Gas, clearly for export, will cost US a bundle!

The Access Northeast Pipe Dream?

Pat Knight  |  February 7, 2017  |  Synapse Energy Economics

On February 6, 2017 Synapse released a report on “New England’s Shrinking Need for Natural Gas. ” This report examines the need for, and the cost of, the Access Northeast (ANE) natural gas pipeline. As proposed, the ANE pipeline relies on a novel funding mechanism whereby electric ratepayers would pay for new gas pipelines. This unprecedented funding proposal has spurred controversy and litigation: the Massachusetts Supreme Judicial Court and the New Hampshire Public Utilities Commission both rejected this approach, declaring that it violates state laws enacted to restructure the electric utility sector and to protect consumers from undue financial risk. Pipeline proponents claim that the ANE pipeline is needed to relieve capacity constraints on New England’s natural gas pipeline system and that the cost of the pipeline is justified because it will ultimately save money for New England electric ratepayers.

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Governors can wield influence over pipelines

Natural gas infrastructure is not just federal issue 

KATHRYN R. EISEMAN Jan 30, 2017 Commonwealth Magazine

WITH NEW FEDERAL ENERGY POLICIES evolving to be starkly at odds with our priorities in Massachusetts, it is vital that we understand what authority our state has to influence controversial new natural gas infrastructure projects. Complicating matters, the Baker administration continues to promote an abstract vision of expanded interstate natural gas pipeline capacity in our region, yet when questioned about his support for specific gas infrastructure projects with concrete impacts, the governor’s repeated response to distraught landowners and local officials is that interstate gas pipelines are a federal matter.

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Koch brothers new target in energy war is not climate science

Linda Haithcox, executive director of the National Policy Alliance, which is funded in part by the Kochs’ organization Fueling U.S. Forward. Credit Matt Roth for The New York Times

Sensing Gains Ahead Under Trump, the Kochs Court Minorities

Warning: Unnecessary Pipelines Could Leave Consumers Holding the Bag

By | BIO

New oil pipelines are very much in the national spotlight. There’s been less attention on big pipes to transport natural gas. So far, debates over gas pipelines have been mostly local and regional affairs, even though there are dozens of gas pipeline applications pending before the Federal Energy Regulatory Commission (FERC). The traditional concerns with both types of pipelines are largely the same: safety, routing, and environmental impacts.

ngpipelines_map-300x225But even before you get to those questions, there’s a more fundamental one we should be asking:  Have the pipeline developers established a true need for the project?

In some cases, the answer might be yes. But in other instances, there are strong reasons to believe the “need” for new gas infrastructure is exaggerated by pipeline developers with corporate ties to the local utilities signing contracts to pay for the pipe whether or not they end up using the gas. Utilities can do this because – by law – the bill for that infrastructure ultimately gets passed through to captive ratepayers.

One example is the Access Northeast Project proposed by Spectra Energy LP, which has sparked a debate across New England. But there are several other examples of pipelines with similar structures proposed across the country, from New Jersey to North Carolina. Fortunately, there are some steps regulators can take to minimize the risk of green-lighting unnecessary, expensive natural gas pipelines, namely providing heightened review procedures to affiliate-backed contracts.

Who’s Paying Whom?

Ordinarily, regulators insist on hard evidence that there’s a need for new capacity before signing off on a multi-billion-dollar pipeline. To build an interstate pipeline, developers need blessings from regulators, including FERC. One important key is having long-term contracts with customers for the gas – typically local gas and electric utilities, sometimes large industrial users or producers.

Signed contracts show FERC that there’s sufficient demand to support the huge investment. Or at least, that’s the idea. Things are fine so long as contracts between pipeline companies and utilities reflect arms’ length deals between parties with no corporate relationship. But when that’s not the case, things get thorny fast. Suddenly, you can end up with the same companies (or their affiliates) on both sides of a pipeline deal, effectively shaking hands with themselves. That creates a big incentive to get the deal done out of mutual financial interest, regardless of actual need.

