Energy Exchange

Energy Producers Capture More Today Than In “Good Old Days” But We’ll All Benefit If They Do Better

By Ramon Alvarez, Ph.D. / Published: September 22, 2011

In the frontier days of drilling in the 1900s, discoveries such as Spindletop in Texas and the Drake in Pennsylvania heralded a new era of energy for America. Back then, the gaseous by-product produced at the wellhead was considered a nuisance and flared (burned) or released into the air. Today, it’s considered a valuable energy source and routinely harnessed, which results in economic and  environmental benefits. Capturing gas cuts emissions that contribute to ground-level ozone, cause cancer, and contribute to climate change.

Given that it’s 2011, we’re way past the conditions of the 1900s. But, whereas the process of capturing natural gas as an energy source has come a long way, many improvements must still be made to ensure producers capture the maximum amount of natural gas “upstream” at wellheads and throughout the gas processing and transportation network.

Just because the gas can’t be seen doesn’t mean it isn’t hazardous. In the last three years, new data shows that natural gas leaks might be twice as high as previously thought. This means that a lot more air pollution is fouling the air we breathe.

The pollution comes from equipment on-site (tanks, valves, compressor engines, flanges), at processing plants (where raw natural gas is purified for residential and commercial use) and throughout the pipeline system.

If you know anyone that lives near drilling sites — such as the Barnett Shale in Texas, the Marcellus Shale in Pennsylvania, Piceance and big chunks of Colorado and Wyoming — you’ve likely heard stories about their public health and environmental impacts.

EDF sponsored a study showing that the emissions produced by natural gas operations around Barnett Shale rival those from 4 million cars and trucks in the Dallas-Fort Worth metro area. Around the country, those who live nearby drilling sites have reported higher incidents of health concerns including respiratory and skin irritation, neurological problems, dizziness and headaches. And in some instances, elevated levels of benzene — a known carcinogen — have been detected.

The Environmental Protection Agency (EPA) has proposed rules that would require use of technologies and practices to capture more of the natural gas now being allowed into the air. These clean air standards are sensible, which makes you wonder why it’s taken a century to put these rules into place at the national level. It also makes you wonder why industry would fight them when they can capture more natural gas and bring it to market. Indeed, in addition to the health and environmental benefits of the rule, there are economic benefits.

A number of natural gas companies already use the practices that the EPA is proposing to cut methane and are touting the resulting economic benefits.

Similar requirements to those the EPA proposed have been in place in Colorado and Wyoming without adverse affects on companies’ profits. Who isn’t for a win-win solution?

I’ll be blogging more about this proposal in the coming days. Please get involved by writing to the EPA in favor of updated clean air protections. We also invite you to join us and share your thoughts with the EPA at the upcoming public hearings in: Pittsburgh, Sept. 27; Denver, Sept. 28; and in Arlington, Texas on Sept. 29. If you can’t make the hearings, you can submit comments online until Oct. 24.

There’s no better time than now to make your voice heard and show your support for clean air.

 

 

 

Also posted in Natural Gas / Comments are closed

Playing Politics With Power

By / Published: September 15, 2011

Source: The Lookout

Déjà Vu All Over Again
Listen carefully these days and you might think it was last year, 2009, or even 2006.  Just a year ago, Governor Perry lambasted the EPA’s decision that Texas’ air permitting program was illegal and amounted to special treatment for a single state when all other states are in compliance with the law.  In a statement at the time Perry claimed “The EPA’s irresponsible and heavy-handed action …. threatens thousands of Texas jobs, families, businesses and communities throughout our state.” Perry went on to claim that “it will also likely curtail energy supplies and increase gasoline prices nationwide.”  Last month the EPA announced that every former Texas permit holder is now successfully working with the agency on their new permits.  No more claims of job losses or gasoline shortages, just companies working with regulators to abide by the law and protect the health of Texans.

In 2006, TXU (now Luminant), the largest power plant owner in Texas, announced that they needed to build 11 coal plants to make sure there weren’t any rolling blackouts in the next few years.  A serious PR campaign ensued with TXU and Governor Perry trying to fast track the coal plants, but as it turned out, they weren’t needed, and that’s part of the reason TXU is now known as the Energy Future Holdings (EFH), the parent company of Luminant.  In fact, the coal plants that Luminant did build, Oak Grove and Sandow, were a big part of the reason Texas experienced the blackouts in February – supposedly reliable, 24-hour coal plants tripped offline when it got too cold.

