Energy Exchange

Natural Gas – A Briefing Paper For Candidates

By Eric Pooley / Published: August 10, 2012

To download a copy of this briefing paper, please click here.

Hydraulic fracturing and horizontal drilling, processes used to extract natural gas from underground shale formations, have unlocked vast new domestic reserves — an unexpected abundance that has overturned many of America’s assumptions about energy. Every major-party candidate for public office in 2012, Republican or Democrat, must understand this new energy reality. And though each candidate’s position on natural gas development is likely to begin with a recognition of shale gas’s economic and energy security benefits, mastery of the issue requires a deeper level of understanding.  Shale gas also brings with it a set of serious risks to public health and the environment — including impacts to water, air, land, local communities and the earth’s climate. At the local level in areas where shale gas production is intense, legitimate concerns over health and environmental impacts are shared by Republican, Democratic, and independent voters alike. No candidate’s position on natural gas can be considered complete unless it addresses these impacts.

In 2001, shale gas accounted for just 2% of America’s natural gas supply.  Today, it accounts for more than 30% — while more than 90% of all new oil and gas wells being drilled in the U.S. make use of hydraulic fracturing. As unconventional natural gas production spreads into populous regions that are not accustomed to intensive industrial activity, its impacts have made it the object of intense local opposition, as manifested in the July 28th “Stop the Frack Attack” rally in Washington D.C and others like it in state capitals around the country. The environmental and public health concerns of local communities must be addressed if natural gas companies are to maintain their social license to operate.

Economic Benefits

While a majority of Americans remain unfamiliar with hydraulic fracturing, or “fracking,” according to a recent University of Texas poll, many will certainly applaud the economic benefits of low-cost natural gas. The natural gas revolution is driving: 

  • Job creation across the value chain, with rising demand for technical and professional services, for steel, pipelines and storage facilities, and for all the ancillary goods and services that arise in support of a rapidly growing industry. 
  • An unexpected expansion in the American chemical industry, with Dow and DuPont now building new plants close to shale formations. “If you had told me 10 years ago I’d be standing up on this podium making this announcement [about Dow’s $4 billion investment in four new Texas chemical plants], I would not have believed you,” Dow CEO Andrew Liveris said in April. “The cost of energy, the cost of feedstocks … was pricing the United States out of the market,” he said. But the shale “miracle” changed that. 
  • A revival in U.S steelmaking and other manufacturing industries. Nucor, which uses natural gas to make steel, is building a $750-million facility in Louisiana, just eight years after shutting down a similar plant in the same state. 
  • A new sense of the potential for U.S. energy independence and energy security.

Environmental Benefits

Increased development of shale gas could yield substantial environmental and public health benefits while helping the U.S. energy infrastructure become cleaner and less carbon-intensive. This highly desirable outcome will only be achieved, however, if the resource is developed responsibly. The potential exists because natural gas: 

  • Produces only about half the carbon dioxide of coal when burned.
  • Produces about a third as much of the smog-forming nitrogen oxides that come from burning coal.
  • Produces almost none of the mercury and sulfur dioxides that come from burning coal or oil.  

For this reason, fueling power plants with natural gas instead of coal can dramatically cut conventional air pollution, can help reduce greenhouse gas emissions from the power sector and could help turn the tide against mountaintop removal mining and other environmentally disastrous industry practices. And because natural gas-fired power plants can cycle up quickly, they can be a nimble enabler of intermittent renewable energy sources in combination with demand response and emerging large-scale energy storage technologies.

Critically, if U.S. industry and regulators are successful in measuring and reducing methane pollution, which undermines natural gas’ role as a lower carbon alternative to coal and oil, the shale gas revolution can also bring a reduction in short-term radiative forcing — the driver of global climate change — over the next several decades. Leak reduction will determine how much of a role natural gas can play in a clean, low carbon future.

