Special Energy Report: Part One
Editor’s Note: What big energy issues will emerge on the reporting agenda for the year to come? To find out, the SEJ convened a panel of top-flight environmental journalists at the Wilson International Center for Scholars in Washington D.C. Jan. 25, 2013. Taking part were John Sullivan of Bloomberg BNA, Margaret Kriz Hobson of EnergyWire, Peter Behr of EnergyWire and ClimateWire, Dina Cappiello of AP, Peter Thomson of PRI’s The World and Bud Ward of The Yale Forum on Climate Change & the Media. In an edited transcript, here’s what they see coming this year and beyond.
The “Environmental Issues: What’s Trending in 2013” panel included (l. to r.) John Sullivan, Bloomberg BNA’s director of environmental news; moderator Margaret Kriz Hobson of E&E Publishing’s EnergyWire; Dina Cappiello, national environment/energy reporter at the Associated Press; Peter Behr, public policy scholar at the Wilson Center; Bud Ward, editor at the Yale Forum on Climate Change & the Media; and Peter Thomson, environmental editor at PRI’s “The World.”
Dina Cappiello: Environmental regulations are going to be used to start changing our energy portfolio. The EPA has a huge role in that. It has a bunch of power plant rules. Existing power plants are the whole enchilada, because if you look at doing greenhouse gas standards for new power plants, there are no new power plants in the pipeline. They’re all pretty clean natural gas. So until you deal with the long, multi-decade-old grandfathering of existing power plants, you’re kind of avoiding the issue. That is where the bang for the buck is.
If we don’t burn coal here, that’s great, but it’s going to go overseas and be burnt elsewhere, and the plants there are going to be probably less efficient and more polluting, and this is a much big-ger problem. That’s also something to consider in the year ahead, especially with John Kerry at State [Department]. That’s going to be a pretty interesting choice; although he personally is obviously a climate warrior legislatively, and philosophically. Coming up in international negotiations will be what mechanisms we will use to curb our greenhouse gas emissions, and without a mechanism, China’s not going to get on board. These big emitters aren’t going to get on board if we say, ‘Hey, we’re going to just do efficiency standards here and there.’ It’s not going to work. We need something bold.
John Sullivan: Keystone [XL pipeline] will be one. There are a lot of economic interests that want the pipeline to happen, but environmental groups are very concerned that that’s going to further promote the use of fossil fuels. But also flying a little bit below the radar — the coal industry is trying to export a lot of coal to China, and the administration will have to make a decision soon on the scope of the environmental assessment it’ll be doing, whether to include greenhouse gas emissions as part of the usual environmental impact statement. The EPA weighed in last year on this and said, ‘Perhaps you should take a look at greenhouse gas emissions in China from the export of coal there.’ The Army Corps of Engineers, which will have to be doing that impact statement, seems to be of a different mind, although no decision has been made yet. But it’s something we’ll be looking at, certainly.
Looking at vehicle fuel economy standards, there may be another round of standards for heavy duty vehicles coming as early as the end of this year — a proposal, anyway. EPA will also be doing new gasoline standards to try to lower the sulfur content in gasoline. Lastly, on the regulatory front, the Energy Department has a number of energy-efficiency standards that they’ve been working on for a number of years. They have been bottled up at the Office of Management and Budget under review, and the thinking is that those may be able to see the light of day.
Peter Behr: My focus has been on the regulation of the shale gas boom, hydraulic fracturing, horizontal drilling. And that’s a story,as you know, that has been written much more at the state level than at the federal level. Congress in 2005 took away from EPA the power to regulate hydraulic fracturing under the Drinking Water Act, and so the primary control and oversight of fracking and horizontal drilling and shale gas development has been at the states. Now that doesn’t mean that EPA and President Obama don’t face some tough decisions about how they really regard this shale gas resource, which can be, as is often said, a true game-changer for the U.S. energy picture, with two ifs: if it can be produced economically and profitably, and that is an open question, and second, if it can be produced in a safe and responsible way so that there are not serious spills and accidents and contamination that really knock out public confidence in this resource.