Repetitive Stress Injury
Raising the threat of job losses, blackouts or other specters has become so common for Perry and industry that it probably amounts to muscle memory at this point. It reached a new level this week, however, when Luminant decided that it would lay people off in order to make a statement.  While Luminant may not like the Cross-State Air Pollution Rule (CSAPR), it’s essentially a “Good Neighbor” rule and none of the clean air protections in the rule require any power plants to shut down.  Companies like Luminant make the decision — either invest in common retrofits like scrubbers to clean up pollution or close down old and poorly controlled plants and replace them with cleaner more efficient generation.

Numerous companies, such as Houston based Dynegy, Exelon, PPL Generation and NRG Energy, have publicly announced that they are well-prepared to meet the updated clean air protections.  As Dynegy’s CEO Robert Flexon points out: “Any efforts to delay or derail CSAPR would undermine the reasonable, investment-based expectations of Dynegy.  In our case, CSAPR allows competitive markets to confer deserved economic returns on our investments in clean energy technology.”  In his Houston Chronicle business column today, Loren Steffy muses: “Funny how much difference good financing and a little planning can make. After all, power generators knew that, sooner or later, stricter air standards were coming.”

Scare Tactics
This also means that claims of rolling blackouts are vastly overstated.  While a study released by Electric Reliability Council of Texas (ERCOT) has received a lot of coverage, the headlines have focused far more on flash than substance.  In fact, ERCOT admits that Texas has had 6 years to prepare for this rule, beginning with the passage of the Clean Air Interstate Rule in 2006, which included Texas.   What’s even more troubling is that ERCOT seems to assume that neither the grid operator, nor any of the power companies, intends to learn from the lessons of this past year in terms of better preparations for extreme weather.   ERCOT assumes that this time next year our power plants will again be unprepared for long periods of hot weather.  In Texas.

In fact, a close reading of the ERCOT study actually rebuts the most popular arguments of state officials and industry that Texas had no warning that this rule was coming:

“The rule is a replacement for the Clean Air Interstate Rule (CAIR), which was implemented in 2005. The CAIR was remanded to the EPA by the United States Court of Appeals for the District of Columbia Circuit in 2008. In the CAIR program, Texas was regulated for particulate matter emissions (annual NOX and SO2 emissions).”

In their presentation to the Texas Public Utilities Commission (PUC), ERCOT directly contradicted the claims of industry and officials protesting this rule.  At the center of this argument is the idea that EPA’s modeling, which shows increased prices for low sulfur coal, is incorrect.  ERCOT’s conclusions seem to support the EPA’s modeling, though, stating that the rule “will have impacts on national fuel markets, increasing demand for natural gas and low sulfur sub-bituminous coal.”

A Texas Tradition: Politicizing ERCOT
It would be much easier to take ERCOT’s study seriously if the organization hadn’t become so politicized over the last 5 years.  In 2006 TXU (now Luminant) seized on a flawed ERCOT analysis to justify the need to build 11 new coal plants to boost reserve margins in 2009/2010.  The plan stalled and 2010 reserve margins proved much higher than ERCOT’s original projections.  Since then, using ERCOT studies to meet the needs of the moment has become a science, whether it serves the needs of someone running for President on a platform of clean air bashing or one of the companies running their committees.

In the latest example, the desired outcome of ERCOT’s latest study was made clear by a number of public statements from Texas PUC Chairwoman Nelson prior to the study’s release, including her August 4th letter to the EPA and her statement in late August:  “I have no doubt in my mind that this rule will result in reliability issues and rolling outages in Texas.”  It’s a little like the boy who cried wolf, but this time businesses are laying off workers because their management team failed to plan accordingly to abide by the law.   It’s an especially hard claim to swallow given that ERCOT’s own planning documents show over 12,000 MW of resources are expected to come online within the next few years.

