Energy Exchange

Ohio Energy Bill Falls Short Of Governor’s Vision For Chemical Disclosure

By Matt Watson / Published: May 25, 2012

Ohio Governor John Kasich showed real leadership earlier this month when he introduced energy bill with the most comprehensive rules in the country for chemical disclosure during oil and gas operations. The Governor’s bill would have required disclosure of not only the chemicals used in hydraulic fracturing – as a number of other states have done – but also the full range of chemicals used throughout the lifecycle of a well. Hydraulic fracturing gets all the attention, but the Governor and his team understand that dangerous chemicals are also used in drilling, producing, servicing and shutting down wells. The entire process should be transparent from beginning to end — “from spud to plug,” as it’s called.

This was smart policy when the Governor proposed it. And it’s smart policy today. Unfortunately, the energy bill passed yesterday by the Ohio General Assembly fails to fully deliver on that vision. In the face of intense industry opposition, lawmakers eliminated many of the reporting requirements contained in the original bill. EDF is disappointed the final bill does not live up to what Governor Kasich proposed, but we give the Governor credit for putting the idea forward and expanding the terms of the debate – both in Ohio and nationally.

To be fair, even in its scaled-back version, the Ohio disclosure policy breaks new ground. It requires disclosure of the chemicals used in stimulating a well. This includes not just hydraulic fracturing but also other kinds of stimulation techniques – something most states have missed in their disclosure rules.

Additionally, companies will be required to disclose the chemicals used in a well until the surface casing is set in place. As we testified in the Ohio House, this still leaves the public in the dark about a lot of dangerous chemicals that are used to drill and operate a well. But again, it’s a step forward compared to what other states have done.

We’re disappointed, though, by changes the House made to the trade secret provisions in the bill. In the original version, companies would have been required to report trade secret information to the Department of Natural Resources. This would have ensured that the agency had quick access to chemical information it might need to respond to a spill, initiate an investigation or respond to a complaint.  Under industry pressure, the Assembly caved on that language, and companies will now be allowed to withhold trade secret information from the regulators. 

The bill establishes an unqualified right for certain land owners to challenge trade secret claims in court. So, there’s at least a mechanism in place to police the system and make sure companies aren’t hiding behind bogus trade secret claims. But it would have been far better to have trade secrets turned over to the state – not only in cases where this information is needed to protect public health and safety, but also because it would have given anyone, not just the land owners, a right to challenge trade secrets under the Ohio Public Records Act.

This is a big bill. It addresses a wide range of issues – not just oil and gas – and includes far too much to cover here. It has some good provisions, such as new requirements for companies to report where they’re getting their water from and how much they’re using, and requirements for companies to test the baseline water quality in nearby water wells before they start drilling. The bill also has some really bad provisions – like an egregious one that strips citizens of the right to appeal permits issued to oil and gas operators.

The passage of the energy bill is not the end of the process: the agency rules implementing this bill will be written in the months ahead, and EDF will be working to make sure they are as strong as possible. And we’ll be working on other rules to reduce the risks oil and gas operations pose to communities and the environment.

This includes improving Ohio’s rules for air pollution from oil and gas operations. It means making sure we have tough standards in place to manage the huge waste streams these operations produce. It means putting smart planning in place to preserve landscapes and protect the fabric of local communities. And sooner rather than later, it’s going to mean coming back to the General Assembly and fixing what didn’t get done right the first time.

Posted in Natural Gas / Read 2 Responses

University At Buffalo’s Shale Resources And Society Institute’s ‘Environmental Impacts During Shale Gas Drilling’ Report

By Scott Anderson / Published: May 16, 2012

The University at Buffalo’s Shale Resources and Society Institute issued a report yesterday, “Environmental Impacts During Shale Gas Drilling: Causes, Impacts and Remedies,” which offers a quantitative data review of Pennsylvania’s regulation of natural gas development in the Marcellus Shale. The press release notes that I was a reviewer for the report.

While I was a reviewer, this does not mean that all of my suggestions were taken or that I agree with all of the report’s opinions and conclusions.

Does the report have strengths? Absolutely. Unfortunately, it is hard to find understandable, comprehensive data describing natural gas industry environmental violations and the responses taken by enforcement agencies. The University at Buffalo has done a great service by bringing such information to light for the period studied (2008 through August 2011).