In a normal business, lenders or shareholders are on the hook for bad bets, but not here. That’s because as state-regulated monopolies, local utilities have a legally guaranteed right to recover costs of providing service to their ratepayers. These costs include the signed contracts used to support the initial pipeline investment. This means developers get paid whether or not demand for gas shipped through their pipeline ever materializes. The only ones left holding the bag are the utility’s customers.

Too Close for Comfort

As the energy industry has evolved in recent years, local utilities are increasingly likely to exist as part of a larger corporate group, under an umbrella parent or holding company.  Some of these subsidiaries fall outside the regulatory realm where local distribution companies exist, and thus play by very different rules. The concern is that a franchised public utility and an affiliate may be able to transact in ways that transfer benefits from the captive customers of the public utility to the affiliate and its private shareholders – and offload financial risk in the other direction. If there was a legitimate and pressing need to take service from the project, presumably the regulated utilities would already have signed up. Instead, we see a pattern emerge where affiliates become owners of the pipeline while simultaneously committing their franchise public utilities to fund the costs of the pipeline.

Policing Perverse Incentives

This new financial model has been popping up throughout the country, including the PennEast Pipeline, Mountain Valley Pipeline, and the proposed Access Northeast Project. Regulators need to be on the lookout for these kinds of troubling affiliate relationships.

Some states, including North Carolina, have laws requiring state utility commission approval of affiliate contracts. But in most places, the normal course of business is for state commissions to approve them, if they even do review the contracts in the first place.  To address this regulatory gap, EDF recently requested the New York State Public Service Commission to take a harder look at these types of transactions.

At the federal level, FERC is supposed to approve pipelines only where there is a demonstrated need. But as the New Jersey Division of Rate Counsel pointed out in a recent FERC proceeding regarding the PennEast pipeline, when the project is supported by affiliate-backed contracts: “two-thirds of the demand for the pipeline exists because the Project’s stakeholders have said it is needed.”

Long-Term Consequences

The new corporate paradigms at work in the pipeline business result in a major shift of risk, where ratepayers end up shouldering the costs of long-term agreements, while the shareholders of the pipeline developers enjoy higher-than-average returns. Dr. Steve Isser recently highlighted the dangers of this risk-shifting in a recent paper, noting that it could lead to pipeline overbuild.

It’s time that FERC and state regulators apply heightened levels of scrutiny to these affiliate precedent agreements to ensure there is sufficient market need for new pipelines. If unaffiliated shippers are unwilling to sign these long term contracts, regulators also needs to ask: why should affiliated ratepayers?

Image source: EIA.gov

In Trump times, cities must lead on climate change

By Joan Fitzgerald   Published in The Boston Globe  NOVEMBER 28, 2016

AS A CANDIDATE, Donald Trump vowed he would abandon the Paris Agreement, reverse President Obama’s climate initiatives, and bring back coal. As president-elect, he’s been more circumspect, but his appointment of climate-change denier Myron Ebell to head the transition at the EPA suggests he may try to make good on these promises.

If he does, the country needs a counterforce. That should come in the nation’s cities, where mayors have been far less polarized and often more creative than Washington in how they address climate change. Whether by transitioning to renewable energy, supporting smart grid development, pushing energy-efficient buildings, or supporting the infrastructure for electric vehicles, cities are already at the forefront of the fight. That’s because mayors of both parties know that climate action both improves the quality of life in their cities and creates economic opportunities.

Burlington, Vt., has become the first US city to meet all its electricity needs from renewable sources. About one-fourth of the city’s power is from a city-owned wood-burning facility. For the rest, Burlington purchases wind power and hydro and uses landfill methane.

After being leveled by a tornado in 2007, Greensburg, Kan., was rebuilt under the leadership of Republican Mayor Bob Dixon, with guidance from the National Renewable Energy Laboratory, as a sustainable city powered completely by renewable energy from biogas, small-scale solar, and its own wind farm. Dixon, a member of a White House task force on climate change, frequently says that sustainable urban development transcends party lines.

