Clean Energy Standard Act Gets Mixed Reviews At Hearing

May 17: The Senate Energy and Natural Resources Committee, Chaired by Senator Jeff Bingaman (D-NM), with Ranking Member Lisa Murkowski (R-AK), held a hearing on the Clean Energy Standard Act of 2012 (CESA), S.2146, introduced by Senator Bingaman introduced the bill on March 1, 2012  [See WIMS  3/1/12]. Witnesses included U.S. Department of Energy, Assistant Secretary for Policy & International Affairs; Energy Information Administration; Resources for the Future; Center for Climate and Energy Solutions; Delaware Department of Natural Resources and Environmental Control; American Iron and Steel Institute; Duke Energy; and Jacksonville Electric Authority, Jacksonville, FL.

 

    Sen. Bingaman opened the hearing with a statement saying, "The purpose of the Clean Energy Standard is to establish a national standard for electricity to make sure that we leverage the clean resources we have today and provide a continuing incentive to develop the cheaper, cleaner energy technologies of the future.  By design, it would drive continued diversity in our sources of energy, and it would also allow every region to deploy clean energy using resources appropriate to that region. The Clean Energy Standard does this in a way that is intended to support home-grown innovation and manufacturing, and keep America competitive in the global clean energy economy.

 

    "This is not the first Clean Energy Standard [CES], and it certainly is not intended to be a partisan proposal. In the last Congress, during the discussion of a Renewable Electricity Standard [RES] in the Senate, several Senate Republicans publicly voiced their support for a more inclusive standard, such as a Clean Energy Standard, that would encompass all cleaner forms of electricity production, and not just renewable energy but other types as well, including nuclear power and hydropower and a variety of other options. At the beginning of this Congress, President Obama moved in that direction by calling for a proposal for a Clean Energy Standard in his 2011 State of the Union address. He endorsed that proposal again, and urged Congress to move ahead on something of this type, in this year's State of the Union address.

 

    "As part of the development process for the Clean Energy Standard, we received input from hundreds of stakeholder groups and citizens. The Energy Information Administration conducted a comprehensive set of policy analyses, and clean energy standard design was the topic of several academic workshops and industry meetings. And we tried to take all of this feedback and incorporate it into the proposal we are discussing today.

 

    "The Clean Energy Standard will take all electricity generating technologies that exceed the carbon efficiency of the current state-of-the-art supercritical coal generation and award them credits scaled to their relative improvement in carbon intensity over that baseline.  Zero-carbon sources such as new nuclear and renewables will get a full credit per kilowatt-hour produced. Advanced coal technologies, such as oxyfuel combustion, will get partial credit; natural gas will get about a half-credit, and so on.

 

    "Utilities that sell electricity at retail will acquire and turn those credits in to meet a standard that, overall, will start off being fairly easy to meet.  The standard, though, will become cleaner and more stringent over time.  The result is intended to be a realistic and a predictable market-pull on advanced energy technologies.  By having a long-term, predictable market for advanced electricity generation, the legislation is intended to provide innovators with confidence and the ability to make their best case to investors and project financiers.

 

    "This proposal is only 25 pages in length. We believe it is simple and straightforward, but would have a transformative effect on the power sector.  The Energy Information Administration projects that adopting the CES would drive substantial amounts of clean energy production across a diverse set of sources, including wind, solar, nuclear, biomass and natural gas. It would also drive enhanced energy efficiency, in particular in the industrial sector. EIA projects that it would reduce emissions from the power sector by 20 percent below their reference case in 2025, and by 44 percent in 2035. This mix of benefits has led to support for the legislation from a diverse group of stakeholders, several of whom we will be hearing from today. . ."

 

    Dr. Karen Palmer with Resources for the Future (RFF) summarized her testimony saying, "Our modeling suggests that the act will result in substantial reductions in emissions from the electricity sector, resulting in 21 percent fewer cumulative emissions by 2035. The policy has very little effect on national average electricity price for the first decade and leads to lower prices in the near term in some regions of the country. However, after 2025, national average electricity prices will increase as a result of the policy, rising to 18 percent above baseline levels by 2035. The alternative compliance payment (ACP) mechanism will be triggered in all years, generating substantial revenue for states to invest in energy efficiency, while reducing the share of clean energy and the amount of CO2 emissions reductions compared to a CES policy without an ACP. The small utility exemption, which applies to roughly 17 percent of electricity sales initially and roughly 12.5 percent after 2025, creates a difference in electricity prices between exempt and non-exempt utilities under the policy that grows to roughly 50 percent on average by 2035. The exemption results in electricity prices at exempt utilities that are lower with the CES policy than without it for the life of the policy. This large price savings provides an incentive for groups of electricity consumers to create their own small utility, an unintended consequence of the bill."

 

    Keith Trent with Duke Energy testified that, "I have heard the concern that a Clean Energy Standard is the wrong policy because it picks winners and losers. I believe this claim is a fallacy. A standard does two things. It sets a target for how much power must be derived from a basket of clean energy technologies. It also specifies qualifying criteria for those technologies. If it is structured correctly, the utilities, working with the states will decide how best to meet their obligations under a federal Clean Energy Standard, using the resources that are most appropriate. In deregulated states, technologies would be selected based solely on their relative competitiveness. In Arizona, solar power likely fits the bill. South Carolina could satisfy requirements by continuing to invest in nuclear power. The winners or losers allegation is only accurate if the Clean Energy Standard determines carve-outs for each technology, or it selects which company will supply the technology. . . I commend the Committee for pursuing a Clean Energy Standard that strives to put the U.S. on a coherent path to investment and job creation. Spurring investment in a diverse mix of clean energy sources and technologies -- including nuclear, renewables and cleaner coal -- will go a long way toward improving our economic and environmental outlook."

   

    James Dickenson with the Jacksonville, FL Electric Authority (JEA), a not-for-profit, community-owned utility with an electric system that serves more than 400,000 customers in northeast Florida said he is, "concerned that any national clean energy standard will create substantial competitive impacts between regions, favoring those that are situated to take advantage of geographic assets that more readily support development of solar, wind and hydropower." He said, "While applauding the inclusion of nuclear energy and the partial credits for natural gas technologies in the Clean Energy Standard Act of 2012 (CES), the move away from existing coal generation, including JEA's, will strand not only large capital investments but the nation's abundant supply of a secure domestic fuel that will be exported to other countries."

 

    Additionally, Dickenson said, "We are also concerned that the proposed CES requiring large-scale phasing in over a short 20-year time frame is too aggressive." He concluded, "JEA is very concerned that the Clean Energy Standard, as described in S. 2146, is too aggressive and too costly to electric consumers across the country, especially in our service area. The CES further isolates our country's abundant coal resources from being a viable source of energy production. It would require that large capital assets not only be scaled in over a mere 20-year period but would also require existing capital assets to be retired or abandoned before the end of their useful economic lives. All this cost would be borne by electric consumers - our customers, your constituents - in uncertain economic times. The ever-changing focus of environmental concerns and the long-term uncertainty of fuel availability and pricing impact a basic life resource that in part defines our quality standard of living."

 

    In advance of the hearing, the American Chemistry Council (ACC) issued a statement indicating its concerns with the bill and said it was concerned about "the absence of energy efficiency" and said it "falls short on domestic energy diversity. It discourages the use of coal from the start, and natural gas in later years." [See WIMS 5/16/12].