At the same time, several of the opinions and conclusions in the report are questionable. These include: 

  • The idea that a violation isn’t an “environmental” concern if it is a violation of “paperwork” or “preventative” regulations and didn’t result in immediate, actual harm to the environment.
     
  • Characterizing the rate of environmental violations (narrowly defined) as “low” in the first eight months of 2011 when, even using a narrow definition of environmental violation, violations were found at 26.5% of the wells drilled.
     
  • The suggestion that the present regulatory program is effective because the incidence of “environmental violations” (narrowly defined) declined from 58.2% of wells in 2008 to 26.5% of wells in 2011.

In sum, there’s a lot of good information to be gleaned from the study, but caution should be exercised with regards to some of the conclusions.

Posted in Natural Gas / Read 5 Responses

ANGA’s New Texas Report Serves Up A Heaping Helping Of ‘Number Salad’

By / Published: April 26, 2012

The American Natural Gas Association (ANGA) released a paper in March titled “Texas Natural Gas: Fuel for Growth,” to a lot of press, and rightly so.  The paper correctly cites several benefits of using and producing natural gas in Texas: it is produced in-state, has water use and air-quality benefits when compared to coal and helps to fund state and local governments through taxes. 

Unfortunately, the paper also makes some claims that are difficult to take seriously; perhaps the first warning sign should be that while the paper was presented as an economic analysis, the authors have no economic credentials.  Dr. Michael J. Economides, a chemical and biomolecular professor at the University of Houston, and petroleum engineering consultant Philip E. Lewis spend little time worrying about the details in this report, serving up a heaping helping of “number salad.”

For instance, the $7.7 billion “loss” is calculated by projecting the potential use of gas in Texas, if it had followed the national trend, against the actual use.  But in looking at the data, it’s not clear that the Texas fuel mix ever tracked the national fuel mix.  Even more importantly, looking at the authors’ own slides, Texas uses 20% more natural gas in its fuel mix than the nation.  If anything, the national fuel mix is following the trend set long ago by Texas —adding more natural gas and wind, while decreasing coal output.

What might shock the authors is that natural gas consumption in the electric power sector has increased by around 5,000 one thousand cubic feet of gas (MCF) since 2006, 800 MCF in transportation and nearly 10,000 MCF in the industrial sector. 

There are so many misleading statistics and inaccuracies that we could practically write a report on the report, but instead I’ll just focus on one aspect that stands out in particular. 

When it comes to comparing natural gas to coal power, the authors are quick to cite the many local benefits of using natural gas energy produced in Texas: it’s cleaner than coal and creates local jobs and a local tax base.  Wind energy has largely produced the same benefits: local wind power has brought jobs and a growing tax base and population to rural Texas counties that “had seen consistent, significant population losses since 1950.”  On top of the economic development benefits, where natural gas beats coal in reducing pollution, wind energy beats both by reducing pollution basically to zero.  But when it comes to discussing any of these benefits from wind energy in the report, the silence is deafening. 

Natural gas is reshaping our energy landscape.  And, done right—with the proper, mandatory environmental safeguards in place and reduced methane leakage rates—compared to coal plants, natural gas power plants offer other distinct air quality benefits.  It emits less greenhouse gases than coal when combusted and avoids mercury and other dangerous air pollutants that come from coal.

However, the same – and more – can be said about wind energy and Texas’ potential clean energy resources, including solar and geothermal power, among others.  Rather than pitting our local clean energy resources against each other as this report does, we should seek to expand and diversify our clean energy mix, reaping health, environmental, economic and security benefits.

Posted in Natural Gas, Renewable Energy, Texas / Read 1 Response

California Low Carbon Fuels Appellate Court Ruling is a Win on Many Levels

By Tim O'Connor / Published: April 24, 2012

Late yesterday, a three-judge panel in the 9th Circuit Court of Appeals granted an important stay motion in favor of California and its Low Carbon Fuel Standard (LCFS). The court’s decision allows the state to move forward with vital protections for human health and the environment that will strengthen California’s clean energy economy and improve our energy security.

The LCFS is one of California’s most ambitious and innovative climate change regulations to date. It is among 70 measures adopted under AB 32 (the Global Warming Solutions Act of 2006) that will be used to reduce emissions to 1990 levels by 2020. The standard calls for reducing the carbon content of fuels by 10 percent by 2020, which is expected to reduce 15 million metric tons of greenhouse gas pollution per year by 2020. Some of the cuts will come from improvements in the way traditional oil and ethanol feedstocks are produced, processed and delivered to consumers. Other cuts will come from advancements in breakthrough technologies such as electric cars and renewable fuels that dramatically cut toxic air contaminants and further diversify our fuel supply with locally generated energy sources.

