This week, we look ahead at nine natural gas policy issues for 2015, recap the week in the news, and interview Christopher Tessum, a researcher at the University of Minnesota who recently published a widely-cited study on the environmental impact of various types of light-duty vehicles.
Listen below or download here.
Nine Natural Gas Policy Issues to Watch This Year
9. Ohio Severance Tax – Ohio produces a small but rapidly-growing amount of natural gas. Republican Governor John Kasich just won a huge reelection and wants to create a new tax on natural gas extraction.
8. Maryland Fracking Regulations – Outgoing Democratic Governor Martin O’Malley proposed regulations on his way out the door, but new Republican Governor Larry Hogan wants Maryland in the drilling business and he will have the final say on the rules.
7. Gas-Electric Coordination – Natural gas is hard to store, so an electric grid relying on natural gas powerplants is also reliant on natural gas pipelines. Coordinating the pipes and the grid are major issues moving forward, as are permitting new pipelines.
6. Liquefied Natural Gas (LNG) Exports – LNG exports require two permits, one a permission to build from the Federal Energy Regulatory Commission (FERC), and one a permission to export from the Department of Energy (DOE). After a few years of confusion, the DOE is now deferring to FERC, but Congress may try to change the process.
5. Methane Pollution – A number of industry, state, and federal regulatory actions will attempt to limit methane pollution in 2015. It remains to be seen how aggressive the federal government will be.
4. Pennsylvania Severance Tax – Republican Governor Tom Corbett has long been friendly to the industry, but he just lost his reelection to a Democrat, Tom Wolf, who wants to impose a new severance tax. It will be tough with the state’s heavily-Republican legislature.
3. Federal Fracking Regulations – The Bureau of Land Management (BLM) proposed rules in 2012 for hydraulic fracturing on federal land, but has not got around to finalizing the rules. Meanwhile, the EPA has hinted it may exercise more of its limited authority to regulate drilling.
2. Colorado “Home Rule” Decision – Colorado was set to vote on a number of pro-drilling and anti-drilling ballot measures last fall. Instead, the state set up an a new Oil and Gas Task Force to address fracking issues. Results are due in February.
1. The EPA Clean Power Plan – The EPA has proposed a series of regulations that require states to reduce the carbon dioxide emissions from powerplants. It is unclear if states will play along.
Read more here.
Natural Gas News For the Week of January 5
Congress came back this week and immediately went to work on energy issues, starting with Keystone:
- The White House issued a veto threat on legislation to speed up the Keystone XL pipeline. Days after that, a court in Nebraska ended a lawsuit that was part of the President’s reason to delay.
- The Senate Energy Committee passed its bill to speed up the project. The Senate plans to debate the bill on the floor with an open amendment process, which could draw amendments on a range of issues, including:
- Liquefied Natural Gas (LNG) exports,
- Energy efficiency,
- Oil and gas taxes,
- Made-in-America provisions,
- Climate-change-is-real language,
- Export restrictions, and
- Eminent domain limitations.
- The House of Representatives passed its version of the bill 266 to 153, short of a veto-proof margin.
U.S. Senators John Barrasso (R-WY) and Martin Heinrich (D-NM) introduced a bill that would set a 45-day limit for the Department of Energy to act on an LNG export permit after a projected has completed its key FERC hurdle. The Senator’s bill is called the “LNG Permitting Certainty and Transparency Act.” Here is what they had to say:
- Sen. Barrasso – “Right now, LNG exports are being stalled by Washington red tape and permitting delays. Our bipartisan bill fixes this by creating clear deadlines…”
- Sen. Heinrich – “If the U.S. does not aggressively market LNG abroad, many of these countries may have no choice but to purchase energy from Russia or other nations that are not aligned with our own national interests.”
In related news, the Administration confirmed over the holidays that it would continue to allow exports of condensate, a minimally refined, very light crude oil. Mexico’s oil company, Pemex, has also applied for a “crude swap,” allowing some U.S. exports in exchange for imports of a different grade of oil. These openings in the general crude oil export ban have allowed exports to hit record levels, and the Administration says they see no reason to change the rules further.