In short, natural gas could be a win-win  benefiting both the economy and the environment — if we do it the right way. The right way means putting tough rules and mandatory environmental safeguards in place that protect communities and reduce methane pollution. There is no question that domestic unconventional gas supplies are leading to coal-fired power plants being retired.  The public recognizes this benefit, but the jury is still out on whether shale resources can be produced responsibly. It’s no simple task to strike a balance between public safety and the development of this crucial energy resource, but it is essential that we do so.  Americans deserve assurance that the economic, environmental and energy security benefits of shale gas development will be realized without sacrificing their health, safety, or the protection of the environment.

Clearly there are environmentally sensitive areas that should be off limits to natural gas development. And just as clearly there are some areas where intensive development will occur. Environmental Defense Fund is working with partners from academia, civil society, and industry to identify and minimize the impacts from the full range of gas development activities. Horizontal drilling and hydraulic fracturing attract significant press attention, but the issues of gas production are much broader than that.

Specific Areas of Concern

EDF sees five areas in which strong rulemaking is necessary: 

  • Mandating greater transparency in industry operations. Having good data is a prerequisite to understanding and mitigating risks, and it’s the first step toward winning back a badly damaged public trust.  Regulators should require, and companies should embrace, disclosure policies that mandate reporting of not only the chemicals used in hydraulic fracturing, but also chemicals used in drilling and operating wells – as Ohio Governor John Kasich has advocated.  Transparency should also be brought to other aspects of industry operations, such as detailed reporting of air emissions, chemical characterization of waste streams and tracking and reporting of water use and waste disposition.  Company compliance histories should also be catalogued and reported, so companies with good records can get the credit they deserve and bad actors can be identified and pushed to improve performance. 
  • Modernizing rules for well construction and operation. Poor well construction and operation can lead to groundwater contamination and to blowouts that can endanger lives and foul the surface environment. In response, EDF is working with regulators and key stakeholders to strengthen rules for proper construction and operation of hydraulically fractured wells. While stronger regulatory oversight of well construction is needed, no one should try to suggest that hydraulic fracturing itself is risk free.  Both aspects of well development need strong oversight.
  • Strengthening regulations for waste and water management.  Poor handling, storage and disposal of production fluids and other wastes is a major issue; chemical spillage is the leading cause of groundwater contamination from gas development activities. In response, EDF is pressing for measures to reduce spills, improve the use and handling of chemicals, and assure proper disposal (or recycling) of produced water.  As mentioned above, a key missing ingredient here is better data on the chemical composition of waste streams.  To be confident that handling, treatment and disposal practices are sufficient, authorities must know what substances are being handled. Finally, headline-grabbing reports of earthquakes connected to shale gas development have been linked to the waste disposal method known as deep well injection, not to hydraulic fracturing itself. This issue points to the need for improved seismic analysis prior to permitting of deep injection wells.  
  • Improving regulations to protect local and regional air quality. Air emissions resulting from the production, storage, processing, and transportation of natural gas can threaten public health. Leaks and routine venting during the extraction, processing and transportation of natural gas result in emissions of greenhouse gases and, depending on the local composition of unprocessed gas, other pollutants that contribute to locally- and regionally-elevated air pollution.  In 2009, an SMU study estimated that the combined amounts of volatile organic compounds (VOC) and nitrogen oxide (NOx) emissions from oil and natural gas production in the Barnett Shale of North Texas were comparable to amounts of those emissions from the roughly 4 million cars and trucks in the adjoining Dallas Fort-Worth metro area. Fortunately, widely available and cost-effective remedies exist: repairing worn equipment, using “green” well completion techniques and eliminating venting are just a few. In the past five years, for example, Southwestern Energy says it has cut the cost of capturing stray emissions from $20,000 a well to close to zero. The company is capturing an average of 16 million cubic feet of gas that would otherwise have been released or flared. Southwestern also uses special pop-off valves to make sure natural gas is not released into the air from well casings. If pressure causes a valve to open, the gas is captured in a closed loop that returns it to the system, saving the resource. These systems cost just $600 to $1200 a piece. 
  • Developing innovative strategies to reduce community impacts. The cumulative impact of infrastructure development, traffic, noise, lights, and the like can overwhelm communities and intrude on sensitive ecosystems and habitats; none of this is easily addressed through conventional regulatory approaches. Instead, EDF recommends that states and local governments bring together stakeholders for scientifically based, bottom-up planning processes designed to address unique local needs. Likewise, the right of local communities to regulate the location of gas development through local zoning ordinances must be preserved.  Gas operations shouldn’t receive special carve-outs from traditional local powers that other industrial activities must comply with. 