 

    The National Alliance of Forest Owners (NAFO) submitted written comments urging the Committee to include a definition of biomass in the legislation "that will promote rather than discourage the use of biomass to meet America's renewable energy goals." NAFO said, "this bill discourages the use of forest biomass. . . The bill defines 'Qualified Renewable Biomass,' using terms and criteria from national forest management that have been the source of protracted litigation for decades. The new definition would overlay the existing framework of well–established federal, state and local laws, which currently govern private forest practices."

 

    Access the statement from Sen. Bingaman (click here). Access the hearing website for links to all testimony and a webcast (click here). Access legislative details for S.2146 (click here). Access the full text of the Clean Energy Standard Act of 2012 (click here). Access the CES Two-Page Summary (click here). Access the CES Section-by-Section Summary (click here). Access a release from ACC (click here). Access a release and comments from NAFO (click here). [#Energy/CES]

 

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Modeling Shows Regional Varying Climate Impacts On Watersheds

May 16: A release from U.S. Geological Survey (USGS) states that climate change projections indicate a steady increase in temperature progressing through the 21st century, generally resulting in snowpack reductions, changes to the timing of snowmelt, altered streamflows, and reductions in soil moisture, all of which could affect water management, agriculture, recreation, hazard mitigation, and ecosystems across the nation. Despite some widespread similarities in climate change trends, climate change will affect specific water basins in the U.S. differently, based on the particular hydrologic and geologic conditions in that area.

    New USGS modeling studies project changes in water availability due to climate change at the local level. So far, the USGS has applied these models to fourteen basins, including: Sprague River Basin, Oregon; Sagehen Creek Basin, California; Feather River Basin, California; Naches River Basin, Washington; Yampa River Basin, Colorado; East River Basin, Colorado; Black Earth Creek Basin, Wisconsin; Flint River Basin, Georgia; Pomperaug River Watershed, Connecticut; Clear Creek Basin, Iowa; Cathance Stream Basin, Maine; Trout Lake Basin, Wisconsin; Starkweather Coulee Basin, North Dakota; and South Fork of the Flathead River, Montana.

    USGS Director Marcia McNutt said, "The advantage of these studies is that they demonstrate that there is not just one hydrological response to climate change: the predictions account for essential local factors that will govern the timing, severity, and type of impact, whether it be water shortage, drought, or flood. This is exactly the sort of information communities need to know now, because we are unlikely to see a 'water-as-usual' future." 

    The local projections are based on General Circulation Models (GCM) that predict how climate change will affect temperature, precipitation, and emissions for large regional areas. The USGS's Precipitation Runoff Modeling System (PRMS) applies information from the downscaled GCM projections to local watersheds, where impacts of climate change on water availability will depend on local conditions. These local-scale hydrologic projections will allow managers to plan for changes in water resources that are specific to their area.

    USGS states for example, the models project that changes to snow pack in the Sprague River Basin in Oregon could cause annual peak streamflows to occur earlier in the spring as overall basin storage decreases, which may force managers to modify storage operation and reprioritize water deliveries for environmental and human needs. Reduced snowpack in headwaters of the Colorado River could affect the amount and timing of streamflow to the Colorado River and also impact important recreation areas. Portions of Maine may see higher streamflows which could affect populations of endangered Atlantic salmon. Areas of the already drought-stressed Flint River Basin, one of Atlanta's primary drinking water supplies, are projected to become even drier. The results for each basin present a complex story due to uncertainty associated with the future climate projections and their effect on the hydrological response of the different geographical regions of the nation.

    The downscaled GCM models are obtained from the World Climate Research Programme's Coupled Model Intercomparison Project phase 3 multi-model dataset archive. The USGS PRMS models were developed as part of the USGS National Research Program (NRP) in cooperation with USGS Water Science Centers. The NRP develops new information, theories, and techniques to anticipate, understand, and solve problems facing resources managers and is a national leader in understanding the effects of climate change on water resources. 

    Access a lengthy release from USGS with links to details on each of the 14 basin and related information (click here). [#Climate, #Water]

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Senate Hearing To Focus On Business Execs' Energy Investment Plan

May 15: The Senate Energy & Natural Resources Committee, Chaired by Senator Jeff Bingaman (D-NM), with Ranking Member, Lisa Murkowski (R-AK) announced that it will hold a hearing on May 22, to receive testimony on a report, produced by the American Energy Innovation Council (AEIC) entitled, Catalyzing American Ingenuity: The Role of Government in Energy Innovation, and related issues." The report, released late last year by AEIC, a group of America's top business executives including Bill Gates, details the case for government investment in research to produce long-term energy breakthroughs, arguing that even in times of budget austerity such investments are crucial to US economic competitiveness and to the development of clean, affordable, and secure supplies of energy. The report followed up on recommendations AEIC first outlined in June of 2010 in another report, A Business Plan for America's Energy Future.

 

    Gates said at the time the report was released, "We are in critical need of a government commitment to research into new energy technologies that can free us from our dependence on foreign oil and create affordable clean-energy alternatives. Yet today, the U.S. government spends only one-sixth as much on energy innovation as it does on medical research." In addition to Gates, chairman and former CEO of Microsoft, AEIC members include: Norm Augustine, former chairman and CEO of Lockheed Martin; Ursula Burns, chairman and CEO of Xerox; John Doerr, partner at Kleiner Perkins Caufield & Byers; Chad Holliday, chairman of Bank of America and former chairman and CEO of DuPont; Jeff Immelt, chairman and CEO of GE; and Tim Solso, chairman and CEO of Cummins.

    Gates said further, "Understandably, especially in this period of tight budgets, people ask why the private sector can't fund the necessary R&D into energy alternatives. No matter how well intentioned, utility companies and other private investors simply are not going to invest deeply in the kind of R&D needed to create scalable, low-cost, low-carbon energy innovations. They have little or no economic incentive to do so. This is a unique but critical role for government, one central to our long-term economic competitiveness." Norm Augustine, who is also a former Undersecretary of the Army said, "Neither the private sector nor the government are making investments in research even remotely commensurate to the vast opportunities in the $5 trillion global energy market. Energy innovation is a matter of national and economic security given oil reliance, nuclear power, climate change and related issues, and must be treated that way by Congress and the Administration in terms of investment priorities." 

