Shale gas is no alternative to renewables by Fortune Editors @FortuneMagazine March 23, 2012, 3:05 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons By Sunil Sharan, contributor The world is scrambling to deploy renewable sources of energy, but America has fallen behind. The upstart natural gas from shale industry has only further increased the prospect of depressing renewables in America, and potentially shoving them into cold storage. Influential commentators have extolled shale gas’ low carbon footprint, as well as its economic potential. Even President Obama, who initially embraced renewables, has ardently converted to shale in his 2012 State of the Union address, while throwing renewables a few crumbs. Shale gas’ allure is two-fold. First, natural gas, which causes about half as much CO2 pollution as coal, is slowly but surely becoming the power industry’s fuel of choice. Nevertheless, the electric power sector contributes about 40% of the nation’s total CO2 emissions. That total is greater than any other sector of the U.S. economy, including transportation. Nuclear generation, which is much less carbon-intensive than natural gas, is facing a chilly winter post-Fukushima. Further, the transportation sector, which accounts for roughly 30% of the country’s CO2 emissions, is heavily reliant on conventional fuels. A mass-market, cost-effective alternative to them is many years away. With coal so dirty, and nuclear energy and transportation mired, natural gas is seen as a halfway measure to combat climate change until solar and wind energies mature. MORE: China’s Mr. Solar looks ahead But how valid is this assumption? An Environmental Research Letters paper argues that to achieve substantial temperature reductions this century, it will take a rapid and massive deployment of a mix of conservation, wind, solar, and nuclear energy — not natural gas. If a trillion watts of gas-fired generation were installed over the next 40 years, the decline in warming by 2112 would only be within a tenth of a degree of that induced by coal-fired plants, it cautions. A new MIT study asserts that shale use suppresses the development of renewables, and that it can only be a “short-term” bridge to a low-carbon future. Treating it otherwise could altogether stunt the development of lower-emission technologies like carbon capture and sequestration. That solar and wind are unready for prime time is a myth. Solar energy is facing a crisis in the country, not because solar cells are unproven, but due to other factors. First, America’s fascination for the new, new thing has made us sink billions, with few obvious results, into cutting-edge solar technologies. The Chinese, on the other hand, have improved the efficiency of traditional polysilicon, and captured 50% of the world’s solar cell market. Second, our failure to put in place a conducive ecosystem, whether it includes long-term industry incentives, feed-in tariffs, a federal renewable portfolio standard, or pricing oil and gas fairly by incorporating the costs of their environmental damage. Third, by persisting in manufacturing overseas and not locally, we will still continue to innovate, but end up exporting precious intellectual property and jobs. MORE: 4 new ways to solve the energy challenge Wind turbines too are rugged and effective. While shale has gushed only in the last few years, a powerful wind corridor has always existed all the way from Minnesota to Texas, making the U.S. the “Saudi Arabia of Wind,” but an uncertain federal policy has strangled its potential. Shale’s second, and perhaps greater attraction, is money. Of the $317 billion in oil and gas deals struck in 2011, $66 billion were shale-related, according to accounting firm Ernst & Young. The trend, they believe, will continue, and at the expense of investment in traditional renewables. Already, the shale surge has minted a half-dozen new billionaires, and is being likened to the Internet boom. But just as the latter went bust, so is the shale El Dorado at risk. Shale prices have tumbled from about $8 for a unit of gas in 2008 to roughly $2.50 now. With supply outstripping demand, low prices are crippling producers. President Obama claims that America has a nearly 100-year supply of natural gas, but his own Energy Information Administration contests his contention. A blight has already descended on the clean tech industry. Policymakers have to decide whether shale is enticing enough to give renewables a rebuff, or whether the two can coexist, just like what China, which has much greater shale deposits than us, is fostering. Sunil Sharan is the founder of Sierra Consulting, an energy consulting firm. He was formerly with General Electric GE , where he served as the director of GE’s Smart Grid Initiative from 2008 to 2009. He has worked in the energy industry for over 11 years, and can be reached at firstname.lastname@example.org.