Coastal States Oppose Offshore Drilling Proposal

The Nicholas Institute for Environmental Policy Solutions at Duke University

Attorneys general of a dozen coastal states—North Carolina, California, Connecticut, Delaware, Maine, Massachusetts, Maryland, New Jersey, New York, Oregon, Rhode Island and Virginia—are expressing opposition to the Trump administration’s proposal to expand development of oil and gas in the Atlantic and Pacific oceans, calling it “outrageous” and “reckless.” In a letter, they called on U.S. Department of the Interior Secretary Ryan Zinke to cancel the proposal. They also expressed ire at the deal Zinke struck with Florida Gov. Rick Scott, which exempted his state from the drilling plan, pointing to the lack of analysis or clear process underlying the decision.

Two governors from opposing parties echoed that sentiment in a separate publication.

“We’ve seen this administration seemingly lift the concerns of one governor and one state above others,” wrote Maryland Gov. Lawrence Joseph Hogan Jr. and North Carolina Gov. Roy Cooper in an op-ed. “In removing Florida from the five-year plan, Zinke and the Trump administration have admitted that offshore drilling poses great risks to coastal economies.”

On Sunday Zinke reiterated why he exempted Florida—due to its unique currents and geology as well as the unanimous opposition of Florida’s legislature to the proposal.

“In the case of Florida, the governor asked first for an immediate meeting and every member on both sides of the aisle contacted my office, wrote letters on it. So Florida is unique,” Zinke said. “Not every state has all the members against it and the geology is different, the currents are different and so looking at it, we’re going to take the process, go through it, meet with every governor personally.”

In a meeting with Zinke the day before, Cooper said the Interior secretary was receptive to his requests for an extended proposal comment period and for three additional public hearings near North Carolina’s coast.

“He said that he was listening, and he heard each and every one of us,” Cooper said. “I think generally he was pretty positive about what we said. He didn’t make any promises to us.”

Cooper said he told Zinke that drilling could cause unrecoverable damage to the state’s $3 billion tourism and fishing industries.

“We told him there is no 100% safe method to drill for oil and gas off the coast, particularly in our area off of North Carolina that sees nor’easters, that sees hurricanes,” Cooper said. “It would be catastrophic if there were to be an oil spill.”

If North Carolina does not get an exemption like Florida, Cooper said he has no problem taking the federal government to court.

“Thousands of North Carolinians and 30 coastal communities have voiced their opposition to drilling off North Carolina’s shores,” said Josh Stein, North Carolina’s attorney general, in a statement. “I will do everything I can, including taking legal action, if necessary, to fight on behalf of our people, economy, and natural resources.”

Also seeking an exemption from the proposal—albeit a partial one—is Alaska Sen. Lisa Murkowski.

“There are certain areas that we feel are not opportune for leasing and for development,” said Murkowski, who chairs the Senate committee that oversees the Interior. “Let’s focus on where the opportunity is good and there is interest and defined resource with limited obstacles.”

As Another Plant Closes, Spotlight Is on Economics of Nuclear

New Jersey’s Oyster Creek nuclear power plant will shut down in October 2018, more than a year earlier than planned, Exelon Corp. announced last week.

Nuclear power is the nation’s largest source of carbon-free electricity, generating about 20 percent of U.S. electric power and 60 percent of our zero-carbon electricity. The challenge to maintain a zero-carbon nuclear fleet to meet climate goals—by keeping existing plants like Oyster Creek—often is economics. This challenge has been particularly apparent in competitive markets, where nuclear plants are not guaranteed cost recovery through ratepayers.

When Exelon CEO and President Chris Crane announced in 2010 that the plant would retire in December 2019, he said the plant faced “a unique set of economic conditions and changing environmental regulations that make ending operations in 2019 the best option for the company, employees and shareholders.” He said the plant’s decreasing value was due to the cumulative effect of negative economic factors, such as low market prices and demand, as well as the plant’s need for continuing large capital expenditures.