Gambling Away Jobs
The truth is that Luminant, just like Dynegy, Exelon, NRG, the Lower Colorado River Authority, Austin Energy and San Antonio’s CPS made a choice in 2005.  As other companies planned for compliance, Luminant chose to fight it, gambling with their shareholders’ money and their employees’ jobs.  Think of this: In 2005, there were 32 other power plants in the nation that emitted more sulfur dioxide (SO2) than Luminant’s Martin Lake coal plant.  By 2010 there were only three.  At the time, Luminant probably thought that by not investing in retrofits like scrubbers to clean up pollution, they could get ahead of the competition.  Ironically, what they have found out instead is that they are actually behind the competition, and now their employees may suffer for poor decisions made by management.

Also posted in Grid Modernization, Texas / Read 1 Response

Clean Energy: Getting Past Cute

By Andy Darrell / Published: May 13, 2011

Source: Wired Business Conference

Did Bill Gates just call the solar panels on my house cute?  “If you’re interested in cuteness, the stuff in the home is the place to go” was the line most often quoted from his talk at the Wired Business Conference in New York City.  Headlines declared that Bill Gates thinks clean energy is ‘cute’ and Gates seemed to suggest that people who were serious about energy should be looking to innovation in nuclear and other technologies. 

That set off a firestorm of responses among clean energy advocates who point out, correctly, that the cost of renewables is coming down, the clean energy market is growing, and many countries are leaping ahead of the US in terms of public investment and incentives. 

According to a UN report released May 9, renewable resources are plentiful and could provide as much as 77% of the worlds’ energy by 2050.  According to the report, renewable energy investments globally could be in the trillions of dollars by 2030.  The brake, according to the UN, is not technology.  It’s governance and policy that stand in the way.  To get beyond cute, we need advances in policy that create an energy market friendly not just to fossil fuels but to renewables too.

But what does it mean for policy to support clean energy?  A couple of weeks ago, Deutsche Bank released a report that says: “there has been a very substantial growth in [clean energy] investment in China, and something of a shift away from Europe and the US as the centers of clean energy investing.”  The implication is that America is being left behind.

But here’s the kicker.  Deutsche Bank then says: “clean energy private investment is still dominated by the US.”  To me, that’s America’s ticket to leadership in the trillion-dollar market of the future.  Create the rules of the game that allow clean energy to compete and innovation has a shot at taking clean energy well past cute, all the way to super-model status. 

Today’s rules of the game make it hard to plug renewables into the grid on parity with fossil fuel sources.  Buildings can waste nearly half of their energy – yet utilities aren’t rewarded for “buying” efficiency.  We can produce electric cars that cost less than three cents a mile to drive (compared to more than 13 cents for a gasoline-powered car), but where do we plug them in?  How many households and businesses can easily figure out their energy run rate – and the most cost-effective steps to cut bills?  Shouldn’t there be an iPhone app for that?

It’s time to take private investment in clean energy to scale.  For that to happen, government has to rewrite the rules of the game so that:

  • Clean energy can plug into the grid, both for distributed sources (which work really well in some places, like cities) and for utility-scale renewables (which could work well in other places, like deserts).  No need to disparage one or the other – let them compete fairly and openly for market share in different places.
     
  • Information is transparent and accurate.  Make it easy for buyers to see the energy footprint of homes and CFOs to track energy usage floor by floor.  Yes, there ought to be an iPhone app for that too – not just an opaque monthly bill.  Map the pollution created by power plants.  Disclose hydraulic fracturing fluid.  Hidden information kills free markets.
     
  • Efficiency has a market.  Let utilities “buy” efficiency just like they “buy” new power plants and innovators will find ways to aggregate efficiency across cities and real estate portfolios to meet that demand.
     
  • Cars can be electric – and be “batteries.”  Electric vehicles can be batteries for intermittent renewables like solar and wind.  They can also be the least expensive cars on the road today.  If we could easily plug them in, who wouldn’t want that?
     
  • Subsidies give way to rules that create a level playing field.  Governments currently dole out massive subsidies to the oil and gas industry.  They subsidize renewables too, but comparatively less.  Worldwide, some reports suggest that governments pay over $300 billion in subsidies for fossil fuels and a mere $55 billion for renewables.  Frankly, waiting for more and more subsidies alone is a losing strategy, especially in times of fiscal constraint.  What if we focused instead on getting the rules right, so that renewables could plug in and compete on more even footing?  And what if we focused on getting information into the marketplace so that local and regional renewable opportunities were clear to end-users? 

How important is it to get this right?  By 2030, the global population will reach 10 billion people – that’s a billion more than originally expected.  Most will live in explosively growing mega-cities, especially in fast-growing economies in China, South Asia, and Latin America. 

