Kiran Stacey BP: Gas will displace coal

Will the glut of natural gas be a good thing for the environment? The gas industry insists it could be if we invest in the infrastructure to use it, as it would displace coal, which produces more CO2 when burned.

Environmentalists, however, say that investing in gas would simply lay the groundwork for a whole new generation of hydrocarbon-producing power plants, and set the goal of sharply reducing emissions back years.

Part of the debate hinges on whether gas would displace coal at all. As Kevin Anderson of the Tyndall Centre said at a debate following the premiere of Gasland, the film about shale gas extraction, there is every chance it won’t result in a diminution of coal production at all – just help to make up some of the shortfall caused by China’s rocketing energy demand.

BP’s report on the outlook for energy until 2030, however, offers the opposing view. In a section called Gas displaces coal in OECD generation, encouraged by environmental policy, the company writes:

Natural gas used to generate power has half the CO2 emissions of conventional coal power generation and near zero sulphur emissions. Gas is expected to displace coal in power generation across the OECD due to rising carbon prices, permitting constraints for new plants and mandates.

No mention, of course, of the methane leaked when using gas as an energy source, which traps more heat even than CO2.

As this chart from the report shows, however, we aren’t really talking about coal supply falling, merely levelling out. As Prof Anderson says, the only coal production that will be displaced by gas is potential coal production which is yet to be built – no one seems to be forecasting an overall fall in the amount of energy produced in this way.

Of course, it is worth pointing out that BP has a vested interest here. In a world that is trying to move away from its dependence on oil, oil companies are increasingly relying on new gas sources to provide revenues. But it is also worth pointing out that if gas is really going to take over from coal, it may well be BP’s biggest rival, Shell, which is the biggest beneficiary, having made a major play in this area.