    The AEIC report found an urgent need for government innovation investments due to the lack of private sector incentives for long-term energy research, and because neither government nor the private sector are investing adequately in energy technology today. The report proposes reforms of government programs to yield greater economic benefits, especially in concert with the private sector. Finally, the group outlines possible funding approaches for increased investment outside annual appropriations and that originate from revenues from the energy sector itself. Specifically, the report:

• 1) Finds that a more robust government role in energy innovation is needed because: The energy sector has suffered from chronic under-investment in R&D; Energy technologies are capital-intensive and long-lived, requiring significant up-front cash with a slow return; Energy markets are not perfectly competitive; Government-funded R&D programs in a number of areas-such as defense, health, agriculture, and IT-have enabled the United States to lead not just in specific technologies but in entire industries.
• 2) Proposes government reforms to more effectively leverage public research for private sector use, including: Developing and implementing a comprehensive, government-wide Quadrennial Energy Review (QER); Supporting "innovation hubs"; Supporting and expanding ARPA-E; Making DOE work smarter along the ARPA-E model; Develop a first-of-a-kind technology commercialization engine along the lines of the proposed Clean Energy Development Administration (CEDA).
• 3) Outlines options for the federal government to pay for increased investment in energy innovation, including: Developing a funding regime that is dedicated, consistent, and not beholden to annual appropriations. In general, funds should originate from revenues from the energy sector itself rather than general federal revenues; Options to provide funding offsets for investments in energy innovation include: Diverting a portion of royalties from domestic energy production; Reforming and redirecting energy technology subsidies; Collecting a wires charge on sales of electricity; Levying fees on other energy or pollution sources; and Streamlining DOE

    AEIC said that it does not advocate for one revenue option over another; the only unacceptable option is to fail to make these investments, and said "support for innovation is an investment, not a cost." AEIC called for a three-fold increase in annual energy innovation investments and said maintaining that level "should be our country's target over the next decade. At the same time, the AEIC fully understands the gravity of the nation's current fiscal situation."

 

    The report states, "We know the federal government has a vital role to play in energy innovation. We know the federal energy innovation system can be structured effectively to achieve real results. And we know there are several ways to pay for public investments in this domain. If the U.S. fails to invent new technologies and create new markets and new jobs that will drive the transformation and revitalization of the $5 trillion global energy industry, we will have lost an opportunity to lead in what is arguably the largest and most pervasive technology sector in the world. However, if the U.S. successfully innovates in clean energy, our country stands to reap enormous benefits. It is time to embark as a country toward our clean energy goals."

 

    The Senate hearing will be webcast live on the Committee's website, and an archived video will be available shortly after the hearing is complete. Witnesses' testimony will be available on the website at the start of the hearing.

 

    Access the ENR hearing announcement and website (click here). Access a release on the report with more details (click here). Access the complete report and individual sections and the 2010 report (click here). [#Energy]

 

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EPA & Commerce Launch Environmental Technology Export Initiative

May 14: U.S. EPA Administrator Lisa Jackson and Department of Commerce Secretary John Bryson announced efforts to launch an environmental technology initiative to help create American jobs in the growing environmental industry. Announced at EPA's first Technology Market Summit [See WIMS 5/11/12], the initiative, which will include a comprehensive web-based portal, will promote American environmental technology, products and services in the global marketplace. The Environmental Technologies Export Initiative builds on President Obama's National Export Initiative, which aims to double U.S. exports by the end of 2014 and support millions of American jobs.

    According to a release, the American environmental industry generates approximately $312 billion in revenues each year, with a global market of more than $800 billion. This growing industry employs nearly 1.7 million Americans and includes over 60,000 small businesses across the country. 

    Administrator Jackson said, "When it comes to technology that conserves resources and protects the environment, America leads the rest of the world by a mile. This is largely thanks to the value Americans place on environmental protection and to the innovation of our entrepreneurs. As other countries start to take environmental challenges more and more seriously, there is a growing global market for the technologies that have been and continue to be developed by innovators on our shores. Today we're taking steps make it easier for American companies to enter and succeed in that market."

    Secretary Bryson said, "Two years ago, the President launched the National Export Initiative [NEI], a government-wide effort led by the Commerce Department. We have made historic progress on the path to achieving the President's goal, but we must continue to do everything we can to support U.S. companies in selling their goods and services all around the world. One of the important strategies in the NEI is to build on our industrial strengths, and it is clear that environmental technology is one of those strengthens."

    The web-based tool, which is scheduled to be launched in fall of this year and hosted on export.gov, will offer U.S. environmental companies detailed information on U.S. government support activities including market research, scientific analysis, regulatory information, and financial support programs. EPA and Commerce are also partnering with trade associations to highlight potential growth opportunities for U.S. companies by increasing access to EPA's scientific, technical and regulatory information and Commerce's foreign market analysis and export promotion infrastructure. When launched, this portal will provide a more systematic approach for U.S. companies looking to expand markets for their environmental products and services abroad.

    EPA co-sponsored the summit with American University's Center for Environmental Policy, bringing together government, academia, investment and industry leaders to discuss the acceleration of technology development and adoption to achieve economic growth through environmental protection. Stimulating innovation and expanding the technology markets to protect people's health and the environment will help to create jobs, develop partnerships, and identify concrete actions that the public and private sectors can take to increase investment and broaden business opportunities.

 

    Access a joint release from EPA and DOC (click here). Access more information on President's National Export Initiative (click here). Access more information on EPA's export initiatives (click here). Access more information on Department of Commerce's work promoting environmental technology (click here). Access more information on EPA's Technology Summit (click here). [#All]

 

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House Hearing On Oil Shale & Oil Sands Development

May 10: The House Committee on Science, Space, and Technology, Subcommittee on Energy and Environment held a hearing entitled, "Challenges and Opportunities of Unconventional Resources Technology." Witnesses testifying at the hearing included representatives from: Department of Energy; U.S. Government Accountability Office; Office of Energy Development, State of Utah; U.S. Seismic Systems, Inc.; U.S. Oil Sands, Inc. and National Oil Shale Association. The hearing was designed to examine challenges and opportunities associated with expanding development and use of unconventional oil and gas production technologies. The hearing continued the Science, Space, and Technology Committee's ongoing efforts to consider key components of a true "all of the above" energy strategy.

 

    The Subcommittee Chairman Andy Harris (R-MD) said, "The Green River Basin, located in Colorado, Utah, and Wyoming, may contain up to three trillion barrels of oil -- more potential oil than the rest of the world's current oil reserves combined. If this energy -- which is overwhelmingly on Federal lands -- made available, I am confident American ingenuity will find ways to responsibly explore and produce this resource." According to a release from Republican committee members, the International Energy Agency (IEA) projects conventional crude oil production will significantly decline in the coming decades. In order to meet projected global demand for energy, the world will need to expand production of unconventional oil, natural gas liquids, biofuels, and other substitutes.

    Republican Members said, ". . .the Administration's fiscal year 2013 budget request for the Department of Energy (DOE) proposes to eliminate almost all oil and gas research and development (R&D)." Republicans repeatedly questioned the Administration for what they called "anti-fossil fuel actions against the backdrop of President Obama's stated goal in his most recent State of the Union address to pursue an 'all of the above' approach to energy." Chairman Harris specifically asked Charles McConnell, DOE's Assistant Secretary for Fossil Energy, whether oil shale and oil sands are part of the President's "all of the above" strategy.  McConnell stated that both resource bases are part of the President's energy mix, but later acknowledged that the Administration does not request funding to advance production technologies. Harris said, "It's disturbing that the Administration claims these vast resources are part of the President's approach, when in fact the budget provides no support for their development. This further confirms the President's 'all of the above' rhetoric is hollow and misleading, if not downright false."

    Full Committee Chairman Ralph Hall (R-TX) raised similar concerns with respect to the Administration's support for shale gas production. He said, "I would just note for the record that in his State of the Union speech, the President said 'it was public research dollars…that helped develop the technologies to extract all this natural gas out of shale rock.' It is troubling that he is suggesting the Federal government made hydraulic fracturing possible while at the same time trying to kill R&D within the same program that he says deserves credit for the current oil and gas boom."