President Obama has voiced his commitment to domestic energy production through safe and responsible natural gas development, declaring that “America will develop this resource without putting the health and safety of our citizens at risk.” EDF would like to see Governor Romney and other candidates across the land call for the same careful balance. Far from being an example of regulation that chokes economic growth, strong oversight of natural gas development is necessary to ensure the sector’s continued growth, by avoiding the public backlash that could slow or even derail natural gas development.  Read More »

Posted in Methane, Natural Gas, Washington, DC / Tagged , , | Read 11 Responses

Future Energy – Needed Now

By EDF Blogs / Published: August 8, 2012

By: Richie Ahuja, Regional Director, Asia, and Andy Darrell, New York Regional Director and Deputy Director of the Energy Program

Credit: Parivartan Sharma / Reuters

“Leopards and elephants often wander in…”says the manager of a tea plantation in India, left in the dark without electricity after the near total collapse of India’s electric grid.  Trains stopped, miners were stuck underground, traffic lights went out, and homes and businesses were left without electricity.  It was the world’s largest blackout, affecting more than 600 million people.

The truth is, the electric grid in many parts of the world is fragile, often struggling to match supply and demand.   The United States is no stranger to blackouts either, as the Washington post reports. “My house lost power for four days,” notes a fellow EDF’er living in Washington, DC in regards to an outage earlier this July. 

Yet technology is available to make grids much more resilient, nimble — and climate friendly.  From sensors that identify weak spots in advance, to ways to store wind power in electric cars overnight, and buildings that make money by selling “negawatts” into the grid at peak times, we know how to get this right.

Globally, trillions of dollars are poised to be invested into electricity systems in developed and developing countries.  Surprisingly, a lot of the medicine to cure the grid is remarkably similar across the world – deploy sensors that gather data that can be used for both reliability and pollution reduction, make it easy to plug renewables into the network, and reward efficiency and demand response.  Build a data-driven, flexible network that uses technology to harness the power of information.

What’s holding us back is not technology or the will to innovate:  it is outdated regulation and policy.  Like most markets, the electricity market is governed by many rules – rules that frame what’s welcome to enter the market, access to data, how much any of us can make by putting solar panels on our house, etc. With so much investment about to happen, isn’t it time we took a hard look at those rules, to make sure we end up with a network that welcomes the future and rewards reliable, clean energy?

Austin’s Pecan Street project  is pioneering a new way of doing business, one that works for families, for businesses, for people – and the planet.  EDF is taking what we learned from that project and developing ideas for how to open much larger markets to innovation, like California and parts of the Midwest.

Leopards and elephants seem a long way away from our homes here in the U.S.… but reading about this crisis in India makes us realize how related the solutions to our energy futures really are.  And how important it is, in each country, to get it right.

Posted in Grid Modernization / Comments are closed

Energy Efficiency: A Resource For The Masses

By / Published: August 1, 2012

By: Jessica Feingold, EDF Financial Policy Fellow

EDF believes that On-Bill Repayment (OBR) can do for efficiency what the third-party finance model has done for solar.

