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Research & Commentary: EPA Finds Greenhouse-Gas Emissions Continue to Decline While Oil, Natural Gas Production Increase

February 16, 2018

Greenhouse Gas Emissions Now 11 Percent Below 2005 Levels, Primarily Due To Fracking

The Environmental Protection Agency’s (EPA) draft 2018 Greenhouse Gas Inventory (GHGI) was released on February 6th. It revealed total gross greenhouse-gas (GHG) emissions in the United States decreased by 2 percent between 2015 and 2016. In 2007, GHG emissions were 15.6 percent above 1990 levels, which is the GHGI baseline. Now, GHG emissions are just 2.6 percent above 1990 levels, 11.6 percent below 2005 levels.

“The decrease in total greenhouse gas emissions between 2015 and 2016 was driven in large part by a decrease in CO2 emissions from fossil fuel combustion,” the report states. “The decrease in CO2 emissions from fossil fuel combustion was a result of multiple factors, including … substitution from coal to natural gas and other sources in the electric power sector … [and] warmer winter conditions in 2016 resulting in a decreased demand for heating fuel in the residential and commercial sectors.”

The report also goes on to note combined methane emissions from oil and natural gas systems have declined by 1.5 percent from 2015 to 2016, and by a total of 14.7 percent since 1990. From natural gas systems alone, the decrease in methane emissions is 16.3 percent since 1990. This has primarily been caused by “increased use of plastic piping, which has lower emissions than other pipe materials, and station upgrades at metering and regulating (M&R) stations.” From oil systems, the decrease in methane emissions is 7.2 percent since 1990, “due primarily to decreases in tank emissions and associated gas venting.” The draft GHGI also notes methane emissions from venting and flaring during production decreased by 40 percent from 2015 to 2016 and has fallen by a total of 53 percent since 2012.

Since 1990, natural gas production has increased by 50 percent and oil production has increased by 21 percent, according to the U.S. Energy Information Administration (EIA). This is primarily due to the hydraulic fracturing (or “fracking”) revolution of the past decade. EIA also notes fracking now accounts for 51 percent of all U.S. crude oil production.

Quite simply, despite the opposition of those on the environmental Left, who have attempted to ban the process at every opportunity, fracking has transformed the energy outlook of the United States over the past decade, and its gradual replacement of coal in the country’s energy portfolio is the main driver of these dramatic reductions in GHG emissions.

Not only is the fracking industry helping reduce GHG emissions, it is also providing large economic benefits to local communities located near drilling activities. A study published in the American Economic Review in April 2017 found “each million dollars of new [oil and gas] production produces $80,000 in wage income and $132,000 in royalty and business income within a county. Within 100 miles, one million dollars of new production generates $257,000 in wages and $286,000 in royalty and business income.”

December 2016 study from researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology (MIT) looked at nine different shale basins, “the most comprehensive assessment to date,” according to the authors, and determined using a “willingness-to-pay” metric hydraulic fracturing activity brings $1,300 to $1,900 in annual benefits to local households, totaling roughly $64 billion in yearly household benefits for those living in the nine basins studied. These benefits include a “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices.” According to the authors, “Local government revenues also increased at a faster pace than expenditures.”

The oil and natural gas hydraulic fracturing has enabled us to exploit are cost-effective and abundant, and they can ensure the United States is the world’s largest energy producer well beyond the 21st century. Policymakers should make sure not to put unnecessary and harmful regulatory burdens on industries such as the natural gas and oil industries, which are safe, responsible, and have had an enormous positive impact on the economy at the macro and micro levels.

The following documents provide more information about greenhouse gas emissions and hydraulic fracturing.

Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2016
https://www.epa.gov/ghgemissions/draft-inventory-us-greenhouse-gas-emissions-and-sinks-1990-2016
EPA’s Greenhouse Gas Inventory provides a broad overview of all U.S. greenhouse-gas emissions sources and sinks, introduces key concepts, and discusses the primary drivers for changes in greenhouse-gas emissions. The 2018 version finds greenhouse-gas emissions decreased by 2 percent from 2015 to 2016 and are now just 2.6 percent above 1990 levels.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Local Fiscal Effects of a Drilling Downturn: Local Government Impacts of Decreased Oil and Gas Activity in Five U.S. Shale Regions
http://www.rff.org/files/document/file/RFF%20Rpt-SPF.pdf
This study from Resources for the Future finds 82 percent of communities in the five largest shale regions in the United States experienced a net fiscal benefit from hydraulic fracturing despite there having been a large drop in oil and natural gas commodity prices starting in 2014.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

What If … Hydraulic Fracturing Was Banned?
https://www.heartland.org/publications-resources/publications/what-if-hydraulic-fracturing-was-banned
This study is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

What If … America’s Energy Renaissance Never Happened?
https://www.heartland.org/publications-resources/publications/what-ifamericas-energy-renaissance-never-actually-happened
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have ever been created and $548 billion in annual GDP would have been lost since 2009. The report also found electricity prices would be 31 percent higher and gasoline prices 43 percent higher.

Bill McKibben’s Terrifying Disregard for Fracking Facts
https://www.heartland.org/publications-resources/publications/bill-mckibbens-terrifying-disregard-for-fracking-facts?source=policybot
This Heartland Institute Policy Study, written by Research Fellow Isaac Orr, examines how methane emissions are measured, reports the effect those emissions may have on global warming, and discusses several falsehoods journalist Bill McKibben repeats from the discredited movie Gasland. It also evaluates the available fracking alternatives and discusses the relatively small impact new methane-emissions rules enacted by the Environmental Protection Agency will likely have on Earth’s climate.

Compendium of Studies Demonstrating the Safety and Health Benefits of Fracking
http://eidhealth.org/wp-content/uploads/2017/04/Positive-Health-Compendium.pdf
This compendium from Energy in Depth features data from 23 peer-reviewed studies, 17 government health and regulatory agencies, and reports from 10 research institutions that demonstrate fracking is linked to numerous health benefits.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at john@heartland.org or 312/377-4000.