The President’s Clean Power Plan, set to limit carbon dioxide emissions from powerplants, was in the news:
- Rules for both new and existing plants should be finalized together this year, according to The Hill.
- Oklahoma Senator Jim Inhofe (R-OK) has a plan to challenge the rules.
- The New York Times reports the EPA will create a “model rule” for states that do not play along.
The Wall Street Journal ran an profile on a welder who went to community college and now makes $140,000 per year. It is something to think about, especially given that President Obama just proposed making community college free.
A few other notes:
- The Wall Street Journal said oil companies are still drilling because they need to kept servicing the debt they have racked up, but that will end someday.
- British Columbia said natural gas infrastructure should not boost oil, per Reuters.
- E&E laid out their version of what energy legislation to expect this year.
- New Jersey, sitting in a region facing natural gas infrastructure limitations, is still having trouble bringing in gas.
Interview – Christopher Tessum, University of Minnesota (Starts at 28:50)
Last month, there were a lot of news articles about a new study on electric cars, and almost all the headlines questioned their environmental benefits. Here are some examples:
- Popular Mechanics, Why Your Electric Vehicle Might Not Be as Green as You Think
- AP, Study: Your all-electric car may not be so green
- Climate Central, Electric Cars a Mixed Bag For Health, Climate
- NBC News, Your All-Electric Vehicle May Not Be So Green, Study Says
- Green Car Reports, New Study Doesn’t Say Electric Cars Aren’t Green
I checked out the study, and felt like it covered a lot more than was coming out in those stories. The paper came from researchers at the University of Minnesota, and was officially titled “Life cycle air quality impacts of conventional and alternative light-duty transportation in the United States,” and was published in the December issue of the Proceedings of the National Academy of Sciences of the United States of America journal. Despite the imposing title, the heart of the paper was only five pages long and fairly easy to understand. And the team put together simple video:
I had a chance to discuss the paper with Christopher Tessum, who was the study’s lead author. Chris said his study built on past studies that have found that ethanol-powered vehicles may not have overall environmental benefits. So Chris and his team were looking for fuels that would have benefits over gasoline. The team tried to quantify all the impacts of driving a car. The team built upon a publicly-available model from the U.S. government’s Argonne National Laboratory, called GREET. That model attempts to quantify greenhouse gasses, regulated emissions, and energy use in transportation. The Minnesota team added spatial information, attempting to calculate the impact of having emissions released near populations. Chris conceded that the study’s prediction of electricity mix on the grid probably overstated the future usage of coal in 2020 at 45%. That only played into one scenario on the paper, however, and it not its most important conclusion.
The study attempts to stack up various light-vehicle fuels in terms of moralities caused by their pollution. From that standpoint, the worst vehicle to drive is an electric car that is running on coal-produced electricity. Ethanol power comes out only slightly better. Corn grain ethanol is far worse than gasoline, and corn stover ethanol is slightly worse. Running an electric vehicle on electricity generated from corn stover is about the same as using the ethanol directly.
The next tier of fuels are compressed natural gas (CNG), diesel, and hybrid vehicles. These all come out slightly better than gasoline. That is perhaps unsurprising for CNG, as few people advocate switching to CNG in cars for environmental reasons. Part of the problem is the energy needed to compress the gas. Finally, the best vehicles in the study are electric vehicles that are powered by natural gas or renewable powerplants. Renewables, specifically wind, water, and solar, are about 70% better than gasoline. Natural gas power is about 50% better than gasoline. Chris said he has received a lot of feedback from electric car owners who saw the article as critical, but he feels the findings are rather favorable to electric vehicles.
The study also did two other major calculations. First, it examined the geographic areas where emissions are occurring. This was where the spatial information came from that went into the larger calculations. Secondly, the study tried to assign a monetary value to the environmental damages from driving a car. Surprisingly, it found particulate pollution is worse than climate change impacts in most scenarios.