Meanwhile, new construction has been plagued with cost overruns. In December 2017, the Georgia Public Service Commission voted unanimously to allow construction of two new nuclear reactors at the Plant Vogtle site to proceed. Plagued by delays and escalating costs, the Vogtle reactors represented the only large-scale nuclear construction underway in the United States since abandonment of two reactors last summer by South Carolina Electric & Gas and Santee Cooper. The Georgia commission reaffirmed its decision this week, despite a challenge by consumer group Georgia Watch over concern about the ultimate cost to ratepayers.

EIA Projects United States Will Become a Net Energy Exporter in 2022

The U.S. Energy Information Administration (EIA) on Tuesday released its annual long-term energy outlook, which projects U.S. production of natural gas will increase through 2050. Production of crude oil and petroleum products, meanwhile, will decrease.

It projects that the United States will become a net energy exporter by 2022, four years sooner than the date projected in last year’s report, reversing “a near 70-year trend when the U.S. became a net energy importer in 1953,” said EIA Administrator Linda Capuano.

“The United States energy system continues to undergo an incredible transformation,” she added. “This is most obvious when one considers that the [report] shows the United States becoming a net exporter of energy during the projection period in the Reference case and in most of the sensitivity cases as well—a very different set of expectations than we imagined even five or ten years ago.”

Renewable generation more than doubles between 2017 and 2050, in EIA projections, with an average annual growth rate of 2.8 percent. EIA projections show 80 gigawatts of new wind and solar photovoltaic capacity being added between 2018 and 2021, spurred by declining capital costs and the availability of tax credits.

Energy consumption grows about 0.4 percent per year on average in the Reference case from 2017 to 2050, which is less than the rate of expected population growth (0.6 percent per year), according to the report.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

EIA: Coal-Fired Electricity Generation, Coal Production to Decrease in 2018

The Nicholas Institute for Environmental Policy Solutions at Duke University

A near record amount of coal-fired electricity is poised to go offline this year, according to recently released data from the U.S. Energy Information Administration (EIA). Set to retire in the United States this year are some 13 gigawatts (GW) at more than a dozen units—that’s an amount second only to the nearly 15 GW of coal power shut down in 2015. The falling fortunes of coal are also evident in the EIA’s projections for its production: a decline from 773 million short tons last year to 759 million in 2018 and 741 million in 2019. By contrast, natural gas production is expected to match a record set in 1970.

According to the EIA’s Short-Term Energy Outlook, coal’s share of the electricity generation mix, which only a decade ago was close to 50 percent, is projected to fall below 30 percent this year. The primary reason? Cheap natural gas, which this year could see the largest single-year increase since 2004 with the addition of roughly 20 GW of new natural gas-fired power generation. The EIA expects these trends to continue in 2019, when it projects that gas-fired plants will generate 34 percent of the country’s electricity and coal, just 28 percent.

Inexpensive and plentiful natural gas is not the only factor influencing coal plant closures. Other factors, according to the EIA, are plant age and size—most coal plants retired since 2008 have been older and smaller than their competition—changes in regional electricity use, federal or state policies that affect plant operation, state policies that require or encourage the use of certain fuels, and improving competitive generation technologies.

Other EIA forecasts for 2018: nuclear power will provide 20 percent of U.S. electricity, non-hydropower renewables, nearly 10 percent; and hydropower, slightly less than 7 percent. U.S. wind power generation capacity will rise to 96 GW, up from about 88 GW in 2017, while solar power generation capacity will hit 50 GW, up from 43 GW last year.

Chatterjee, LaFleur Discuss FERC Order

The U.S. Federal Energy Regulatory Commission’s (FERC) Neil Chatterjee said Tuesday that a new FERC investigation into grid resilience could take longer than the 90-day timeframe established by regulators last week when they unanimously rejected a Notice of Proposed Rulemaking from the Department of Energy (DOE) to change its rules to help coal and nuclear plants in the electricity markets FERC oversees.

FERC gave regional grid operators 60 days to detail how they could enhance grid resilience, after which other “interested entities” will have 30 days to reply—considerably faster than most major market reform discussions at FERC.

“One of the reasons I thought the record warranted the short-term [coal and nuclear payments] is … it’s going to take time to sort through this,” Chatterjee said during a panel discussion hosted by the Bipartisan Policy Center where he and FERC Commissioner Cheryl LaFleur discussed FERC’s Jan. 9 ruling as well as previewed the docket that the panel created to investigate regional transmission organizations (RTOs’) resilience practices. “I am under no illusion that this process will end in 90 days.”

