As the United States struggles to respond to rising energy costs and the challenge of climate change, rapid growth in new natural-gas sources has upended the debate on energy policy. The booming gas sector has also given rise to controversy on a number of fronts.

By far the most controversial issue has been that of “fracking,” the process by which fractures in rock formations are created or expanded to permit the extraction of gas that would otherwise be inaccessible. As a relatively new and scary-sounding technology, fracking makes an easy target. But in reality, few if any of the crucial issues raised by the growth in unconventional gas production are related specifically to fracking.

Where are the emissions?

First, there’s the question of whether “fugitive” methane emissions from this kind of unconventional gas production offset the apparent lower carbon content of gas relative to coal. Methane is a far more powerful greenhouse gas than carbon dioxide, though it is also much shorter-lived. Although climate change is a problem that will play out over centuries, opponents of fracking have confined their analysis to a twenty-year time frame, which makes methane look much worse than it actually is in the long term.

The problem of fugitive methane emissions also arises with coal mining and with conventional gas. The fracking process results in some additional emissions for unconventional gas, but emissions in the production process are only part of the problem. Significantly more methane is emitted in gas processing, transmission and storage than at the initial production stage, and these losses are unrelated to the way in which gas is produced.

Even more important is the question of how new sources will change the overall energy picture. Will natural gas, as its advocates hope, serve as a bridge away from coal and oil and towards an economy based on renewable energy? Or will it will delay the advent of renewables and increase total emissions of greenhouse gases? The answers to these questions and to the problem of fugitive emissions depends almost entirely on the broader settings of climate policy.

From an economic viewpoint, a crucial step would be a market-based system, such as a carbon price or an emissions-trading scheme, that places a cost on all greenhouse-gas emissions, particularly carbon dioxide and methane. Such an approach, proposed in the Waxman-Markey Act (which failed to pass the Senate in 2010), would ensure a gradual transition in which natural gas would substitute for more polluting fossil fuels. Unfortunately, that’s unlikely to happen at the national level any time soon. Instead, the Obama administration is relying on EPA regulation to control carbon-dioxide emissions.

The problem with regulatory approaches is that they can often be exploited to produce perverse outcomes. Thus, the details of regulatory design matter a great deal. If coal-fired electricity generators can work the system as successfully as they have done in the past, with the grandfathering of old plants under the Clean Air Act, gas may end up competing with renewables for a residual share of the market.

Drink Up

Next, there is the question of dangers posed to water supplies. The fracking process, which involves the injection of a mixture of chemicals, water and sand to create fractures, sounds scary—but most of the problems created by unconventional gas drilling are common to all kinds of drilling and mining processes.

All such processes have the potential to contaminate water tables directly or to lead to freshwater aquifers being linked to saline groundwater. Most of the evidence of contamination associated with unconventional gas appears to relate to problems of the latter kind.

As with methane emissions, protection of water supplies is a serious problem, but it should be addressed in a comprehensive and consistent fashion. Picking out one relatively new technology while ignoring the damage caused by existing alternatives is not a helpful approach.

Staking a Claim

Last but not least in terms of the bitterness of the controversy are disputes between gas producers, landowners and other stakeholders over leases to drill on and under land as well as the use of eminent-domain powers to build pipelines.

The use of eminent-domain powers for private purposes has been controversial in many contexts, most notably in the Kelo case that concerned the compulsory acquisition of homes for urban renewal. But once again, the question of fracking is peripheral to the main issue.

The controversy about fracking raises important issues—including greenhouse-gas emissions, property rights and water safety—and these questions need to be addressed more coherently than in the past. Nevertheless, a policy debate in which a particular technology is either demonized by environmentalists or lionized by their opponents is unlikely to produce a coherent outcome.

John Quiggin is a Federation Fellow in Economics at the University of Queensland, Australia, and an adjunct professor in the Department of Agricultural and Resource Economics, University of Maryland, College Park.

Image: Adrian Kinloch