A recent post on efficiency.org, entitled ‘Solar is for the wealthy? Not anymore!’ highlights the growth of residential solar projects in middle-income markets (areas with median incomes of $50k-$100k) at the same time that financing became widely available from the private sector.  While wealthier people have always been more likely to be able to afford the upfront costs of a solar installation, the introduction of solar leases and Power Purchase Agreements (PPAs) has extended the opportunity to a much wider range of consumers.  This increase was described in detail in the 2012 California Solar Initiative Assessment.  The success of solar among middle income households – achieved by eliminating upfront costs and allowing for monthly repayment through a solar lease or PPA structure – lends support to the notion that low-cost financing will be critical to making similar advancements in energy efficiency.

EDF has been working to create an OBR program in California that would provide financing for energy efficiency and renewable energy upgrades.  OBR uses private capital to finance these clean energy upgrades at no upfront cost to consumers.   However, OBR differs from the existing clean energy financing models in that it allows for repayment of a clean energy investment on the customer’s monthly utility bill.  This reduces the administrative burden of an additional bill, while at the same time strengthening the credit of the loan by leveraging historically strong utility payment history. Thus, OBR would provide low-cost capital to consumers for clean energy upgrades.

Middle-income earners, in particular, stand to benefit from OBR, since they otherwise do not have access to low-cost, unsecured financing.  Middle-income households are highly price-sensitive and likely do not have sufficient savings or home equity available to make clean energy investments that would reduce their utility bills, resource use and reliance on grid power.  That is precisely why private sector financing was critical to promoting solar among middle-income households.  Energy efficiency projects, on the other hand, have not yet attracted the low-cost private capital needed to achieve such widespread success.

OBR is an innovative financing solution that would allow middle-income households to realize the long-term benefits of energy efficiency, and provide more affordable financing for renewable energy projects as well.

Posted in California, Energy Efficiency, On-bill repayment / Tagged | Read 2 Responses

Envision Charlotte Meets Pecan Street

By Greg Andeck / Published: July 26, 2012

Last week, I, along with several other Envision Charlotte Board Members travelled to visit the Pecan Street smart grid project in Austin, Texas.   We hope this will be the start of a recurring “exchange program” between the two cities for sharing of information and best practices related to smart grid deployment.  There are significant differences between the two projects.  Pecan Street is focused on the residential sector; Envision Charlotte on commercial office buildings.  Envision Charlotte is deploying innovative behavior change, social networking and employee training to reduce energy use, while Pecan Street is heavily focused on technology solutions. 

But, there is also a lot in common.  Both organizations desire to reduce energy use and find alternatives to our outdated energy system.  Both believe that smart grids and energy efficiency can be cost effective and drive economic development.  Finally, both groups are rigorously measuring the impacts of their actions. 

What we saw in Austin was very cool.  We started by visiting a home in the Mueller neighborhood, a playground for testing the latest in home energy management and appliances.  In one house’s garage was a wireless energy monitor that connects to the home’s circuit breaker box and allows homeowners to view real time energy use from different appliances and lighting systems in the home.  Residents now know exactly how much it is costing them to make coffee each morning – or power up their flat screen TV. 

Also in the garage was a Chevy Volt, along with four charging stations from different manufacturers (according to Pecan Street staff, they all perform roughly the same).  Up on the roof was a series of solar panels, whose every watt is being recorded to learn important things about installation location, potential for offsetting peak generation, and storage solutions.  Although each of these technologies are impressive on their own, only when operating together do they represent the next generation of home energy management where consumers have complete knowledge and control over their energy choices.  It’s pretty empowering.

This innovative project didn’t happen accidentally.  It came about through lots of perspiration from their Executive Director and former Austin Council Member Brewster McCracken; design recommendations from hundreds of folks in the private sector, local community and NGOs (including EDF); prodigious fundraising; and hard work from staff, board members, and participating companies.  Some of my key takeaways from the trip are as follows:

Residential Technology Still a Wild West – Unlike the commercial building automation universe, where users have more experience integrating energy management and building systems to speak the same code and talk to one another, residential systems are still in their infancy and competing languages make it extremely difficult to get different pieces of hardware to talk to one another.  Pecan Street will often need to write new code or develop other workarounds to get vendor equipment to work as described.  This is one of the reasons why EDF has joined the OPEN network, to help ensure that smart grid investments in different states maximize interoperability.