How LCFS Works

The standard creates a flexible system that allows fuel suppliers to comply by either documenting reduced emissions in their fuel production pathways (using a science-based lifecycle emissions model) or by purchasing credits from suppliers that have reduced emissions below a predetermined threshold. This approach rewards innovative solutions that cut emissions as quickly, cheaply and extensively as possible, using a scientifically credible emissions reporting and trading platform.

How LCFS Provides Energy Security and Protection from Fuel Price Surges

California drivers burn about 16 billion gallons of gasoline and 4 billion gallons of diesel fuel every year and emit, in aggregate, approximately 170 million tons of greenhouse gas emissions. Much of this fuel is sourced from California oil fields (approximately 200 million barrels per year), though more than 50 percent is imported from the Middle East, South America and Alaska. These imports make our economy vulnerable to price swings and shortages driven by production changes and politics.

There is perhaps no greater embodiment of our state’s vulnerability to imported fossil fuel than dramatic and sustained “price shocks.” These periods of elevated prices impact drivers’ pocket books and transfer huge amounts of money from California’s economy to foreign countries, many of which are hostile to our country.

Since 1995, California has experienced 15 such fuel price shocks, including the current one that has increased fuel prices by about 40 percent above the 24-month moving average. California’s LCFS, an important clean energy policy, is going to break this trend.

The LCFS Incentive to Diversify the Transportation Fuel Mix

California’s LCFS is a scientifically-based standard that provides incentives for fuels that cause less climate change pollution throughout their entire lifecycle. At the same time, the LCFS allows for traditional fuel producers to continue operating as long as they turn in sufficient compliance credits. Fuel sources producing credits include electricity (powering electric vehicles), natural gas, advanced biofuels and some traditional biofuels that emit less carbon than gasoline and diesel. These fuels are typically produced or grown in the Western United States rather than imported from abroad. This results in a more diversified fuel mix that is less vulnerable to fuel price shocks.

Positive Signal for States Looking to Follow California’s Lead

Though the Court of Appeals has yet to hear the case on the merits, yesterday’s ruling is a positive signal that this standard has a strong legal foundation that will likely be upheld on appeal and can be adopted by other states. We trust this is music to the ears of Oregon, which just last week announced a Clean Fuels Program similar to California’s.

Without a federal policy in place to regulate the carbon pollution in fuels, it is critically important that California and other states have the ability to carry out smart, science-based policies such as this standard to cut pollution, reward innovation, and build a stronger, more efficient economy.

EDF will continue pursuing the matter on appeal until a final resolution, an outcome that looks suddenly brighter for California consumers, innovative fuel producers and the environment.

 

 

 

 

Posted in General / Comments are closed

Guest Blog: The Devil In The Design – Energy And Climate Policy Design Matters More Than You Might Think

By EDF Blogs / Published: April 23, 2012

By: Guest Blogger Joe Indvik, ICF International

Policy design matters. But all too often, this notion is ignored by political pundits and belittled by policymakers in favor of flashy claims about the morality of a policy type. Like the latest sports car, a policy is usually touted as either a gem or a dud based on its superficial image, with only marginal public interest in looking at what’s actually under the hood. On the contrary, data-driven analysis of the inner workings of policy design will be the key to smart solutions on the road ahead for climate and energy policy the U.S.

The Waxman-Markey cap-and-trade bill of 2009 is a prime example. Claims about this former centerpiece of the American climate policy debate ran the gamut of dramatic generalization. They ranged from accusations of a job-killing socialist scheme that “would hurt families, business and farmers—basically anyone who drives a car and flips a light switch” to claims from hopeful environmentalists that any cap would be better than nothing.  Discussion on the actual design of the bill was all but absent from the limelight.  Energy policy discourse is often dominated by these combative back-and-forths, which focus on oversimplified notions of whether a policy would be good for the country while glossing over the practical nuances that make all the difference. Read More »

Posted in Climate, Renewable Energy / Tagged , , , , , , , | Read 4 Responses

What Will It Take To Get Sustained Benefits From Natural Gas?

