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Friday, April 26, 2013

Arbor Day

Today is Arbor Day.

The tree which moves some to tears of joy is in the eyes of others only a Green thing that stands in the way. Some see Nature all Ridicule and Deformity...and some scarce see Nature at all. But to the eyes of the Man of Imagination, Nature is Imagination itself.

William Blake, English poet (1757-1827)

Consider the value of trees.

Consider their role as the lungs of the earth.

Consider their beauty.

Then, plant one.

The increasingly risky business of fossil fuel exploration and production

The risk of “relatively low-likelihood” but potentially "catastrophic" disasters from deepwater oil exploration, Arctic drilling – and shale gas development -  demand that energy exploration and production (E&P) companies adopt more sophisticated risk management strategies, says a paper from the global insurance broker Marsh.

Managing Risk on the New Frontiers of Energy Exploration reviews the financial, environmental, political, and reputational risks of these activities and finds that “one misstep could sink an entire industry.”

Of shale gas, March says that the “risk exposures derived from shale gas production are significant,” mentioning political and NGO opposition, public concerns, and bans and moratoria  on drilling.  It says, “Shale gas exploration remains contentious because it can be intrusive for local communities.”  

The report recommends these actions for shale gas E&P companies:

1.  Where shale gas exploration is under consideration, companies should pay due attention to their strategy for managing stakeholder relations. Consultation and engagement with communities local to reserves will become necessary for proactively managing reputational risk.

2.  Emergency response plans and recovery strategies for dealing with an unplanned incident should be well developed and rehearsed. The manner in which local communities and the media are responded to will be critical in the event of an unforeseen incident.

This list appears to me to be a bit, shall we say, thin.  Perhaps it should include minimizing – and perhaps eliminating – risks with new technologies, best practices, landscape-level planning, and embrace of strong regulations

Wednesday, April 24, 2013

Bloomberg: Renewables investment to triple by 2030, but...

Bloomberg reports today that steeply declining costs of wind and solar power - that resulted in high-profile and highly politicized bankruptcies of some renewable manufacturers - is forecasted by Bloomberg New Energy Finance (BNEF) to spur a tripling of investment in renewables by 2030 and means renewables would account for half of all generation capacity by 2030.

The article quotes Michael Liebreich, chief executive officer of New Energy Finance: “The apocalyptic views about what it will cost to shift the world to renewable energy simply aren’t true.” “Three years ago, we thought wind and solar would be cheap as chips, and they’ve even gone below that.” Indeed, the cost of solar panels has fallen by half since 2010, and the price of wind turbines is down a quarter since 2009, according to data compiled by Bloomberg. Despite reduced government subsidies, more projects are being built.

This optimistic report comes a week after a “wake-up call” on renewables from the International Energy Administration. But the two reports are not fundamentally in conflict. Even at 50% renewable penetration by 2030, we will still be on a path that far exceeds the internationally-agreed target of limiting global warming to 2 degrees Centigrade.  We need investment in renewables – as IEA said – to triple NOW to prevent catastrophic warming. We also need the policies to get us there.

April 24 Update: For more, see this report on BNEF's prediction of peak fossil fuels by 2030.

NETL, NIOSH to study air emissions form shale gas drilling

The National Energy Technology Laboratory (NETL) and the National Institute for Occupational Safety and Health (NIOSH) will study the potential impacts of shale gas production on air quality and greenhouse gas emissions

According to a NETL announcement, the research will enable the development of modeling tools, assist researchers in analyzing greenhouse gas lifecycle emissions, and inform local, regional, state, and federal actions to improve air quality and reduce emissions from shale gas development.

NIOSH will join the Multi-Agency Collaboration on Unconventional Oil and Gas Research, a cross-functional team of scientists from the U.S. Department of Energy, Department of the Interior, and Environmental Protection Agency.  The team was created by Presidential executive order to evaluate health and environmental risks associated with hydraulic fracturing and shale gas extraction.