San Diego is the largest city in the country to commit to going 100 percent renewable, in this case by 2035. In May, Republican Mayor Kevin Faulconer released a budget that commits $127 million to climate-change projects. Faulconer, like Dixon, does not see climate action as a partisan issue.

Cleveland, with support from the Cleveland Foundation and others, has been trying to develop offshore wind turbines on Lake Erie since 2004. After many false starts, construction is beginning on Project Icebreaker, deploying a specially designed turbine that can free itself from ice that would otherwise lock it up in the winter months. Should this six-turbine farm on Lake Erie be successful, a new wind-powered energy grid could be developed along the southern shores of all the Great Lakes.

Onshore wind power alone could supply more than 95 percent of Ohio’s electricity demand, according to the NREL. And there’s the potential for thousands of good jobs in the manufacturing supply chain for turbines and in their maintenance. The American Wind Energy Association estimates that Ohio could reap $57 million annually in property tax revenue and $26 million in lease payments to landowners by 2030 if wind power continues to develop.

But maintaining this progress has been a struggle. In 2014, Governor John Kasich signed legislation freezing the state’s push toward renewable energy adoption. A second Kasich-approved law increased the distance turbines must be located from abutting properties, which stopped the construction of 11 previously approved wind farms.

And the going may get tougher; Ohio is one of several states where the Koch Brothers are pushing to undo legislation promoting renewable energy over fossil fuels.

Yet there could be some common ground on some projects. Trump seems serious about a major infrastructure initiative. Investing in a smart grid would be a great start. The nation’s current electrical grid is really a patchwork of grids that cannot communicate effectively, and have reached capacity. That must change if the grid is to handle increasing amounts of renewable energy. Another crucial need is for cities to protect themselves against sea-level rise and adopt green stormwater-management approaches. That challenge looms regardless of whether you believe climate change is naturally occurring or human-made.

Republicans are champions of local control. More than 1,000 mayors have signed on to the US Conference of Mayors Climate Protection Agreement, which commits them to urging the federal government to pass greenhouse gas-reduction legislation. On climate issues, mayors of both parties will be letting Trump know both the opportunities and the stakes. He would be wise to listen.

Joan Fitzgerald is a professor of urban and public policy at Northeastern University. She is working on her next book, “Greenovation: Urban Leadership on Climate Change.”

Let’s build the right kind of future

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US must transition to low-carbon energy

By Jeffrey D. Sachs   Boston Globe NOVEMBER 20, 2016

Part of a weekly series on the economic choices facing the United States and its relations with the rest of the world. For previous entries, click here.

Energy is the lifeblood of the economy. Without ample, safe, and low-cost energy, it is impossible to secure the benefits of modern life. For two centuries, fossil fuels — coal, oil, and natural gas — offered the key to America’s and the world’s growing energy needs. Now, because of global warming, we have to shift rapidly to a new low-carbon energy system.

President-elect Donald Trump has vowed to resurrect coal, promote gas fracking, and restart the Keystone XL pipeline project to bring Alberta, Canada’s oil sands to market. He won’t get far. Today’s low world prices of oil, coal, and gas reflect the fact that newly installed power generation and vehicles worldwide are shifting decisively to low-carbon energy.

The world has far more fossil fuel reserves than can be safely used. Many will stay in the ground, forever. Saudi Arabia, not Alberta, is the low-cost oil supplier. Investors in a resurrected Keystone would go broke, as have investors in coal. Wall Street figured this out long ago.

Nonetheless, Trump may well try to resist the tide at the start. In that case, climate change would quickly become his biggest controversy, costing decisive political capital as the climate debate engulfs his nominations, undercuts America’s diplomacy, and stymies infrastructure plans as well. The US government would be challenged in courts across the country. We are not back in 2001, when George Bush pulled out of the Kyoto Accord. Now the entire world, not just a group of high-income countries, has signed on to climate action.

What’s also clear is that climate change, together with mega-student debt and the loss of entry-level jobs to robots, will trigger a millennial revolt. Twenty-five-year-olds starting out in the workforce, and 35-year-olds with young children, are not going to settle for a septuagenarian president repeating climate falsehoods and squandering their future.