    Democrats on the Subcommittee indicated in their release on the hearing that oil shale refers to a fine-grained sedimentary rock containing organic matter known as kerogen, from which oil and gas can be extracted. To extract the oil, the shale must be intensely heated over long periods of time, either on the surface or deep underground. The resultant liquid must then be separated before it can be collected. The majority of oil shale resources in the United States are located in the Green River Formation in Colorado, Utah, and Wyoming. Democrats said, "Despite a century of government support and industry attempts to develop oil shale, there are no commercial oil shale projects in the U.S., and many industry experts agree that years of research and development will be needed to develop commercially ready and environmentally sustainable technologies and processes."

    Ranking Member of the Investigations and Oversight Subcommittee, Representative Paul Tonko (D-NY), standing in for Ranking Member Brad Miller (D-NC), said in his opening statement, "Every time oil prices have spiked or that we have become concerned about a major disruption in oil supplies, oil shale gets a new look. Why we continue to use public funds to pursue this energy source is truly a subject for research. The oil companies and the federal government have poured millions of dollars into research, demonstration projects, and subsidies to find an economically viable way to develop this resource. Yet it is still years, if not decades away from being economically, technologically, and environmentally viable. I have listened as many of my Republican colleagues questioned the wisdom and need for public investments in renewable energy resources either through support of research or through tax incentives. But when it comes to offering subsidies to one of the wealthiest and most profitable industries in the world -- the oil industry -- their generosity knows no bounds."

    Anu Mittal, the Director of Natural Resources and Environment at the U.S. Government Accountability Office (GAO) testified about an October 2010 GAO report on oil shale development. She described a number of environmental concerns and uncertainties that need to be addressed prior to commercial development of oil shale, highlighting the impact on water quantity and quality. She said, "Developing oil shale and providing power for oil shale operations and other associated activities will require significant amounts of water, which could pose problems, especially in the arid West where an expanding population is already placing additional demands on available water resources."  She also pointed out that industry experts believe that oil shale development is at least 15-20 years away. 

    Rep. Tonko said, "There is no greater indicator of a region's economic potential – its ability to sustain human life and industry – than its access to clean water… Given the current and looming shortages of water in many areas of the West, I cannot imagine why we would consider trading water – a renewable, vital resource for which there is no substitute, for a non-renewable resource that we can only obtain with very costly, highly damaging and destructive methods.  Land and water are not – or should not be – treated as disposable goods." 

    Samantha Mary Julian, the Director of Utah's Office of Energy Development, highlighted the State's efforts to develop its unconventional energy, noting "Despite the lack of efforts of some federal agencies, the unconventional energy industry is alive and growing in Utah." She praised the benefits of expanded unconventional energy development on employment and education and said, "Utah actively manages its lands to promote the responsible development of its energy resources as it produces the main source of funding for our schools. Simply put, Utah educators and students depend on responsible energy development."

    The President and CEO of US Seismic Inc., Jim Andersen, discussed how the new technology his company is developing will enable shale oil and gas producers "to improve efficiency, increase output, and enhance safety, all at a lower cost." The CEO of US Oil Sands, Inc., Cameron Todd, further highlighted his company's anticipated pilot project to produce oil from oil sands, noting their innovative process uses "far less water, energy, surface area, and generates less greenhouse gas than any project to date."

    Tony Dammer, the former Director of the DOE's Office of Naval Petroleum and Oil Shale Reserves, noted the Department of Energy has not implemented the policies contained in the Energy Policy Act of 2005 with respect to its responsibilities to develop oil shale. Dammer said that if the sections of the law "were implemented and the unconventional fuels development program was initiated within the DOE, uncertainty and inconsistency in policy would not exist today."

    Access a Republican release on the hearing with links to testimony and a webcast (click here). Access a Democratic release on the hearing (click here). Access the Republican hearing website with background and opening statements (click here). [#Energy/OilShale, #Energy/Unconventional, #Energy/OilSands]

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CBO Major Report On Energy Security In The United States

May 9: The independent, nonpartisan Congressional Budget Office (CBO) released a significant, 38-page report that examines energy security in the United States -- that is, the ability of U.S. households and businesses to accommodate disruptions of supply in energy markets -- and actions that the government could take to reduce the effects of such disruptions. CBO also released an infographic on energy security that highlights the key points of the paper. The report is the result of a request from U.S. Senator Jeff Bingaman (D-NM), Chair of the Energy and Natural Resources Committee, who last October asked CBO to study the factors that underlie energy security within the U.S. economy.  Bingaman also asked CBO to highlight the types of policies that might be undertaken to reduce the U.S.'s vulnerability to energy market disruptions.

    CBO indicates that energy use -- for electricity, transportation, and heating and air conditioning -- is pervasive throughout the U.S. economy, representing 8.4 percent of U.S. gross domestic product in 2010. About 80 percent of the energy used by households and businesses comes from oil, natural gas, and coal; the rest comes from nuclear power and renewable sources, such as wind and the sun. Disruptions in the supply of commodities used to produce energy tend to raise energy prices, imposing an increased burden on households and businesses.

    According to the report, the extensive network of pipelines, shipping, and other options for transporting oil around the world means that a single world price for oil prevails (after accounting for the quality of that oil and the cost of transporting it to the marketplace). Except for countries where the price of oil is regulated or subsidized in certain ways, disruptions related to oil production that occur anywhere in the world raise the price of oil for every consumer of oil, regardless of the amount of oil imported or exported by that consumer's country. In contrast, the high cost of moving natural gas, coal, nuclear power, and renewable energy limits their markets to geographically bounded regions, such as North America. Consequently, foreign disruptions have had little or no effect on the price of those fuels in the United States.

    Although the global nature of the market for oil makes U.S. consumers vulnerable to price fluctuations caused by events elsewhere in the world, it also benefits those consumers by lowering the price of oil relative to what it would be in a regional market. That benefit would be greater, however, if the global market was less prone to disruptions or if oil producers and consumers were better able to adjust to such disruptions.

    CBO indicates that when a disruption occurs, those countries with spare production capacity can determine whether to partially or fully offset the disruption. Few countries other than Saudi Arabia have much spare production capacity in the near term to offset such disruptions. In contrast, the U.S. markets for natural gas, coal, nuclear power, and renewable energy either are less prone to long-term disruptions or have significant spare production and storage capacity. For example, U.S. producers and consumers of natural gas maintain a significant reserve in storage (30 percent of annual consumption in 2010). Similarly, stocks of coal in 2010 represented 9 weeks of U.S. consumption. Much of the limited potential for disruptions in the supply of those fuels involves their transport across the United States (via pipeline, railcar, river barge, or truck), for which redundancy and spare transport capacity exist.

    Transportation is almost exclusively dependent on oil supplied in a global market in which disruptions can cause large price changes. The United States has no alternatives that can be readily substituted in large quantities for oil in providing fuel for transportation. Moreover, consumers have less flexibility in the near term in how they use transportation, and changes in transportation use tend to be more expensive over the long term than changes in electricity use. In contrast, in the United States electricity can be produced from several sources of energy and the electricity system operates with significant spare capacity. That spare capacity means that when western coal is not available to electricity providers in the East, for example, they can shift generation to facilities that rely on coal from Illinois or Appalachia or increase generation from natural gas or renewable sources. Thus, when the price of one commodity used to generate electricity rises, another commodity can be substituted, keeping electricity prices relatively stable.

