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SEPTEMBER 1, 2010 | CF In The News by COMMONWEALTH FOUNDATION
Solar Subsidies Sink State
Taxpayer grants and mandates for alternative energy undermine Pennsylvania economy
The Commonwealth Foundation expresses its displeasure with Gov. Rendell's pronouncement today of awarding more taxpayer funds for solar energy projects and advocating an increase in a mandate to buy more solar energy.
AUGUST 31, 2010 | Commentary by ELIZABETH STELLE
Traditional Energy Fuels Pennsylvania's Economy
Pennsylvania has always been a leading provider of America's energy. From timber and coal to the nation's first commercial oil well, and now the Marcellus Shale boom, traditional energy is vital to our state's economy. But these industries, and the prosperity that accompanied them, are now threatened because they have become politically
JULY 16, 2010 | News Release by COMMONWEALTH FOUNDATION
CF Responds to PennFuture Demands
A July 14, 2010 letter from PennFuture's attorney claimed the Commonwealth Foundation's Policy Brief, "PennFuture's Lobbying: Hypocritical, unethical, and possibly illegal," contained three inaccuracies and demanded retraction. The Commonwealth Foundation responded on July 16, 2010.
Recent Blog Posts
AUGUST 31, 2010
Coal Faces an Onslaught of New Regulations
Debate over new regulations by the EPA puts the Pennsylvania coal industry at a crossroads. Last week, experts met in Philadelphia to discuss a new ruling known as the Clean Air Interstate Rule. The measure requires 31 states, from Massachusetts to Texas, to reduce sulfur dioxide emissions from 2005 levels by 71% and nitrogen oxide emissions by 52% by 2014.
The impact on the coal industry would be significant, forcing many small and older coal-fired generation plants to close. Doug Biden, President of the Electric Power Generation Association, noted about 65% of Pennsylvania's coal-fired electricity capacity already meets or exceeds the standards set forth by the EPA; however, older and smaller plants do not.
While the Philadelphia Inquirer touts the new ruling as a way to save billions on health care costs brought on by asthma and other lung problems, there are also significant disadvantages. The new regulations are expected to cost plants in Pennsylvania a total of $2.8 billion dollars, an insurmountable amount for some of the state's oldest plants. And companies contend the actual cost of regulations will be much higher.
It's likely that over time, the industry would have closed older plants and continued upgrades. For example, PPL recently spent $1.4 billion for pollution controls on its 1961 plant in York County and Montour plant built in 1972. Sulphur dioxide emissions at Montour fell 88% - from 128,000 tons in 2007 to 15,000 tons in 2009.
But forcing large emission reductions immediately will not only result in lost jobs, as plants close, but higher electricity prices -- hurting all businesses. Jeff Holmstead, a former EPA official who authored the original interstate rule, said it was not clear whether utilities will be able meet the new standards while still providing affordable and reliable electric power.
See my commentary today on the inconsistency of punishing traditional energy while offering corporate welfare for alternative energy.
posted by ELIZABETH STELLE | 01:30 PM | 0 comment
AUGUST 16, 2010
Marcellus Shale: One Study Goes Beyond the Hype
A recent study that looks at the environmental and regulatory issues surrounding Marcellus Shale gas is a refreshing change of pace from the attacks and emotionally charged analyses.
Frac Attack: Risks, Hype, and Financial Reality of Hydraulic Fracturing in the Shale Plays looks at the future Marcellus Shale development and makes some interesting predictions:
- A federal or New York state drilling ban is unlikely, while a ban is Pennsylvania is highly unlikely given the state's reliance on state land leases to partially fund this year's budget.
- In wake of the BP oil spill, new regulation is likely; however, the authors doubt Congress will move before the new EPA study on fracing is completed sometime in 2012.
- Compliance and environmental costs will increase for drillers regardless of regulation, since many are attempting to preempt future regulation by improving practices.
- Without federal regulation, this could add $200,000 to $500,000 per well. With federal regulation, an additional $125,000 to $250,000 on top of that is likely.
- The EPA study will most likely focus on health risks from sloppy drilling procedures.
- Environmental opposition will continue to escalate because:
Wide scale adoption of newly abundant, cheap natural gas throws off a mass embrace of renewable energy for a generation. Even if attacking gas means a short‐term win for coal and foreign energy, environmentalists' longer‐term agenda is weaning the country off fossil fuels.
The study also narrows in on Pennsylvania suggesting:
- Leakage from poorly cemented casing when drillers hit shallow gas zones is a significant problem, and more companies now test for methane in water before they drill. Some companies estimate methane is already in 20% of water wells.
- In North Central and Southwest PA, permitting by the Susquehanna River Basin Commission
has gotten faster and more efficient. In fact, is now able to scrutinize permits more carefully without long delays. - Unfortunately, the situation is very different in Northeast PA, where drilling is at a standstill. The Delaware River Basin Commission is holding up all new permits in Northeastern Pennsylvania while it reviews its regulations on fracing. The DRBC expects to have draft regulations out by summer's end, but given the review period, 2010 drilling is highly unlikely.
Finally, the report compiles a list of the major studies used on both sides of the debate, and identifies 13 major incidents of contamination linked (or at least claimed to be linked) to Marcellus drilling.
Important here is the distinction between contamination from hydraulic fracturing (which has never occurred, according to the EPA and state environmental agencies) and preexisting contamination from methane or spills and accidents on the surface. The later two are often what opponents mistakenly ascribe to the hydraulic fracturing process.
posted by ELIZABETH STELLE | 01:30 PM | 0 comment
AUGUST 10, 2010
How Attractive is Pennsylvania Drilling?
Pop quiz: Drilling in Pennsylvania is as attractive as drilling in A) Arkansas B) Kansas or C) Cambodia?
The correct answer is Cambodia.
Currently, the Keystone State is one of the least attractive places to drill in the nation--and getting worse. According to the Fraser Institute's 2010 Global Petroleum Survey, Pennsylvania ranks 66 out of 133 jurisdictions worldwide. The only US states worse off are: Alaska (68), California (87), Florida (100), and New York (102). These states all rank in the survey's less desirable to investors category, along with places such as Quebec, Uganda, and Syria.
The report questions industry experts on each jurisdiction's attractiveness for oil and gas exploration based on factors such as regulatory burden, tax rates, and security risks. Interestingly, the Commonwealth dropped 7 places from the 2009 survey.
Legislators should keep this in mind as they work to enact a severance tax on natural gas by the Oct. 1 "deadline." A tax will erect greater barriers to returning economic prosperity to the state.
posted by KATRINA CURRIE | 00:55 PM | 0 comment