One of the challenges the administration will face is whether to revise the new source performance standards they issued last year affecting the shale gas wells and hydraulic fracturing. The rules that they have issued do not directly regulate methane emissions, and the air quality issues involving shale gas development are within the scope of what EPA can do. The interesting question here is that the standards that were issued last year don’t specifically address, or may not address, so-called wet gas development and oil development.
Now, because the price of natural gas has dropped so low, you see all of the companies are switching away from dry gas to the production of wet gas, which is methane that is also laced with ethane and butane, and so-called wet gases, which are priced in relation to oil, have a lot of value, and continue to be produced, and that’s where a lot of the drilling is going on, in search of wet gas and in search of oil. The problem is that when you get wet gas and you ship that out to make ethylene and polyethylene, you also get a fair amount of natural gas, sometimes a lot of methane. What are you going to do with it? You can flare it, and you can just vent it and let it go into the atmosphere. Methane, as you all know, is a very powerful greenhouse gas. So that’s an issue that environmentalists hope to force on the EPA and there may be lawsuits that would take that issue and put it directly on EPA’s plate.
Margaret Kriz Hobson: An issue on my plate right now in the energy field is Arctic drilling. Last summer, Shell had technical problems and was not able to secure the permits that would allow it to drill for oil. The question is, what about this year?Well, they’ve started off this year with a real bang. They had one of their drill rigs run aground in the Gulf of Alaska, and the second one has some pollution problems that they’re dealing with — they need two operating rigs in order to actually begin oil drilling in the Arctic, because you need one to back up the other in case there’s a blowout. So the oil drilling in the American Arctic, it’s very, very much up in the air this year.
Peter Thomson: China’s demand for coal, and the demand of the rest of the world for coal. Our demand for coal is shrinking con-siderably, and is at a 40-year low, in large part because of the natural gas flood, and increasing efficiency during the recession. We have lots of coal, and our coal industry wants to export it to the rest of the world. There is huge demand in China, and China’s demand for resources is going to swamp the other efforts of everybody else to deal with their own environmental issues. Australia is an analogous situation to the U.S. in terms of its politics, its demographics and economics, and they have been addressing climate change and are way ahead of us. They have passed a carbon tax after a huge battle, which was very much like our battle here.
They are making big pushes into renewable energy, but they have a huge coal industry there — and they are making big efforts to start shipping their coal to China and elsewhere. Which one of those is going to have a bigger effect on Australia’s climate footprint? That’s one of the big things that is going to be played out, as it is here. Fracking is not just a big issue here in the U.S.; it is exploding all around the world.
In some respects, this has really blown the idea of oil out of the water. The problem now is that we have too much. As far as we look into the future we’ve got more than we could possibly burn. So there are going to be a lot of battles about fracking and energy extraction around the world. There are a lot of battles over nuclear power. Two really interesting laboratories for the nuclear question and the balance against renewables are Japan and Germany. Japan is an involuntary laboratory; they are in an emergency situation. Germany is in a voluntary situation; they are trying to phase out nuclear power. They are both having growing pains and tensions around both of those; they are going to be interesting places to look at to see how countries wean themselves off of these technologies that have huge sunken costs and institutional momentum behind them.
On energy, there are a lot of interesting innovations. There is interesting stuff going on below the radar about renewable energy. In many places, there were pushes by NGOs and governments to try to find ways to get solar, wind and other renewable energies on line. They haven’t worked out very well. What you are finding in places like India and Pakistan, Africa, East Africa and elsewhere is that failures of governments to bring reliable energy to their people are actually creating a market for renewable energy among people who can afford it. And that is happening on all kinds of different levels, from rich people in Pakistan to rural folks in Kenya. People are starting to find ways to buy this stuff because they can’t get it through the market, and that is a really interesting shift over the last few years.
Thanks to Wilson Center’s Carolyn Lamere and Maria Prebble for their transcription of the panel. To view a video of the panel in its entirety and to read an additional news writeup, click here. 
* From the quarterly newsletter SEJournal, Spring 2013.  Each new issue of SEJournal is available to members and subscribers only; find subscription information here  or learn how to join SEJ.  Past issues are archived for the public here.