The US’ success in extracting natural gas from shale is one of the most important milestones of the 21st century. To integrate vertical drilling with hydraulic fracturing without seeping into shale layers and extracting large volumes of natural gas used to be considered either impossible or economically unfeasible.
However, in less than 10 years, the US, which used to be the world’s largest importer of natural gas, has become self-sufficient.
Between 2000 and 2010, US shale gas production has increased 12-fold, causing domestic US natural gas prices to tumble to a record low in 2012. Judging from current consumption, US natural gas reserves are expected to last for 100 years.
It is worth mentioning that last year, US natural gas production surpassed Russia’s for the first time since 1982. At the same time, US shale gas has stimulated economic growth and by 2010 it had already created 600,000 new job opportunities.
As a reflection of low natural gas prices and the resulting increase in natural gas power generation, US carbon emissions fell by 430 million metric tonnes between 2006 and 2011, making the US the country with the biggest reduction in greenhouse gas emissions.
Over the same period, emission reductions in the EU, which has worked hard to respond to climate change, were only half that of the US.
Part of the reason for this is an increase in coal-powered generation as a result of increasing natural gas prices. Other reasons are the failed carbon trading policy and the phasing out of nuclear power.
As a result of the sudden sharp increase in US natural gas supply, other countries with shale gas reserves that still import the product, such as China, the UK and Turkey, are now focusing on the development of their own resources.
Among those, China is the world’s largest energy consumer and it has the world’s largest shale gas reserves. Beijing has set an ambitious goal to follow in the steps of the US and is preparing to increase its natural gas production from zero in 2012 to 6.5 billion cubic meters this year and 8 billion to 10 billion cubic meters in 2020, which amounts to one-quarter of all the natural gas currently being consumed.
For these reasons, many Taiwanese academics have suggested that natural gas power generation should replace nuclear and coal power generation. Energy data implies that domestic natural gas power generation has increased from 13.2 percent of all power generation in 2002 to 26.9 percent in 2012, while overall power generation has increased 1.56 times. The annual increase in natural gas power generation is indeed founded in the hope that it will become Taiwan’s main energy source.
There are other advantages to natural gas power generation. International Energy Agency data show that the cost of building a natural gas power plant is low; less than half the cost of building a coal-fired power plant and one-tenth the cost of a nuclear power plant.
The operating costs of natural gas power plants are also the lowest, while construction is faster than for a nuclear power plant. Furthermore, natural gas power plants can be quickly started up and they often play an important part in load dispatching systems and when supplying peak loads.
When looking around for the best energy policy for Taiwan — and taking into account the widespread opposition to nuclear power — it is clearly worth considering the development of the increasingly ascendant option around the world: natural gas.
Lu Shyi-min is a retired energy policy researcher.
Translated by Perry Svensson
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