Can we provide so many people an economic future without destroying the planet?  Only if we take down the barriers to private sector innovation and rewrite the rules of the market to let clean energy in. 

Here’s something else Gates said: “If we don’t have innovation in energy, we don’t have much at all.”  If we don’t have innovation in policy, we won’t have enough innovation in energy.

Also posted in Energy Efficiency, Grid Modernization, Renewable Energy / Read 1 Response

Thinking Long Term On America’s Energy Future

By Elgie Holstein / Published: April 1, 2011

On Wednesday, President Obama, speaking at Georgetown University, set out a multi-pronged approach to boosting America’s energy security.  We agree that America “cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again.”  President Obama’s goals to leverage alternative fuels, increase efficiency, and invest in smart grid technology, advanced vehicles, high speed rail, and public transit are critical steps toward a truly clean energy economy.

The core objectives of our Energy Program are to help accelerate the deployment of large-scale, clean technologies into the nation’s energy system and remake the market for efficiency and innovation.  Our goal is to reduce the environmental impact of energy production, delivery, and use.  Why?  Because investments in clean technology will bring about the clean energy revolution we need by greatly reducing our use of dirty fuels and improving air quality and, thus, the health of millions of Americans – especially children and the elderly. 

We can improve our energy independence and end the economic hardships imposed on American families by spiking energy costs while preserving our air, land, and water for future generations.

As important as the energy, environmental, and public health outcomes are, this revolution also benefits our economy and creates jobs.  American workers have tremendous opportunities related to energy efficient and clean technologies, which are creating well-paying jobs and helping companies compete in the global market.  

One of EDF’s main areas of focus is on smart grid technology.  President Obama’s Advanced Research Projects Agency-Energy (ARPA-E) funds projects that will help modernize our antiquated electricity system.  A smarter grid can adjust demand, reducing the need to build costly, new power plants.  It will enable extensive new wind and solar energy to integrate into an upgraded grid so that we can rely far more on clean, renewable, home-grown energy.  The result:  less environmental damage, more jobs, and a more efficient, reliable, and resilient electricity system.  A smart grid will also facilitate the switch to electric vehicles, making it possible to “smart charge” them at night so they can be ready the next morning for commuters who will no longer be paying for gasoline.

Another key point that the President made was on responsible development practices for natural gas.  Natural gas can play a significant role in achieving our clean energy future – but it needs to be developed safely and in an environmentally sound manner.  Protecting citizens’ health and the environment will require that we “get it right from the start.”  That means putting rules in place to guarantee that our water and land are protected from contamination and ensuring that leakage of harmful air pollution is minimized.

The President’s call for increased transparency in the use of hydraulic fracturing chemicals is a necessity.  The natural gas industry is engaged in a public perception war that it is not winning.  Participating in the development of transparency within the industry is the first step necessary in attempting to rebuild public trust.  A balance between creating a sustainable market for business and ensuring the health and safety of the public should not be a source of division, but instead our common ground. 

While Congress is negotiating the federal budget, members would do well to recognize the essential need to make long-term investments in a 21st century clean energy economy that will reduce America’s dependence on foreign oil and put Americans back to work.

EDF commends the President for his willingness to look to the future.  If we can do that, we will all benefit from a stronger economy, energy security, and a cleaner environment that protects our public health and maintains our quality of life.

Also posted in Energy Efficiency, Grid Modernization, Natural Gas, Renewable Energy, Washington, DC / Read 1 Response

Gas Industry Lawsuits Undermine Americans’ Right To Know About Dangerous Pollution

By Ramon Alvarez, Ph.D. / Published: February 1, 2011

It was disappointing, but unfortunately not surprising, that Chesapeake Energy and three natural gas industry trade associations filed legal challenges to EPA’s new rule that requires assessment and public disclosure of the industry’s greenhouse gas (GHG) emissions. 

I find it ironic that the industry that touts itself as the “low-carbon” fossil fuel is fighting efforts to require disclosure of its global warming pollution.

Learn more about this in our news release sent out earlier today.