    Addressing concerns about U.S. energy security requires considering policies related to the nation's supply of and demand for oil. Because of the global nature of the oil market, no policy could eliminate the costs borne by consumers as a result of disruptions, but some policies could reduce those costs. Policies targeting temporary disruptions in the supply of oil take two general forms:

• Reducing the exposure of consumers to high prices by, for example, making oil from the Strategic Petroleum Reserve available to the world oil market or encouraging the development of insurance markets. The beneficial effects of such policies could be neutralized if releases were not implemented in coordination with other oil-producing countries or the insurance did not transfer risk to those better able to bear it.
• Providing U.S. households and businesses with more choices in the near term for reducing the use of personal vehicles when oil prices rise.

    Policies that enabled consumers to use their vehicles less during periods of high gasoline prices would be more likely to lower costs for households and businesses. Policies to address permanent changes in oil prices could take two broad approaches parallel to those above:

• Increasing domestic production of oil or oil substitutes or
• Reducing the consumption of oil by, for example, increasing fuel-efficiency standards or encouraging the development of alternative transportation options that use less, or no, oil.

    Policies that promoted greater production of oil in the United States would probably not protect U.S. consumers from sudden worldwide increases in oil prices, even if increased production lowered the world price of oil on an ongoing basis. In fact, such lower prices would encourage greater use of oil, thus making consumers more vulnerable to increases in oil prices. Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.

    In contrast, policies that reduced the use of oil and its products would create an incentive for consumers to use less oil or make decisions that reduced their exposure to higher oil prices in the future, such as purchasing more fuel-efficient vehicles or living closer to work. Such policies, however, would impose costs on vehicle users (in the case of fuel taxes or fuel-efficiency requirements), or taxpayers (in the case of subsidies for alternative fuels or for new vehicle technologies). But the resulting decisions would make consumers less vulnerable to increases in oil prices.

    Commenting on the report, Senator Bingaman said, "This report. . . illustrates why some of the slogans used in our energy policy debates actually don't reflect how world energy markets work, and thus lead us away from the most useful steps we could take to improve our energy security. As many experts, and now the CBO, have repeatedly observed, every barrel of oil that we displace from the transportation sector, and that we therefore do not need to consume in the United States, makes our economy stronger, not to mention our personal pocketbooks, and less vulnerable to the volatility of the current marketplace. 

    "This is not to say that we shouldn't keep increasing domestic production, and that the Obama Administration should not move forward with its plans to bring even more supplies into the market. We lead the world in innovative exploration and production technology, and it is helpful to have more supplies on the world market. But the long-term solution to the challenge of high and volatile oil prices is to continue to reduce our dependence on oil, period. This is a strategic vision that has been articulated and embraced in the past on a bipartisan basis -- by President George W. Bush in his 2006 State of the Union Address and by a large bipartisan majority in Congress in the Energy Independence and Security Act of 2007. That bipartisan path is still the best approach today."

    Access an overview of the report on the Director's blog (click here). Access the complete report (click here). Access the Infographic (click here). Access the statement from Sen. Bingaman (click here). [#Energy, #Transport, #Land]

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Conference Committee On Surface Transportation Program

May 8: The House-Senate Conference Committee to resolve the substantial differences between the two versions of the reauthorization of the Highway Surface Transportation program held their first meeting [See WIMS 4/26/12] . The House version, H.R.4348, the Surface Transportation Extension Act of 2012, provides a short-term extension and includes highly controversial provisions requiring approval of the Keystone XL pipeline and the management and reuse of coal ash. The Senate version, S.1813, the Moving Ahead for Progress in the 21st Century (MAP-21), provides a two-year $109 billion surface transportation reauthorization. A number of members of the Conference Committee issued opening statements. The following summarized statements represent some of the issues to be considered.

 

    House Energy and Commerce Committee Chairman Fred Upton (R-MI) indicated that, "Other important matters in the House-passed bill include a path for expedited approval of the Keystone XL pipeline and a state-based regulatory framework for the safe management, re-use, and disposal of coal ash. While the connection between these items and a transportation and infrastructure package might not seem obvious, in fact, these policies make perfect sense in the context of this package. Coal ash is a widely used component in construction materials including concrete, so the regulatory regime governing its management has a direct effect on the cost and durability of our roads and bridges. EPA's proposal to reclassify this material as a hazardous waste would make road construction more expensive, the infrastructure we build may not last as long, and the liability -- which translates to cost -- would be higher for everyone."

 

    Senator Barbara Boxer, sponsor of the Senate Bill and Chairman of the Environment and Public Works Committee said, "I trust we all know how fortunate and blessed we are to have this opportunity to save or create three million jobs and protect thousands of businesses as we meet the needs of America's transportation system. . . If Senator Inhofe and Senator Boxer can agree on a bill, then we can all agree. If Senator Sessions and Senator Sanders can agree, then we can all agree. If Senator Baucus and Senator Blunt can agree, then we can all agree. Now some pundits and experts have predicted gloom and doom when it comes to this bill. They were wrong in the past, and they are wrong now. . .

We have the wind at our backs, because we have a Senate bill (MAP-21) that is a reform bill that received 74 votes in favor. It protects and creates three million jobs - one million of those because of an expanded TIFIA (Transportation Infrastructure Finance and Innovation Act) program that has strong support. . ."

 

    House Natural Resources Committee Chairman Doc Hastings (R-WA) said, "The federal government's slow, cumbersome bureaucracy is consistently getting in the way of job creation and economic growth. Nowhere is this more evident than infrastructure and energy projects, where burdensome red tape and duplicative federal programs hamstring the ability to approve projects and get Americans working. For this conference report to be considered a success, meaningful reforms need to be made to streamline government inefficiencies for infrastructure projects. Similarly, approving the Keystone Pipeline is an opportunity to address high gasoline prices, put Americans to work and reduce America's dependence on unfriendly Middle Eastern oil. . . At the last minute, the Senate added several other unrelated pieces of legislation to its version of the highway bill. . . Among these are one-year extensions of the Payment-In-Lieu-of-Taxes and the Secure Rural Schools programs [and] the RESTORE Act, which would direct funds to Gulf states affected by the Deepwater Horizon oil spill . . ."

 

    Senator Max Baucus (D-MT) Chairman of the Finance Committee said, "Construction season has started. Fourteen thousand Montana jobs and 1.6 million jobs across America depend on this Highway Bill. The bipartisan Senate bill received a unanimous vote from the Environment and Public Works Committee's 18 urban, rural, western, eastern, northern, southern, progressive and conservative Senators. And 75 percent of the Senate supported it. . . I worked with members of both parties to achieve three goals: guarantee funding through September 2013; not add to the deficit; and keep the Highway Trust Fund solvent moving forward. . . Over the next two years, we put $9.2 billion into the Highway Trust Fund, covering the cost of the bill and leaving a $3.6 billion cushion. In total, we put $14 billion into the Highway Trust Fund over ten years.  This actually reduces the deficit by $10 billion over the 10-year budget window. . ."