While the president-elect and a few self-serving coal and oil executives might still pretend that climate change is overblown, the rest of the world knows better. For 120 years, scientists have known that burning fossil fuels adds to the carbon dioxide in the atmosphere and thereby warms the planet. Last year was the warmest year since record keeping began, in 1880, and 2016 will be warmer than 2015. Around the world, people observe and suffer the consequences.

For this reason, every nation in the world, including the United States, agreed in Paris, in December 2015, to shift to a low-carbon energy system. The Paris Climate Agreement went into force this month. The global agreement aims to keep human-caused global warming to “well below 2-degrees Celsius” (3.6 degrees Fahrenheit) and to aim for no more than 1.5-degrees Celsius (2.7 degrees Fahrenheit), all measured relative to the earth’s temperature at the start of the fossil-fuel era (around 1800). The warming of the earth up to 2016 is already around 1.1 degrees Celsius, more than halfway to the globally agreed upper limit.

Climate scientists have come up with a tool called the “carbon budget” to guide us back to climate safety. Roughly speaking, the earth’s warming is proportional to the cumulative amount of fossil fuels burned or carbon release into the atmosphere by cutting down forests. To have a “likely” (that is, two-thirds) probability of staying below 2-degrees Celsius warming, humanity has a remaining carbon budget of around 900 billion tons of CO2.

To put the remaining 900 billion tons into context, the world as a whole is currently emitting around 36 billion tons of CO2 into the atmosphere each year. At the current rate of fossil fuel use, the world therefore has only about 25 years remaining to stay below 2-degrees Celsius, with a two-thirds probability (and still a hefty one-third chance of exceeding 2-degrees C). The key is an energy “transplant” that replaces coal, oil, and gas, with zero-carbon energy such as wind and solar power, or that combines the continued use of some fossil fuels with technologies that capture CO2 and store it safely underground (known as carbon-capture and storage, or CCS). Such an energy transplant may seem impossible, but it’s actually well within reach, in fact underway.

Most of the key changes will hardly be noticed by most of us. Instead of driving a Chevy Malibu, with a gasoline-burning internal combustion engine under the hood, we will instead drive a Chevy Volt, with an electric motor under the hood. Instead of charging the Chevy Volt with the electricity currently generated by a coal-burning power plant, the power plant will instead use wind, solar, nuclear, hydroelectric, or some other noncarbon energy technology (such as CCS) to generate the electricity.

Forward-looking engineers have already given us a pretty good roadmap from fossil fuels to zero-carbon energy. There are three guidelines.

The first is energy efficiency. We need to cut back on excessive energy use by investing in energy-saving technologies: LED lighting rather than incandescent bulbs; smart appliances that do not draw energy when not in use; better housing insulation and passive ventilation that cut heating needs (and heating bills); and so forth.

The second is zero-carbon electricity. Depending on where you live, your power today is generated by a mix of coal, natural gas, nuclear power, hydroelectric power, and a bit of wind and solar power. By 2050, electricity should be generated entirely by noncarbon sources (wind, solar, hydro, geothermal, nuclear, tidal, biofuels, and others) or fossil fuels with CCS.

The third is called fuel switching. Instead of burning gasoline in the car, you would use electricity in its place; instead of burning heating oil to warm the house, you would use electric heating. For every current use of fossil fuel, we can find a low-carbon fuel substitute. Most of us would hardly notice the difference. The main thing we would notice is a slightly higher electricity bill and a vastly safer climate. But even the slightly higher costs are likely to be transitory. As producers slide down the learning curve, the costs of electric vehicles, industrial fuel cells, fourth-generation nuclear power plants, and solar grids are likely to fall significantly.

We’ll also enjoy the new low-carbon technologies more than we do today’s. Smart electric vehicles will not only be cleaner and safer but will also drive you to work while you read the morning news. The shift from coal to renewable energy and from gas-guzzlers to electric vehicles will clear the deep smog that now envelopes Delhi, Beijing, and other places now literally choking on their air. That’s why China politely reminded the United States this past week that the global climate agreement is here to stay.