The Incredible Power of Data – Pecan Street collects a data point from each home circuit every 15 seconds.  With dozens of circuits per home and hundreds of participating homes in the Mueller development, the Pecan Street project has rapidly approached billions of discrete pieces of data that can be captured, sorted and analyzed.  Although a challenge to work with data sets this large, once properly harnessed, they provide incredible insights to consumers, utilities, researchers and policymakers on energy use.  Pecan Street can see exactly what happens to the grid when someone opens their refrigerator or micro-waves dinner, and use that information to develop strategies for homeowners that will reduce energy use and improve reliability.   

Test Technology, Scale, Inform Policy – Pecan Street is unique in its approach in several ways, but one of the most significant is that it enables a technology to policy pathway.  Pecan Street’s test labs experiment with the latest in home energy management technologies, present those solutions to homeowners in the Mueller neighborhood for adoption and enable EDF to identify regulatory or policy mechanisms that can further accelerate smart grid investment.  As an example, last year EDF was able to help secure provisions in a Texas energy bill that enable demand response programs and payments for utility customers.  This technology to policy approach is something that Envision Charlotte will need to reach our ambitious 5-year, 20% energy reduction goal.

All in all, it was an incredible trip.  Over the coming years, as Envision Charlotte develops more programs and scales its impact, we hope to repay the warm hospitality of Pecan Street by hosting their team in Charlotte and sharing what we have learned.  We’ll promise good conversation, great BBQ and a continued devotion to collaboration.

Posted in Grid Modernization, North Carolina, Texas / Tagged , | Comments are closed

Smart Meters Are Key To A Smart Grid

By Cassandra Ely / Published: July 26, 2012

Cassandra Brunette is a research associate in EDF’s Office of Chief Scientist.

Source: PG&E

A well-designed smart grid is critical to the clean energy revolution we need – enabling significantly greater use of clean, renewable, domestic energy resources and improved air quality to protect the health of millions of Americans now harmed by dangerous air pollution.

Smart meters are a key component of the smart grid.  They unlock air quality, climate pollution and public health benefits by enabling two-way, real-time communication that gives households, small businesses, manufacturers and farmers (and the utilities that serve them) the information they need to cut energy use and electricity costs.  These devices help ensure that every day energy users reap the many benefits of the smart grid.

However, as a recent PBS NewsHour report explained, some activist groups and individuals in areas where smart meters have been deployed have expressed concerns over exposure to radio frequencies (RFs) resulting from the use  of this technology.  EDF supports further research and opt-out programs for those concerned.  But what is missing from the PBS report is a clear account of the current, available scientific evidence on smart meters and health.  EDF uses the best available science in all of its programs, and our smart grid initiative is no exception.

I am a member of EDF’s science team out of the San Francisco Bay Area and have dug deep into the peer-reviewed literature on health effects of smart meters, as well as independent assessments by agencies and industry groups and reports from government agencies.  Here is what we know:

Research shows that every day humans come into contact with RFs from a wide variety of sources, including – but not limited to – wireless or cellular phones, microwaves, wireless internet routers, hair dryers, baby monitors and wireless laptops.  Each has varying levels of exposure that depend on the technology and – importantly – on distance from the source.

One example in our daily lives is the use of a cell phone.  A study by the Electric Power Research Institute (EPRI) found that during a call, cell phones held at the ear generate exposure levels between 1000-5000 microwatts per square centimeter (µW/cm2).  In comparison, when transmitting, smart meters create exposure levels of approximately 8.8 µW/cm2.  And that’s if a person is standing right in front of the meter.  In homes and businesses, people are much farther away from their electric meter, so exposure levels are far lower.  This means that a cell phone call exposes a person to hundreds of times more RFs than a transmitting smart meter.  Moreover, smart meters only transmit signals roughly 2-5% of the day (approximately 30-70 minutes).