Tuesday, April 23, 2013

Harvard and fracking Take 2: Law school study blasts FracFocus

A study published today by the Environmental Law Program at Harvard Law School has found that FracFocus fails as a compliance tool for the 11 states that rely on it.  

Legal Fractures in Chemical Disclosure Laws: Why the Voluntary Chemical Disclosure Registry FracFocus Fails as a Regulatory Compliance Tool says, in its summary:

In its current form, FracFocus is not an acceptable regulatory compliance method for chemical disclosures. The registry’s shortcomings – and opportunities for improvement – fall into three categories:

(1) Timing of Disclosures.  State laws attach penalties to a company’s late submittal of, or failure to submit, chemical disclosures.  However, FracFocus does not notify a state when it receives a disclosure from a company operating in that state.  Nor can most states readily determine when a disclosure is made.  As a result, states cannot enforce timely disclosure requirements.  

(2) Substance of Disclosures.  FracFocus creates obstacles to compliance for reporting companies.   For example, by not providing state-specific forms, FracFocus leaves companies to figure out how to account for state disclosure requirements not covered by the FracFocus form.  FracFocus staff does not review submissions, and states usually do not receive the form; factors that may encourage some companies to under-value careful reporting. Meanwhile, no state sets minimum reporting standards for FracFocus.  In fact, were FracFocus to disappear entirely, most states using the registry would have no backup disclosure methods readily identified and available to them.  

(3) Nondisclosures.  Trade secret protection is critical in order to reward development of unique products in the marketplace.  However, three characteristics of a robust trade secret regime prevent overly broad demands for this protection: substantiation by the company, verification by a government agency, and opportunity for public challenge.  FracFocus has none of these characteristics; operators have sole discretion to determine when to assert trade secrets.  As a result, inconsistent trade secret assertions are made throughout the registry.

Public confidence and the industry’s social license to operate cannot be won with the current disclosure regime.  As the report says:

States and the BLM are expending valuable resources issuing hydraulic fracturing disclosure requirements.  Companies are spending valuable time submitting disclosures.  We should make sure these systems work.  

Important Harvard analysis: existing fracking regs, disclosure, practices need improvement

The Harvard Business Law Review has published an excellent analysis of public and private efforts to regulate hydraulic fracturing written by Hannah J. Wiseman, Assistant Professor, Florida State University College of Law.

The Private Role in Public Fracturing Disclosure and Regulation looks at existing federal informational disclosure requirements for oil and gas production, which it characterizes as “weak”; voluntary disclosure efforts like FracFocus; a growing list of 16 states that have updated or proposed new laws or regulations to require basic chemical disclosure; various regulatory comparisons and analysis efforts; and “private and quasi-private” guidelines and best practices.

Professor Wiseman finds these efforts wanting.  She writes:

All of these public-private efforts toward sharing regulatory information, suggesting better regulation, and developing industry best-practices are valuable but may fail to address all of the risks. Substantive efforts to self-regulate are voluntary, meaning that members may ignore best practices without penalty. These efforts also may be influenced by a strong interest, shared by industry and many state regulators, to keep regulation at the state level. And in the case of industry efforts, profit motives could potentially dampen best practices aimed to reduce environmental risks. Despite all of these drawbacks, public-private efforts beyond chemical disclosure in tight oil and gas development seem to be expanding the regulatory information available to the public, reducing the use of certain chemicals, and potentially lowering certain development risks.

Professor Wiseman discusses how further improvements will be needed to ensure effective regulation of oil and gas development through a combination of public and private controls, concluding:

More action, both at the public and private levels and the grayer areas between them, will be needed to address the range of impacts introduced by a rapidly growing industrial practice. Local, state, and federal agencies implementing further change must account for and in some cases formalize the private progress already occurring, while recognizing that such action could disincentivize future industry efforts. At the same time, private actors seeking public acceptance of tight oil and gas would be wise to further improve information dissemination and show the extent to which industry actors follow the many best practices that already have been developed. Disclosure is a very important start, but much more collaborative work remains to be done.

Professor Wiseman’s paper is a must-read.

