Regulation of Natural Gas in the United States, Canada, and Europe: Prospects for a Low Carbon Fuel

Jeff D. Makholm

Review of Environmental Economics and Policy, 2015, vol. 9, issue 1, 107-127

Abstract: The United States and Canada have seen a competitive and technological revolution in unconventional natural gas production in the 21st Century—dramatically lowering the price of gas and displacing high-carbon coal with low-carbon gas for power generation. This gas revolution came from an earlier revolution in the regulation of gas pipelines, which ended the obstruction of gas markets by pipeline interests. Neither revolution has spread to Europe, where increasingly protectionist EU legislation has effectively blocked competitive pipeline entry and related gas markets. As a result, unconventional gas is untapped, coal displaces gas for power generation, and oil-linked gas prices have cost EU consumers a staggering $425 billion more than their US counterparts have paid since 2009 for about the same quantity of gas. Europe faces a serious institutional challenge to adopting the kind of pipeline regulation that facilitates the competitive flow of natural gas supplies and the accompanying lower carbon emissions. (JEL: D23, K23, L14, L51, L95, N70, Q54)

Date: 2015
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