 

    Senator John (Jay) Rockefeller (D-WV) Chairman of the Commerce, Science, and Transportation Committee said, "I am hopeful that this conference will lead to a bi-partisan compromise that ends with the bill being signed into law. We know that surface transportation programs play a critical role in all aspects of our lives, and everyone can agree about the need to improve the efficiency and capacity of our transportation system. . . the Senate bill contains a range of smart safety improvements with wide bipartisan support here and outside this room. . . I want to urge everyone to focus on the issues at hand and not try to bring up extraneous issues that are certain to derail this process.   Environmental riders are not relevant to this transportation bill and more importantly – pushing them in this venue may score political points but it won't get us a bill. . ."

 

    Representative John Mica (R-FL), Chairman of the House Transportation and Infrastructure Committee said, "We all share a commitment to build our nation's infrastructure and this legislation must do so responsibly. It must be paid for, it must not raise taxes, it must not include earmarks, and it must not add to federal bureaucracy. . . I am concerned that the long-term solvency of the Highway Trust Fund is at risk, however the solution to the Trust Fund solvency problem is not more deficit spending or General Fund transfers. The solution is major reform of programs, cutting wasteful spending and reining in the federal bureaucracy. Federal programs are broken when red tape bogs down major highway projects for up to 15 years, increasing project costs and leaving jobs behind. . . All of my House Transportation and Infrastructure Conferees are committed to serious reform as part of any legislation we produce. Real reform is necessary for House Republicans to support funding a surface transportation bill."   

 

    Access the complete statement from Rep. Upton (click here). Access the complete statement from Sen. Boxer (click here). Access the complete statement from Rep. Hastings (click here). Access the complete statement from Sen. Baucus (click here). Access the complete statement from Sen. Rockefeller (click here). Access the complete statement from Rep. Mica (click here). Access legislative details for H.R.4348 (click here). Access legislative details for S.1813 (click here). [#Transport]

 

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Reports & Information On The Future Of Carbon Capture & Storage

May 8: A new report from the Worldwatch Institute discusses the future of carbon capture and storage (CCS) and indicates that growth of the technology stalled out in 2011. The report indicates that funding for CCS technology, a tool for the reduction of greenhouse gas (GHG) emissions, remained unchanged at US$23.5 billion in 2011 in comparison to the previous year. Although there are currently 75 large-scale, fully-integrated carbon capture and storage projects in 17 countries at various stages of development, only eight are currently operational -- a figure that has not changed since 2009

    CCS, refers to the technology that attempts to capture carbon dioxide from its anthropogenic source -- often industry and power generation systems -- and then store it in permanent geologic reservoirs so that it never enters the atmosphere. The United States is the leading funder of large-scale CCS projects, followed by the European Union and Canada. The Worldwatch report, part of the Institute's Vital Signs Online series of analyses of environmentally related trends and data, discusses a number of new CCS projects and facilities throughout the world. Among these is the Century Plant in the United States, which began operating in Texas in 2010.

    Report author and Worldwatch Sustainable Energy Fellow, Matthew Lucky said, "Although CCS technology has the potential to significantly reduce carbon dioxide emissions -- particularly when used in greenhouse gas intensive coal plants -- developing the CCS sector to the point that it can make a serious contribution to emissions reduction will require large-scale investment." Today, the total storage capacity of all active and planned large-scale CCS projects is equivalent to only about 0.5 percent of the emissions from energy production in 2010. Lucky said, "Capacity will have to be increased several times over before CCS can begin to make a serious dent in global emissions."

    Worldwatch indicates that the prospects for future development and application of CCS technology will likely be influenced by a number of factors. Last March the U.S. EPA imposed regulations on CO2 emissions from power plants. As a result, U.S. power producers will soon be unable to build traditional coal plants without carbon control capabilities (including CCS). The technology will therefore likely become increasingly important as power producers adjust to the new regulations.

    Globally, an international regulatory framework for CCS is developing slowly and the technology has been addressed in international climate negotiations. Its classification as a Clean Development Mechanism (CDM) -- a mechanism created through the United Nations Framework Convention on Climate Change (UNFCCC) to allow industrialized countries to gain credit for emissions reductions they achieve through funding development projects in developing countries -- has raised objections, however, from those who argue that it risks prolonging the use [of] carbon-intensive industries.

    Worldwatch President Robert Engelman said, "CCS technology is worth exploring as one of a large array of potential strategies for slowing the buildup of CO2 in the atmosphere. But as this report demonstrates, right now there's little progress in realizing this potential. A technology capable of permanently sequestering large amounts of carbon will be expensive, and so far the world's markets and governments haven't assigned much value to carbon or to the prevention of human-caused climate change. Ultimately, that will be needed for progress in CCS development and implementation."

    Further highlights of the report include:

• There are now 7 large-scale CCS plants currently under construction, bringing the total annual storage capacity of operating and under constructions plants to 34.97 million tons of carbon dioxide a year.
• According to the International Energy Agency, an additional $2.5–3 trillion will need to be invested in CCS between 2010 and 2050 to cut greenhouse gas emissions in half by mid-century.
• On average, $5–6.5 billion a year will need to be invested in CCS globally until 2020 for the development of this technology.
• About 76 percent of global government funding for large-scale CCS has been allocated to power generation projects.

    In related information, Congressional Research Service (CRS) has released a 26-page report entitled, "Carbon Capture and Sequestration: Research, Development, and Demonstration at the U.S. Department of Energy." The report indicates that on March 27, 2012, U.S. EPA proposed a new rule that would limit emissions to no more than 1,000 pounds of carbon dioxide (CO2) per megawatt-hour of production from new fossil-fuel power plants with a capacity of 25 megawatts or larger. EPA proposed the rule under Section 111 of the Clean Air Act. According to EPA, new natural gasfired combined-cycle power plants should be able to meet the proposed standards without additional cost. However, new coal-fired plants would only be able to meet the standards by installing CCS technology.

 

    The proposed rule has sparked increased scrutiny of the future of CCS as a viable technology for reducing CO2 emissions from coal-fired power plants. The proposed rule also places a new focus on whether the U.S. Department of Energy's (DOE's) CCS research, development, and demonstration (RD&D) program will achieve its vision of developing an advanced CCS technology portfolio ready by 2020 for large-scale CCS deployment.

 

    Congress has appropriated nearly $6 billion since FY2008 for CCS RD&D at DOE's Office of Fossil Energy: approximately $2.3 billion from annual appropriations and $3.4 billion from the American Recovery and Reinvestment Act (or Recovery Act or Stimulus). The large and rapid influx of funding for industrial-scale CCS projects from the Recovery Act may accelerate development and deployment of CCS in the United States. However, the future deployment of CCS may take a different course if the major components of the DOE program follow a path similar to DOE's flagship CCS demonstration project, FutureGen, which has experienced delays and multiple changes of scope and design since its inception in 2003. A question for Congress is whether FutureGen represents a unique case of a first mover in a complex, expensive, and technically challenging endeavor, or whether it indicates the likely path for all large CCS demonstration projects once they move past the planning stage.

 

    Since enactment of the Recovery Act, DOE has shifted its RD&D emphasis to the demonstration phase of carbon capture technology. The shift appears to heed recommendations from many experts who called for large, industrial-scale carbon capture demonstration projects (e.g., 1 million tons of CO2 captured per year). Funding from the Recovery Act for large-scale demonstration projects was 40% of the total amount of DOE funding for all CCS RD&D from FY2008 through FY2012.