Both Chatterjee and LaFleur were reluctant to prejudge the outcome of the proceeding or to speculate on the kind of responses that RTOs will give, but they stressed that they will continue to consider the country as a whole in making decisions to improve resiliency and reliability in the power sector. (subscription)

“We’ll see what comes forward in the docket,” said LaFleur, noting that it is possible that different proposals could come out of the different regions, which have unique challenges.

As Public Hearings Begin, Governors Voice Opposition to Offshore Drilling Plan

Ever since the Trump administration revealed a draft five-year plan that would expand oil drilling to previously protected areas in the Atlantic, Pacific and Arctic oceans, governors of nearly every state on those seaboards—including South Carolina, Rhode Island, Oregon, California, Washington, New York, New Jersey, Delaware and North Carolina—have expressed opposition. Under the proposed plan, more than 90 percent of the continental shelf would be available for drilling rights and only one out of 26 planning areas across the three oceans and the Gulf of Mexico would be entirely off limits to oil drilling.

U.S. Department of the Interior Secretary Ryan Zinke has been in talks with many of the coastal state governors since he agreed to exclude Florida from the plan days after its release. Governors and lawmakers have sent letters pointing to the importance of tourism as a reason to exclude their states from the plan—the tact taken by Florida’s governor.

“The long-term health of New York’s economy is inextricably linked to protecting our ocean resources,” New York Gov. Andrew Cuomo wrote in a letter to Zinke. “Much like Florida, New York’s ocean coast is unique and plays a vital role in our economy.”

Maine’s Gov. Paul LePage and other Gulf Coast governors who already have drilling off their shores are among those open to new exploration.

The proposal presently includes 47 lease sales from 2019 to 2024 in 25 of the nation’s 26 offshore planning areas. Among them: 19 sales off the coast of Alaska, 12 in the Gulf of Mexico, 9 in the Atlantic, and 7 in the Pacific.

This week, the public also began weighing in during the first of several meetings planned in the capitals of affected states.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

Study Reveals Climate Change’s Large, Geographically Disparate Economic Damages

The Nicholas Institute for Environmental Policy Solutions at Duke University

Last week, Republican lawmakers revived a bill aimed at stopping use of the social cost of carbon (or the social cost of any greenhouse gas) in federal rulemaking (subscription). The bill would bar the U.S. Department of Energy and U.S. Environmental Protection Agency from applying the metric in any action, going further than President Trump’s executive order, signed in March, to revoke existing guidance and disband the interagency working group that sets guidance for the metric’s use. The bill’s reintroduction comes on the heels of a new study in the journal Science that makes a major advance in calculation of the cumulative economic impacts of climate change.

The study estimates that the United States could incur damages worth 1.2 percent of gross domestic product (GDP) for every 1 degree Fahrenheit rise in global temperature. Those damages include worsening economic inequality, heat-related deaths, agricultural declines, and even increased crime. The hard-hit counties—mainly in the South—could see losses higher than 20 percent of GDP. In the worst-hit county, Florida’s Union County, losses could near 28 percent, the kind of disparity that could contribute to political instability and drive mass migration.

According to lead researcher Solomon Hsiang, an economist at the University of California, Berkeley, the most striking “takeaway message” is that “the effects of climate change on the U.S. are not the same everywhere. Where you are in the country really matters.” By which he means that climate change will move wealth away from the south and toward the north and west of the country, although he acknowledges that exact costs and their redistribution are hard to nail down because a changing climate makes the future world hard to predict.

Nonetheless, “Unmitigated climate change will be very expensive for huge regions of the United States,” said Hsiang. “If we continue on the current path, our analysis indicates it may result in the largest transfer of wealth from the poor to the rich in the country’s history.”

The main takeaway of the study for Nicholas Institute for Environmental Policy Solutions faculty fellow Billy Pizer, who wrote a perspective accompanying the study, is that it has produced “the first comprehensive estimate of climate change damages driven by state-of-the-art empirical studies of climate change impacts.”