Monday, April 22, 2013

Drilling productivity and natgas prices - must-read article

This fascinating article by David J. Phillips discusses the economics of drilling and advances in drilling technology that are propelling natural gas production despite low prices.

A must-read piece, very helpful in understanding how the industry operates.

ExxonMobil study: life cycle carbon emissions, water consumption of Marcellus-fired power is half that of coal

A new study by ExxonMobil’s research arm, ExxonMobil Research and Engineering Company, finds that the lifecycle carbon footprint of electric power generated by burning natural gas produced from the Marcellus shale is 53% lower than coal-fired power, and that freshwater consumption of Marcellus-fired electricity is about 50% that of coal-fired power.

The Exxon study joins a long list of other studies that reached similar conclusions about natural gas and carbon emissions. It also points out the high comparative water requirements of a continued reliance on coal – something that is often overlooked in the ongoing debate about shale gas.

The Exxon study and its predecessors underscore the necessity, from a climate perspective, of minimizing methane emissions from the production, transport, and distribution of natural gas.  Clearly, if that can be accomplished, natural gas can be our best available climate stabilization tool (and a near-zero carbon energy source if coupled with carbon capture and storage technology). It can at least be a hedge against the most catastrophic impacts of global climate disruption. But we must do more than that.  We must leverage responsibly-produced natural gas into a bridge to a renewable energy future.

None of this will happen on its own, or at least, fast enough to prevent the worst impacts of climate change.  Recent gas-driven U.S. carbon emissions gains have been reversed as natural gas prices inch back up from historic lows, showing how narrow the price window is that allows gas to outcompete coal. The invisible hand will not ensure timely, sustained, and deep cuts in  carbon emissions. Smart, aggressive energy policies are needed to ensure that the shale gas revolution becomes a climate victory.

Earth Day 2013

Today is Earth Day.  Forty three years ago, the modern environmental movement was born. The history of that movement, its growth, and its hard-won successes offer reason for hope for our planet - and ourselves. But of the many challenges facing our planet today, none is more daunting than mankind's fact-defying and suicidal conduct of history's largest uncontrolled chemistry experiment - the carbonization of our atmosphere.   

The link between atmospheric carbon and climate was identified a century ago, and the first warnings about climate disruption from increasing concentrations of anthropogenic CO2 came in the mid 1960's.  Indeed, in a special message to Congress in February 1965, President Lyndon B. Johnson said: 

This generation has altered the composition of the atmosphere on a global scale through . . . a steady increase in carbon dioxide from the burning of fossil fuels.

Then - as now - Congress didn't listen, and succeeding generations failed to change course.  Almost a half century later, hockey stick graphs, weather extremes, vanishing polar ice caps, and extinctions have yet to dislodge the political and economic hegemony of fossil fuels.  Denials of the obvious grow more hysterical and the tactics of deniers more vicious. And still, billions around the globe lack access to electricity, and their right to a better life and pursuit of it will only worsen an already existential threat. 

It's difficult, sometimes, to feel optimistic about the future. But we must. It's our only choice. We must defy the seemingly inexorable and inescapable logic of our fossil-fueled  addiction and lack of progress in kicking it.  We must imagine, in the spirit of that first Earth Day and all those since, a better, cleaner, and more just future.  Albert Einstein famously said:

Logic will get you from A to Z; imagination will get you everywhere. 

But imagination alone is not enough. We must work to make that better, sustainable future real. John F. Kennedy wrote in Profiles in Courage:

In a democracy, every citizen, regardless of his interest in politics, “holds office”; every one of us is in a position of responsibility; and, in the final analysis, the kind of government we get depends upon how we fulfill those responsibilities. We, the people, are the boss, and we will get the kind of political leadership, be it good or bad, that we demand and deserve.

In the final analysis, the true solution to ending the global chemistry experiment, to adapting to the changes we’ve already locked in, to preventing what appear to be its unavoidable outcomes, and to building that just and sustainable world lies not in technology, but in ourselves.