 

    To date, there are no commercial ventures in the United States that capture, transport, and inject industrial-scale quantities of CO2 solely for the purposes of carbon sequestration. However, CCS RD&D in 2012 is just now embarking on commercial-scale demonstration projects for CO2 capture, injection, and storage. The success of these projects will likely bear heavily on the future outlook for widespread deployment of CCS technologies as a strategy for preventing large quantities of CO2 from reaching the atmosphere while U.S. power plants continue to burn fossil fuels, mainly coal.

 

    Given the pending EPA rule, congressional interest in the future of coal as a domestic energy source appears directly linked to the future of CCS. In the short term, congressional support for building new coal-fired power plants could be expressed through legislative action to modify or block the proposed EPA rule. Alternatively, congressional oversight of the CCS RD&D program could help inform decisions about the level of support for the program and help Congress gauge whether it is on track to meet its goals.

 

    Access an overview of the Worldwatch Institute report and link to information on access the complete report (click here). Access the complete CRS report (click here). Access the Global CCS Institute website for more information (click here). Access the Department of Energy CCS website for more information (click here). [#Energy/CCS, #Climate]

 

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EPA Releases Draft Guidance For UIC Fracking Permits

May 4: Late Friday afternoon, U.S. EPA released draft underground injection control (UIC) program permitting guidance for class II wells that use diesel fuels during hydraulic fracturing (fracking) activities. EPA developed the draft guidance to clarify how companies can comply with Energy Policy Act (EP Act),passed by Congress in 2005, which exempted hydraulic fracturing operations from the requirement to obtain a UIC permit, except in cases where diesel fuel is used as a fracturing fluid. EPA will take public comment on the draft guidance for 60 days upon publication in the Federal Register to allow for stakeholder input before it is finalized.

    The draft guidance outlines for EPA permit writers, where EPA is the permitting authority, requirements for diesel fuels used for hydraulic fracturing wells, technical recommendations for permitting those wells, and a description of diesel fuels for EPA underground injection control permitting. The draft guidance describes diesel fuels for these purposes by reference to six chemical abstract services registry numbers (CASRN). The Agency is requesting input on this description.

    EPA said that while the guidance undergoes public notice and comment, decisions about permitting hydraulic fracturing operations that use diesel fuels will be made on a case-by-case basis, considering the facts and circumstances of the specific injection activity and applicable statutes, regulations and case law, and will not cite this draft guidance as a basis for decision. EPA said it continues to work with states, industry and other stakeholders to help ensure that natural gas is developed safely and responsibly. 

 

    The prepublication copy of the draft guidance indicates it, "includes EPA's interpretation of the Safe Drinking Water Act (SDWA) and regulations regarding UIC permitting of oil and gas hydraulic fracturing operations using diesel fuels as a fracturing fluid or as a component of a fracturing fluid, specifically that they are subject to Class II UIC permitting requirements. EPA's goal is to provide greater regulatory clarity and certainty to the industry, which will in turn improve compliance with the SDWA requirements and strengthen environmental protections consistent with existing law. The draft guidance will not impose any new requirements."

 

    Specifically, the EP Act revised the SDWA definition of "underground injection" to specifically exclude from UIC regulation the "underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities" (SDWA Section 1421(d)(1)(B)). The specific CASRN numbers include: 68334-30-5, Fuels, diesel; 68476-34-6, Fuels, diesel, no. 2; 68476-30-2, Fuel oil No. 2; 68476-31-3, Fuel oil, no. 4; 8008-20-6, Kerosene; and 68410-00-4, Distillates (petroleum), crude oil.

 

    EPA's draft guidance follows the Department of Interior's (DOI's) announcement, also on Friday, of a proposed rule to require companies to publicly disclose the chemicals used in fracking operations on public and Indian lands. DOI's proposal would require public disclosure of chemicals used during hydraulic fracturing "after fracturing operations have been completed." Environmental groups said the DOI proposal needed to be strengthened and indicated the oil and gas industry needs to disclose the chemicals they'll be using in fracking before they are pumped into the ground [See WIMS 5/4/12]. It would appear that there could be conflicts between the two proposals.

 

    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW), said that the Obama EPA's Draft Permitting Guidance for Diesel Fuel, was "the second Administration announcement today in a recent barrage of federal efforts designed to stunt hydraulic fracturing by putting more and more authority over the process into the hands of the federal government." The Senator has issued an earlier statement on the DOI proposed rule on fracking operation on public and Indian lands saying it was "yet another rule designed to strangle American energy production." He said, "The first use of hydraulic fracturing happened in 1949 in Duncan Oklahoma, and it has been safely regulated at the state level for over 60 years. "

 

    Regarding the EPA proposal he said, "Once again, the Obama EPA has released a plan they know few will like at a time they hope no one will notice: EPA's draft permitting guidance for diesel fuel is the second attempt today to put forth rules that will severely hinder hydraulic fracturing, and therefore the development of America's vast natural resources. While I continue to look further into this proposed guidance, my initial concern is that since Congress gave EPA very narrow optional authority over 'diesel fuel' under the Underground Injection Control (UIC) program, any attempt by EPA to broaden that definition increases the chance that the federal government can step in to stifle hydraulic fracturing. At first glance, this appears to be exactly what EPA's guidance is designed to do. . ."

   

    House Energy and Commerce Committee Chairman Fred Upton (R-MI) issued a statement commenting on both the EPA and DOI fracking regulation proposals saying, "The administration continues to dispense more and more red tape at the expense of our economy and energy security. New production techniques have led to an energy renaissance in this country, creating jobs, generating government revenues, and helping to advance our nation's energy security. Instead of allowing this industry [to] flourish and states to use their experience and expertise to oversee the process, he continues to administer regulations and restrictions that could impair job growth and slow energy production.

 

    "The president likes to say that oil and gas production has escalated under his watch, but the truth is, our energy sector is thriving in spite of the president's actions, certainty not because of them. Almost 96 percent of our nation's increase in oil production has occurred on non-federal lands since 2007. Oil production on federal lands decreased by an average of 275,000 barrels per day in 2011. Energy production has shifted to state and private lands in large part because the federal government has little to no involvement. More red tape on federal lands is the wrong direction for federal land policy, and will only drive investment further away.

 

    "EPA's proposed guidance on diesel fuels represents a paradigm shift that requires careful review and analysis. Hydraulic fracturing has been safely used to extract oil and gas for over 60 years under state regulation. In this case, EPA is inserting itself into that long-standing relationship by broadly interpreting the definition of diesel, so that companies who safely fracture wells could face needless regulatory burdens, and states could have their working programs complicated. EPA seems intent on involving itself in fracking regulation whenever and wherever it can. EPA should not compete with the state regulators, it should learn from them and respect their decades of prior experience in this field. As the debate on this rule unfolds, EPA has an obligation to be transparent and forthright."

 

    Energy and Commerce Committee Ranking Member Henry Waxman (D-CA), Natural Resources Committee Ranking Member Edward Markey (D-MA), and Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO) released a joint statement commenting on EPA's proposed draft guidelines saying, "Last year, an investigation by the House Committee on Energy and Commerce Democrats revealed that oil and gas companies had used at least 32 million gallons of diesel fuel or hydraulic fracturing fluids containing diesel fuel over a five year period. This investigation also found that none of the companies sought -- and no state and federal regulators issued -- permits for diesel fuel use in hydraulic fracturing, as required by the Safe Drinking Water Act. By issuing this guidance, EPA is taking a long-overdue step to explain existing requirements for the use of diesel fuel in hydraulic fracturing fluids.  We look forward to examining the proposed guidance in more detail."