The study team—a group of economists and climate scientists—used state-of-the-art statistical methods and 116 climate projections to price those impacts the way insurers or investors would. Specifically, they computed the real-world costs and benefits of increased temperatures, changing rainfall, rising seas and intensifying storms on agriculture, crime, health, energy demand, labor and coastal communities. In total, they computed the possible effects of 15 types of impacts for each U.S. county in 29,000 simulations.

The study appears to represent a significant improvement over earlier financial forecasts of climate change, which approximated damages for the entire country at once. The new study built its model from microeconomic studies of how variation in climate affects well-measured, and well-valued, county-level outcomes like crop yields, mortality, and energy consumption. But because the model’s algorithms emerge from observed relationships in real-world data, estimates omit many serious climate change risks, such as biodiversity loss, for which economic cost data were considered insufficient.

According to the researchers, their model is designed to continually integrate new findings and new climate model predictions, producing actionable science (subscription).

Red Team, Blue Team: Pruitt Calls for Debate of Climate Science

On Monday, a federal appeals court ruled that the U.S. Environmental Protection Agency (EPA) cannot freeze implementation of a rule requiring oil and gas companies to fix leaks of methane, a greenhouse gas, while it reconsiders that rule. The court ruling could hint at trouble for the Trump administration’s efforts to unilaterally delay regulations such as those aimed at curbing greenhouse gases. But EPA Administrator Scott Pruitt may have found a new context in which to question the need for such regulations.

Pruitt is leading a formal initiative to assess climate science using a “back-and-forth critique” by government-recruited experts. The idea is to stage “red team, blue team” exercises used by the military to identify vulnerabilities in field operations to conduct an “at-length evaluation of US climate science,” an official told ClimateWire. Other Trump administration officials are said to be discussing whether the initiative would stretch across many federal agencies that rely on such science.

“Climate science like other fields of science is constantly changing,” said EPA spokeswoman Liz Bowman. “A new, fresh, and transparent evaluation is something everyone should support doing.”

But scientists and former EPA officials worry that the debate will give a disproportionately large voice to the limited number of skeptical voices within the scientific community. And, as was pointed out by PBS, science does not operate not by debate but by peer-reviewed studies.

Energy industry executives said the approach to scientific review that Pruitt is instituting could allow a challenge to the 2009 scientifically based environmental endangerment finding that established the EPA’s legal foundation for restricting greenhouse gas emissions from mobile and stationary sources. But lawyers say successfully making that challenge could be extremely difficult.

President Outlines Energy Dominance Proposals

President Trump last week outlined a multipronged plan to increase production of and export fossil fuels, including what he described as “clean, beautiful coal.” Speaking at the Department of Energy’s Washington headquarters, he called the need for regulations “a myth” and said his new policies would reap “millions and millions of jobs and trillions of dollars in wealth.” Although he did not reference renewable energy, climate change or reducing emissions, he touted his decision to exit the Paris climate agreement and to approve the Dakota Access and Keystone XL oil pipelines.

To usher in what he dubbed “the golden era of American energy,” Trump outlined six initiatives:

  • Expanding nuclear energy
  • Lowering barriers to financing of overseas coal energy plants
  • Constructing a petroleum pipeline to Mexico
  • Increasing sales of natural gas to South Korea
  • Exporting additional natural gas from the Lake Charles liquid natural gas terminal in Louisiana
  • Opening a new offshore oil and gas leasing program.

The last initiative calls for an Interior Department rewrite of a five-year Obama-era drilling plan that had closed areas of the Arctic and Atlantic oceans to drilling. The Washington Post pointed out that the surge of onshore oil and natural gas production due to horizontal drilling has helped to lower the price of petroleum, diminishing interest in offshore drilling.

In a New York Times op-ed, former U.S. Environmental Protection Agency head (and Nicholas Institute for Environmental Policy Solutions Advisory Board chairman) William Reilly noted that drilling in those areas could come at an economic cost. “A spill in any of those waters could threaten multibillion-dollar regional economies that depend on clean oceans and coastlines,” said Reilly, who pointed out that Trump has called for reconsideration of the well control rule, which tightened controls on blowout preventers, which are designed to stop undersea oil and gas well explosions. That rule was based in part on findings of the bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, which Reilly co-chaired.