Tuesday, 14 May 2013

On Fracking, the Obama Administration, and Climate Change

Greenwire reported recently that Rep. Rush Holt, a physicist and a Democratic Congressman who represents the district in which I grew up in New Jersey, has complained that the Obama Administration's disposition to hydraulic fracturing, or "fracking" on BLM land is overly generous to the oil and gas industries. He has a point. The federal government may lack the jurisdiction to do much regulating of fracking on non-federal lands (see work by my FSU colleague, Hannah Wiseman), it certainly can require firms on fracking on federal land to comply with construction standards and disclose fracking fluids. A rule released last year for fracking on BLM lands was withdrawn after industry complaints that it was going to be too costly. Really? A seminar paper written by one of my law students, Kaitlin Monaghan, dissected the cost-benefit analysis undertaken by the BLM in arriving at its rule. She found that the cost-benefit analysis was fundamentally biased against environmental values. In the analysis, the BLM assumed that the environmental benefits of regulating -- of either/both requiring construction standards and disclosing fracking materials -- consisted of the costs of, in a "low damage" case (only contaminating one or a few wells), just the cost of drilling a new well. In other words, the BLM assumes that it would be costless to leave for dead an existing water well, as long as it was "small." In a "high damage" case -- extensive contamination of a large aquifer or other groundwater source -- the BLM assumed that the cost was remediation of that water source. Missing from that benefit accounting is the harm that would occur between the time of actual contamination and the completion of the remediation. Would people be harmed by consumption of that water in the meantime? Would there be any interim loss of use by farmers or other water users? Would there be any ecological harm in the meantime? The BLM's answer would apparently be "nope."

I've often wondered, beyond Dick Cheney's "Halliburton exemption" if the Obama administration really was a little too sweet on fracking. Why would that be? My guess is that with the failure of Congress to pass federal greenhouse gas legislation, with failing efforts to construct any meaningful international regime, and with the reality that even if the United States manages to reduce its reliance on coal (not a done deal) other nations may not (the European Union has seen an uptick in coal consumption), the Obama administration has quietly decided that natural gas is the carrot they will offer other countries to reduce their greenhouse gas emissions. Combustion of natural gas emits about half the carbon dioxide per unit of energy produced as does coal, and has been frequently, sometimes over-enthusiastically, as a "bridge fuel." So, if you can't get China to reduce its carbon footprint using sticks, how about using carrots? Instead of futilely browbeating the Chinese into weaning itself from coal, why not export cheap natural gas? In the United States, the fracking revolution has accomplished what decades of political fighting has not -- induced electric utilities to switch from coal to natural gas. Fair enough, but there are limits to the carrot approach. Coal is already pretty cheap, so introducing natural gas as a cheaper fuel has its limits. There is always this pushing-on-a-string problem with trying to induce desirable behavior through carrots instead of sticks.