 

    Several environmental groups including Sierra Club, Clean Water Action, Earthworks, Natural Resources Defense Council, and Earthjustice, called on EPA to simply ban the use of diesel in hydraulic fracturing or 'fracking' fluids, instead of issuing guidance for regulating the practice. They said, "The use of diesel in fracking fluid is just one of many harmful industry practices that the government must clean up. Strong federal protections are needed to protect American families nationwide from all of the consequences of dirty fracking."

    Access a release from EPA (click here). Access complete details on the draft guidance (click here). Access a lengthy release from DOI/BLM with additional details and link to the proposed rule, economic analysis, appendix and related information (click here). Access a release from Sen. Inhofe with additional comments and background on the EPA proposal (click here); and the DOI proposal (click here). Access the statement from Rep. Upton (click here). Access joint statement from House Democrats and link to more details on their recommendations (click here). Access a joint release from environmental organizations (click here). [#Water/Frack, #Energy/Frack]

 

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DOI Releases Proposed Rule On Fracking Chemical Disclosure

May 4: Department of Interior (DOI) Secretary Ken Salazar announced the release of a proposed rule to require companies to publicly disclose the chemicals used in hydraulic fracturing operations (fracking) on public and Indian lands, with appropriate protections for proprietary information. Currently, there is no specific requirement for operators to disclose these chemicals on Federal and Indian lands, where approximately 90 percent of the wells drilled use hydraulic fracturing to greatly increase the volume of oil and gas available for production. The proposed rule would require public disclosure of chemicals used during hydraulic fracturing after fracturing operations have been completed.

    DOI said this "common-sense measure," which builds on the preliminary input received from the public, industry, tribal representatives, and other stakeholders, supports the continued development of America's abundant oil and gas resources on Federal and Indian lands by taking steps to ensure public confidence in well stimulation techniques and technologies, including hydraulic fracturing. It is also in line with steps that some states have already taken, requiring operators to disclose the chemicals they use in activities on state lands.

    DOI said the draft rule also contains two additional, commonsense measures to ensure development continues safely and responsibly: (1) Improving assurances on well-bore integrity to verify that fluids used in wells during fracturing operations are not escaping; and, (2) Confirming that oil and gas operators have a water management plan in place for handling fracturing fluids that flow back to the surface.

    Secretary Salazar said, "As the President has made clear, this administration's energy strategy is an all-out effort to boost American production of every available source of energy. As we continue to offer millions of acres of America's public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place. The proposed rule will modernize our management of well stimulation activities -- including hydraulic fracturing -- to make sure that fracturing operations conducted on public and Indian lands follow common-sense industry best practices."

    DOI indicated that the measures contained in the draft rule are consistent with the goals first outlined by Secretary Salazar in November 2010 during a forum on hydraulic fracturing on public lands to examine best practices to ensure that natural gas on federal and Indian lands is developed in a safe and environmentally responsible manner. Once the proposed rule is published in the Federal Register, a 60-day public comment period will begin, during which the public, governments, industry and other stakeholders are encouraged to provide their input. The proposed rule would apply to BLM-managed mineral estate, including 700 million subsurface acres of federal estate and 56 million subsurface acres of Indian mineral estate.

    BLM Director Bob Abbey said, "The BLM recognizes the importance of all domestic energy sources to the welfare and security of this nation. The proposed rule will move our nation forward as we ensure responsible development while protecting public land resources." Current BLM regulations governing hydraulic fracturing operations on public lands are more than 30 years old and were not written to address modern hydraulic fracturing activities.

    DOI said the proposed rule seeks to maximize flexibility, minimize duplication and complement ongoing efforts in some states to regulate fracturing activities by providing a consistent standard across all federal and Indian lands and making reported information easily accessible to the public. For instance, the BLM is working closely with the Ground Water Protection Council and the Interstate Oil and Gas Commission in an effort to integrate the disclosure called for in the proposed rule with the existing program known as FracFocus.

    American Petroleum Institute (API) Upstream Director Erik Milito said any new Federal rules on hydraulic fracturing must reflect a history of successful state-led regulations on oil and natural gas production and avoid the creation of unnecessary bureaucratic red tape. He said, "The states have proven time and again that they are the best place for responsible regulation of drilling operations. While it appears constructive changes have been made, we are still reviewing the new proposal to see how the agency addressed the various concerns that we've raised. The administration should exercise deference to the robust and comprehensive state regulations that already exist. Energy production on federal lands has a history of driving job creation, and creating significant revenue for the government. But this potential could be stifled by a federal regulatory program that duplicates existing state regulations. This could have a chilling effect on investment and jobs."

    API said it supports and works closely with a number of public and private partnerships throughout the country that collaborate with state regulators, including FracFocus.org, State Review of Oil and Natural Gas Environmental Regulations (STRONGER) and the Groundwater Protection Council (GWPC). Milito said, "Led by API, the industry has adopted standards and practices for continuous improvement, hundreds of which are referenced in state regulations. The industry remains committed to informing and educating the public about all aspects of oil and natural gas production." Through the efforts of the industry to promote transparency, companies now voluntarily disclose the contents of fluids on FracFocus.org, run by the Groundwater Protection Council. The typical fracturing fluid is 90 percent water and 9.5 percent sand, with the rest being additives to aid well production [See WIMS 5/2/12].

    Amy Mall, senior policy analyst at the Natural Resources Defense Council (NRDC) issued a statement saying, "We need BLM to be a leader when it comes protecting our lands, water and ultimately our health from fracking pollution, yet several states already have stronger protections in place than what the agency proposed today. This is a critical first step, but so much more needs to be done. Oil and gas operations are expanding rapidly with new technologies and into new areas, including closer and closer to where families live and children go to school, but federal safeguards have not caught up. And industry does not inspire confidence when it balks at the notion of sharing chemical ingredients upfront. Communities shouldn't have to wait for that information until after the deed is done. We hope the agency will strengthen this proposal before it becomes final."

    Earthjustice Legislative Representative Jessica Ennis said in a statement, "Fracking for oil and gas is happening at a breakneck pace on our public lands -- and edging ever closer to the places where people live. In light of the near-constant reports of fracking-related air and water pollution, an update to federal rules is long overdue. Unfortunately, these proposed rules from the Department of the Interior fall far short of what's needed to protect public health. For one, the oil and gas industry needs to disclose the chemicals they'll be using in fracking before they are pumped into the ground. This information is essential so communities can test drinking water before fracking occurs and monitor the safety of water supplies in real time. If there's a problem with their water, families deserve to know immediately -- not after they've been drinking it for years.

    "The oil and gas industry has gotten used to operating in the shadows for too long – hiding chemical information, fighting against right-to-know laws, silencing families who speak out. It's unacceptable and needs to end now. The President promised in his State of the Union that this country's gas drilling boom would not come at the expense of public health. This proposed rule fails to meet that promise."

    Access a lengthy release from DOI/BLM with additional details and link to the proposed rule, economic analysis, appendix and related information (click here). Access the statement from API (click here). Access the statement from NRDC with links to more information (click here). Access the statement from Earthjustice (click here). [#Energy/Frack]

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