Shale gas and oil resources have been named as “the single largest opportunity to improve the trajectory of the U.S. economy” by a new report from the Harvard Business School and The Boston Consulting Group.
The report argues that U.S. economic performance is poor and is reflected by slow job growth and stagnating wages, especially for middle- and lower-middle-class Americans. The success of U.S.-based multinational businesses is masking the under-performance of smaller business and an economical weakness that is not cyclical but structural, and it “reflects an erosion of the nation’s fundamental competitiveness”.
The report further identifies the booming unconventional oil and gas industry as a once-in-a-generation opportunity to change the nation’s economic and energy trajectory. It points out that the U.S. has a global energy advantage with 10- to 15-year head start in commercializing unconventional resources versus other countries, while at the same time benefiting from lower gas and electricity prices.
Unconventionals have already created major economic benefits for the U.S., adding more than $430 billion to annual GDP and supporting more than 2.7 million American jobs that pay – it argues.
However, with a dwindling social support for shale exploration the report points to a real risk that America will fail to capitalize on this historic opportunity, much less build on it.
Significant environmental risks to water, air, land, and communities, created by development of unconventional energy resources is a fact and has to be acknowledged, the report states. On the other hand, the researchers are firm in their belief that natural gas is the only fuel that can cost-effectively deliver large-scale carbon emissions reductions over the next 20 years while also providing a bridge to achieving even lower carbon solutions over the long term. The researchers analysis also shows that developing unconventional resources today is unlikely to delay the roll-out of renewables.
Overall, the exploration of unconventional oil and gas presents the U.S. with a once-in-a-generation opportunity that the country cannot afford to miss. The report, however, identified eleven key challenges that the U.S. must address in order to realise that potential. These are:
- Continuing the Timely Development of Efficient Energy Infrastructure. Additional pipelines, gathering, and processing infrastructure are needed to safely and efficiently move unconventional gas and oil from producing regions to users across America.
- Delivering a Skilled Workforce. The U.S. will need many more trained workers with the right skills across a wide variety of occupations to fill the well-paying middle-skills jobs.
- Eliminating Outdated Restrictions on Gas and Oil Exports. With abundant resources, restrictions on exports created in response to the 1970s’ energy crises are no longer needed, and exports would boost U.S. economic and job growth while benefitting friendly nations.
- Developing Transparent and Consistent Environmental Performance Data. Transparent environmental-performance data creates the foundation for monitoring compliance and stimulating innovation. State governments, industry, and NGOs all have roles to play.
- Setting Robust Regulatory Standards. Better standards are needed to fill gaps, speed adoption of industry-leading practices, and encourage further innovation.
- Achieving Universal Regulatory Compliance. Both industry and regulators need to strengthen regulatory enforcement and producer compliance.
- Strengthening Bodies Driving Continuous Environmental Improvement. Continuous-improvement organizations such as STRONGER and CSSD have played an important role, but steps are needed to improve collaboration and better disseminate recommendations.
- Containing Methane Leakage. Uncontrolled methane leakage can offset the climate benefits of natural gas. Cost-effective methods to contain leakage are available and need to be deployed throughout the natural-gas value chain.
- Setting Policies That Encourage Cost-Effective Emissions Reductions. Climate policies and regulations should be market based to encourage cost-effective carbon reductions, rather than specifying particular technologies.
- Fostering Clean-Energy Technologies. The U.S. needs to encourage ongoing private- and public-sector research investments in cost-effective, low-carbon energy technologies and applications, including potentially broader uses of unconventional natural gas.
- Building Out a Smart, Efficient Energy Grid. The long-term (by around 2050) transition to a low-carbon energy system will require a robust power-grid infrastructure capable of addressing the intermittent nature of renewable power sources. The U.S. federal government and states must invest now in these grid improvements to enable renewables to scale over the long run.
The full report can be downloaded here.
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