The challenge is to make the energy transition quickly, seamlessly, and at low cost, without destabilizing the energy system or putting America’s industrial companies at a competitive disadvantage with enterprises in China, Mexico, and India. The beauty of the Paris Climate Agreement is that all countries are now in this effort together.

Is the energy transition worth it? Much of the transition will pay for itself, in the sense of cleaner air, better appliances, and better services. Yet some parts will require a small extra cost for essentially the same energy services, at least at the start.

But here’s a critical point to keep in mind. The last time the earth was less than 1 degree warmer than now (about 130,000 years ago, in a geological period called the Eemian), the ice sheets in Antarctica and Greenland had disintegrated to such an extent that the global ocean level was around 5-6 meters higher than today. Today’s small-island economies would disappear.

I’m not talking only about the Maldives and Vanuatu. Manhattan would be inundated, and Boston, too, would be mostly under water.

But the risks transcend the disasters facing New York City, Boston, New Orleans, and countless other low-lying cities around the world. Global warming has already destabilized food supplies in many parts of the world, and there is much worse ahead unless we undertake the energy transplant. Syria, to name just one case, experienced its worst drought in modern history between 2006 and 2010, leading to impoverishment, hunger, forced migration, and social instability that provided tinder for the war that broke out in 2011.

Many Americans understandably fear the job displacements that would hit today’s coal miners and oil roustabouts. Fortunately, the news on this front is reassuring. At latest count, the total number of coal miners in America is around 16,000, out of a labor force of 150 million. Total extraction workers in coal, oil, and gas combined is around 150,000, around 0.1 percent of the workforce. These workers, whose physical health is routinely crushed for corporate profits, can easily be compensated and retrained for much healthier work and better wages. Other workers in the fossil-fuel sectors — accountants, managers, programmers, and the rest — will be needed directly in the new-energy sectors and in other parts of the economy.

There are a few true economic “losers” in America’s energy transformation, and David and Charles Koch are perhaps among them. The Koch brothers own the largest private oil company in the world. In their narrow private interest, it might be better for them to defend their $100 billion oil industry investment and wreck the rest of the world. After all, they can afford to buy new property above the rising sea level. Yet even on that narrow and extremely callous calculus, uncontrolled climate change is certainly not better for the Koch family children and grandchildren, who would suffer dire consequences from their parents’ and grandparents’ selfish disregard for humanity’s needs.

Recent excellent work by my colleague Dr. Jim Williams and other energy specialists has charted the US energy transition to 2050. Just this week, the White House issued a superb United States Mid-century Strategy for Deep Decarbonization along the same lines. It turns out indeed that renewable energy, nuclear power, and carbon-capture and storage technologies offer a range of possible pathways to decarbonization. North America is blessed with vast stores of renewable energy, including solar power in the southwest, wind power in the Midwest and eastern seaboard, and vast hydroelectric potential in Canada. And if you don’t like nuclear power or CCS, it’s still possible to make the transition to low-carbon energy, but at a higher cost. (Not surprisingly, the costs rise a bit when options such as nuclear energy are taken off the table).

The bottom line of these scenarios is reassuring. According to Williams’s study, the cost of decarbonizing the US energy system is less than 1 percent of national income per year, perhaps much less. While one percent of GDP is not negligible, it will be a very small price to pay for global climate safety. Similar calculations, and similar bargains, will be the case for the energy transplant operation in other parts of the world. A few lucky places, with magnificent wind, solar, or hydroelectric power will find the incremental costs of zero-carbon energy systems to be negligible.

If the energy challenge is all so clear, why isn’t it happening? First, some part of the energy transformation is already underway, with a rise in deployments of wind and solar energy. Now that the climate risk is finally appreciated worldwide, the entire world is ramping up for energy-transplant surgery. The second is that powerful vested interests, including the Koch Brothers, ExxonMobil (until recently), and Peabody Coal told the American people lies about climate change for years and, even worse, funded the campaigns of politicians who have been willing to oppose climate legislation in return for campaign dollars.

