Jun 03, 2016 - 4:45pm

How Regulators are Helping the 'Keep It In the Ground' Movement


Senior Editor, Digital Content

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Natural gas pipes in Bismarck, North Dakota.

If fossil fuel opponents can’t “keep it in the ground” and stop oil, natural gas, and coal development, then the next best thing in their anti-energy march is ensuring that energy can't go to where it’s needed.

After President Barack Obama refused to permit the construction of the Keystone XL pipeline, fossil fuel opponents learned from their success by vigorously targeting other energy infrastructure projects and pressuring regulators to throw up roadblocks. The result, as The Wall Street Journal reports, is billions of dollars in missed opportunities that will hamper the economy:

Many major fossil-fuel projects across the U.S., from pipelines to export terminals, have been shelved or significantly delayed because of a confluence of new regulations, grass-roots opposition and a drop in energy prices.

Overall, more than a dozen projects, worth about $33 billion, have been either rejected by regulators or withdrawn by developers since 2012, with billions more tied up in projects still in regulatory limbo.

Take natural gas pipelines. America’s largest source of natural gas, the Marcellus Shale, is only a few hundred miles away from densely populated states in the Northeast, but it might as well be on another planet if pipelines can’t be built to get that energy to consumers. With electricity generation relying more on natural gas, this problem is already hitting households and businesses in their wallets:

Gordon van Welie, president and CEO of ISO-New England, the region’s power grid operator, said such projects are badly needed. Residential consumers in New York and New England paid between 5% and 41% more than the national average for natural gas in March, the latest month for which data were available. They also paid more for electricity, which itself is increasingly made with natural gas.

But finding ways to move gas into the Northeast has proven difficult. Matthew Piatek, an associate director at consulting firm IHS Energy, said some natural-gas pipeline projects have been delayed by more than a year-and-a-half.

Without new infrastructure, Mr. Piatek said, “certain areas will need to rely on higher-cost sources.”

Despite the Northeast having some of the highest electricity prices in the nation, pipeline projects are being blocked. In May, “New York regulators refused to issue a water quality permit for Constitution, a pipeline to move natural gas out of Pennsylvania to New York, as well other New England markets,” the Journal reports.

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Across the country in the Pacific Northwest, coal exports projects are also running into trouble:

In May, the U.S. Army Corps of Engineers rejected a proposed $850 million coal-export terminal proposed for Cherry Point, Wash., a forested, coastal area two hours north of Seattle where two oil refineries and an aluminum facility operate.

Not mentioned in the story is another project proposed by Millennium Bulk Terminals. As Dan Byers of the U.S. Chamber’s Institute for 21st Century Energy explained, Washington State regulators made an unprecedented demand that the company buy carbon offset credits for the “carbon dioxide that will be emitted annually in Asia when the exported coal is used for electricity generation.”

This would set a dangerous precedent, Byers writes:

For decades, the scope of environmental permitting has rightly focused on the site itself, not the product being sold or what happens to it thousands of miles away from the facility under review. A growing push from “keep it in the ground” advocates threatens to impose global life-cycle carbon considerations into EIS reviews of all kinds—be they export facilities, pipelines, exploration and production activities, or even just roads. These requirements will often make projects economically infeasible. For example, at a modest carbon credit price of $20 per ton, Millennium’s 1.3 million tons of additional emissions would essentially cost port owners more than $25 million per year. That amounts to what is effectively an enormous export tariff! Worse, it is not far-fetched to envision environmental extremists working to impose similar requirements on an endless range of other exported products. The implications for oil and natural gas exports are obvious, but what about cars or airplanes? As with coal, their use also results in overseas emissions. What about heavy machinery? Medical equipment? Refrigerators? Computers and electronics? Even agriculture? The same logic applies—use of all these products requires significant amounts of energy, and that energy increases carbon emissions.

Now, there have been some wins--Kinder Morgan won approval to build a liquefied natural gas export facility in Georgia, and Iowa regulators are prepared to approved a pipeline that will transport oil from North Dakota—but activists continue to target necessary energy infrastructure in its extreme “keep it in the ground” campaign to stop American’s from using our energy abundance, and whether they realize it or not, regulators are helping them.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.