Also posted in Natural Gas, Texas / Read 2 Responses

TCEQ Buckles On Oil & Gas Rules Under Pressure From Industry

By Ramon Alvarez, Ph.D. / Published: January 28, 2011

After a 10-month process, the TCEQ finally ended the suspense regarding what emissions safeguards the oil and gas industry will have to follow in order to protect the citizens of Texas.   On Wednesday, the TCEQ adopted a much, much weaker rule than the one it proposed in July (see details at the bottom of this post).  The rule was dramatically scaled back to apply only to those living near the Barnett Shale near Dallas-Fort Worth and, miraculously, the process will begin anew to decide what protections will apply elsewhere. 

If you are reading this, you are probably wondering what I think about the outcome.   I’ll answer by telling you what I am going to tell my boss, who will surely ask how my efforts – scores of hours attending meetings, writing comments, coordinating and consulting with experts on this topic (as well as having to watch industry unrelentingly bully TCEQ staff) – translated into results.   

It is a fair question given that I truly threw myself into this one.  I convinced myself (and my boss) that – this time – it was going to be different.  With all of the attention focused on the emissions from natural gas operations, including reports showing how the emissions from the oil and gas industry were much higher than everyone assumed, I thought this time we actually had a chance to help TCEQ do the right thing.   

The most favorable answer I can give is that “it could have been worse.”  Maybe, just maybe, had we not made the effort, the final rule might have been even worse.  What issues went in favor of public health?  The TCEQ did expand the proposed definition of “receptors” that must be protected to include hospitals, day cares, and certain businesses (although this definition is still less protective than many other agency rules).  Oh, and in response to our expert modeler’s numerous examples showing that the agency’s modeling did not represent “worst-case” conditions as claimed, the TCEQ changed their description to “reasonable worst case” (while making numerous other changes that allowed far greater emissions of harmful pollutants than originally proposed).  Sadly, that’s all I can say went in a positive direction. 

The TCEQ’s initial proposal in July would have established a basic framework that provided greater assurances of protectiveness to the public.  But industry firepower overwhelmed the TCEQ staff, which had little, if any, apparent support from their Commissioners.  The final rule was gutted with so many exceptions and loopholes (see below) that it almost makes me wonder if there is sufficient environmental benefit left to justify the regulatory burden.  Especially troubling was the number of sweeping changes made to the rule during a 6-week continuance, out of the public eye, during which time staff was asked to attempt to resolve industry concerns.  

In the end, I have no choice but to admit that my time would have been better spent on something else.  This story is yet one more example of why the legislature’s required sunset review of the TCEQ is so timely.  It is time for the TCEQ to put the protection of public health and the environment first.

On this last point, State Representative Rafael Anchia (D-Dallas) who serves on the state’s Sunset Advisory Commission, ably captured the situation in an interview on KUT’s feature “Letters to the Lege” this morning:

“In hearings we’ve held, we’ve heard complaints from all over the state … and there’s definitely an issue at the TCEQ when it comes to the response to citizen complaints. There’s no doubt about it. The EPA is seriously put out with the TCEQ and there’s a real standoff going on right now between the Perry administration and the federal government on how the TCEQ regulates pollutants in Texas. And in my opinion, we need to shake the agency up and make it more responsive to the public.”

At EDF, we completely agree.     

Key Examples Of How The July 2010 Oil & Gas Permit by Rule Proposal Was Weakened:

  • Applies only to Barnett Shale. A new rule will have to be developed by January 2012 to apply to the rest of Texas
  • Allowable hourly emissions of benzene increased by up to a factor of 20X
  • Eliminated formaldehyde emissions limits and protectiveness review
  • Increased VOC and other pollution limits, and removed limits for others
  • Created an exception for “small operations,” specifically projects with a maximum engine horsepower (450 hp or less depending on fuel), or five defined combinations of emissions sources and components.  These only have to maintain equipment in good working order and maintain a minimum 50-foot setback with no notification to TCEQ required
  • Protectiveness review only required for new or modified sites within ¼- or 1/2- mile from a receptor (depending on size of facility), and excludes consideration of existing emissions at modified sites if the off-site concentrations are less than 10%-25% of an Effects Screening Level
  • Removed prohibition against increasing emissions of applicable pollutants in an Air Pollutant Watch List Area (where pollution levels already exceed the TCEQ’s own acceptable risk levels)
  • Replaced Executive Director’s right to deny a permit for good cause with limited additional pre-conditions for a permit
Also posted in Natural Gas, Texas / Read 4 Responses