gas, at ‘current rates of consumption’, doesn’t look that great if we start consuming it 20 times as fast.”

    True – and it’s even worse if the “100 years” figure is inflated by a factor of 3 or more.

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