Source: CCST

The chart to the right (units in µW/cm2), from a report by the California Council on Science and Technology, puts smart meters in context with other RF emitting technologies.  Keep in mind that this chart compares smart meters at a hypothetical maximum exposure level with transmission occurring during 100% of the day.  Even at these hypothetical maximums, exposure from smart meters is significantly lower than other technologies already in use.

Assessments also show that impacts from RFs come in two forms, thermal (heat-related) and non-thermal.  The Federal Communications Commission (FCC) sets safety standards for thermal impacts.  Smart meter exposure levels fall well below the FCC’s limits for safety for thermal impacts.  As for non-thermal impacts, the cumulative impacts of low-dose, long-term exposure are uncertain.  To date, there is no scientific evidence of non-thermal impacts from smart meter RF emissions.  EDF supports continued research on any possible health impacts of all RF emitters, but given the current standard for thermal impacts and uncertainties of non-thermal impacts, there is no evidence that the public would benefit from additional standards.

EDF’s number one priority is environmental and public health safety.  We advocate for a “smart grid done right” to quote a message by EDF’s President Fred Krupp, and we are not alone in this effort.  Though the PBS NewsHour story references “environmentalists” broadly opposed to a smarter grid, EDF is one of many environmental organizations strongly advocating for grid modernization as the clear path to lessening our dependence on fossil fuels and moving us toward a clean, healthy, low-carbon energy system.  Our science team will continue thorough assessments of the best available science on this topic and our work with utilities, regulators and the smart grid industry to protect the environment and the health of customers.

For more information on the many benefits of the smart grid, please view EDF’s fact sheet here.

Posted in Grid Modernization / Tagged | Read 14 Responses

PUC Resource Adequacy Workshop on Friday, July 27

By Marita Mirzatuny / Published: July 25, 2012

Source: Brattle Group. “ERCOT Investment Incentives and Resource Adequacy.” June 1, 2012

This Friday, the Public Utility Commission (PUC) will host a workshop to discuss the Brattle Group’s recommendations for Texas’ resource adequacy predicament and how to move towards sustained reliability. This workshop is timely, since the Texas energy crunch continues to be in the spotlight. Just last week, the New York Times reported that Texas ranks last in electrical reliability among all states in the U.S. Texas won’t stay open for business if that remains the case and year after year it seems our state energy policy is based on a hope and a prayer. 

Table 1 of the Brattle report outlines the five policy options to solve the long-term problems.

The report specifically states that “reliance on scarcity prices is unlikely to achieve current reliability objectives.” Therefore raising the price cap is, alone, not going to solve the problem. As mentioned at the Senate Business & Commerce committee earlier this month, this issue was plagued by accusations that the market was being manipulated because of violent price fluctuations on June 25 and 26. It turns out the market is not being manipulated, which is good, but that it is really just dysfunctional in design, which is not so good. Colin Meehan’s blog last week highlights this issue and makes the point that while the PUC is willing to potentially pass the costs of a price cap increase onto ratepayers, it should also consider demand-side resources suggested by Brattle which could positively affect ratepayers. For example, in the PJM market demand-side resources are allowed to participate in energy and capacity markets and over $20 million of the payments went to residential customers.

EDF submitted comments for this workshop and will be in attendance. Other public comments were made from a variety of stakeholder’s including demand response advocacy groups, cities, MOUs, and power companies.

EDF believes that “such reforms must include a substantially increased role for demand response (DR) and other demand-side resources in ERCOT’s markets; the report provides ample supporting evidence for this need. EDF requests detail on the level of DR needed to maintain reliability in each scenario [in chart above], what would be required in each scenario to attain those levels, as well as the role of other demand-side resources in meeting future resource needs.”

Posted in Demand Response, General, Texas / Comments are closed