By Ramon Alvarez, Ph.D. / Published: April 10, 2012

Natural gas is reshaping our energy landscape. Though the potential energy security and economic benefits are compelling, the challenge is that natural gas comes with its own set of risks to public health and the environment, including exposure to toxic chemicals and waste products, faulty well construction and design, local and regional air quality issues and land use and community impacts.

There has also been much confusion about the impacts of increased natural gas use on the climate.  While natural gas burns cleaner than other fossil fuels when combusted, methane leakage from the production and transportation of natural gas has the potential to remove some or all of those benefits, depending on the leakage rate.  Methane is the main ingredient in natural gas and a greenhouse gas (GHG) pollutant many times more potent than carbon dioxide (CO2), the principal contributor to man-made climate change.

Proceedings of the National Academy of Sciences (PNAS) Paper

EDF has teamed up with several respected scientists to find a better way to examine the climatic impacts of increased use of natural gas and compare it in place of other fossil fuels in a paper titled “Greater Focus Needed on Methane Leakage from Natural Gas Infrastructure” published yesterday in the Proceedings of the National Academy of Sciences (PNAS).  While methane absorbs more heat energy than CO2, making it a much more potent GHG, it also – luckily – has a shorter duration in the atmosphere.  The combination of these factors makes it difficult to compare methane emissions to other GHGs using conventional methods.

Instead, in the PNAS paper, we propose the use of an enhanced scientific method: Technology Warming Potentials (TWPs).  Specifically, this approach reveals the inherent climatic trade-offs of different policy and investment choices involving electricity and transportation.  It illustrates the importance of accounting for methane leakage across the value chain of natural gas (i.e. production, processing and delivery) when considering fuel-switching scenarios from gasoline, diesel fuel and coal to natural gas.  TWPs allow researchers, policy makers and business leaders to make fuel and technology choices while better accounting for their climate impacts.

PNAS Paper Key Findings

We illustrated the new approach by analyzing commonly discussed policy options.  Using the Environmental Protection Agency’s (EPA) best available estimated leakage rate of 2.1% of gas produced (through long-distance transmission pipelines but excluding local distribution pipelines), generating electricity from natural gas in new combined cycle power plants decreases our contribution to climate change, compared to new coal-fired plants.  This is true as long as methane leakage rates stay under 3.2%.

Natural gas powered cars, in contrast, do not reduce climate impacts unless leakage rates are reduced to 1.6% (compared to our estimate of current “well-to-wheels” leakage of 3.0%).  In heavy trucks, the reduction would need to be even more pronounced—converting a fleet of heavy duty trucks to natural gas damages the climate unless leakage is reduced below 1.0%.

The PNAS paper only provides illustrative calculations with EPA’s current estimate of the methane leakage rate and better data is needed to more accurately determine leak rates.  Measuring how much gas is lost to the atmosphere and where the leaks are occurring will help to further target leak reduction opportunities to ensure that natural gas will help mitigate climate change.  EDF is working to obtain extensive empirical data on methane released to the atmosphere across the natural gas supply chain, since the climatic bottom line of fuel switching scenarios involving natural gas is very sensitive to this parameter.

Not only is the data on methane leakage far from definitive, but climate impacts from leakage – and other key public health and environmental risks – could be reduced by strong standards and improved industry practices.  There are many practices and technologies already being used in states such as Colorado and Wyoming, and elsewhere by natural gas companies to reduce gas losses, which results in greater recovery and sale of natural gas, and thus increased economic gains. The return on the initial investment for many of these practices is sometimes as short as a few months and almost always less than two years.  In these tough economic times, it would seem wise to eliminate waste, save money and reduce environmental impact.

In sum, the paper’s results suggest that methane leakage rates matter: they can materially affect the relative climate impacts of natural gas over coal and oil.  While the paper does not draw hard and fast conclusions about the future implications of fuel switching, it does provide guidance in terms of the leak rates necessary for fuel switching to produce climate benefits at all points in time.

EDF Methane Leakage Model

We also released a new methane leakage model, based on the science described in the PNAS paper, which allows anyone to test a range of scenarios to quantify the climate benefits, or damages, of natural gas production and usage given specific methane leakage rates.  Users can vary the key system attributes independently to see how they affect net radiative forcing (the primary index used to quantify the effect of greenhouse gases [GHGs] on global temperatures) from U.S. emissions over time.  Visit http://www.edf.org/methaneleakage to plug in different variables and observe the outcome.

For more information, visit http://www.edf.org/methaneleakage.

Posted in Methane, Natural Gas / Read 1 Response