And third, stunningly, because of the same lobbying pressures, long-term energy thinking has been largely blocked. The first step for Trump and Congress in January should be to call on the National Academy of Engineering to mobilize the great engineers across America to come up with a climate-smart energy strategy that makes sense for all regions of the nation. Then the president’s new infrastructure program would build the right kind of future.

Jeffrey D. Sachs is University Professor and Director of the Center for Sustainable Development at Columbia University, and author of “The Age of Sustainable Development.”

Baker’s Pipeline Support Undercuts Climate Goals

MetroWest Daily News, November 5, 2016 

By Emily Norton/Guest Columnist

Gov. Charlie Baker recently took two terrific actions for the environment. But they are undercut by his continuing support for more natural gas pipelines.

On Sept. 16, the governor signed an executive order establishing an “integrated climate change strategy for the Commonwealth.” The order commits his administration to more aggressive steps to reduce greenhouse gas emissions that are warming the planet, and offering assistance to cities and towns to adapt to the changes caused by climate change — changes that are already here. It also directs the secretary of each executive branch agency to designate a climate change coordinator, to ensure an integrated approach to addressing the threat climate change poses to human health and safety.

In addition, in August Gov. Baker expressed support for significantly reducing the cap on greenhouse gas emissions that electric utilities face under the Regional Greenhouse Gas Initiative (RGGI). For this he received well-deserved national praise, as RGGI has not only prevented the release of fifteen million tons of carbon pollution, but has also led to over $300 million returned to Massachusetts residents, businesses and municipalities in the form of energy audits, air sealing and weatherization, rebates for insulation and efficient lighting, appliances, HVAC, water heating equipment, and more.

Yet simultaneously with these actions, Gov. Baker has not disavowed his strong support for more natural gas pipelines in Massachusetts and throughout New England.

We can’t have it both ways – more fossil fuels and less greenhouse gas emissions. Natural gas is a potent greenhouse gas contributor – it emits carbon dioxide when burned and consists primarily of methane, which is 84 times more powerful at warming the planet than carbon dioxide. A study by Boston University revealed that one tenth of Massachusetts’ greenhouse gas emissions are caused by gas leaks from our aging pipeline infrastructure.

In fact, increasingly the evidence is showing that gas is no better than coal when it comes to climate impacts, when taking into account leaks and emissions related to gas exploration, production and transportation.

Luckily, we know from a study commissioned by Attorney General Maura Healey – the Commonwealth’s top ratepayer advocate – that new natural gas pipelines are neither needed nor cost effective.

Pipeline proponents claim we need extra pipeline capacity to ensure there is sufficient natural gas supply, especially for the few “winter peak” days when the temperature drops and demand for heat goes up. Building a $3 billion pipeline to meet demand on those few cold days a year is like adding an addition to your house for in-laws that only visit a couple weekends a year. AG Healey found that the most cost effective and climate friendly way to meet this demand is through increasing energy efficiency and demand response, in which heavy energy users are incentivized to take temporary measures to reduce electricity use during peak periods.

Another argument offered is that more natural gas will help keep electricity prices low. But the Access Northeast pipeline would cost $3 billion to build. Pipeline proponents, including Gov. Baker, want the public to cover this cost via a tax on our electricity bills. As many analysts have pointed out, if this pipeline is such a good deal financially, why aren’t pipeline companies willing to pay for it? We should all be suspect of any savings plan that starts with ratepayers having to front $3 billion. To their credit, the Supreme Judicial Court recently ruled that a “pipeline tax” would not be legal under current state law. The Mass. Senate voted unanimously against authorizing such a pipeline tax, but in an ominous move, Mass. House leadership omitted language prohibiting a pipeline tax from the final version of the energy bill that passed in July.

Gov. Baker has come a long way since his first campaign in which he wouldn’t concede climate change was real. His stance on RGGI and his Executive Order show real leadership, which is sorely lacking among others in his party who are still in elective office. But those positions are undercut by his continued support for new natural gas pipelines.

Emily Norton is chapter director of the Massachusetts Sierra Club.