Spill Baby Spill or Blow Man Blow?
This week we are seeing two starkly different uses of offshore natural resources playing out on a national stage. In the context of emerging climate and energy legislation, its worth taking another look at the risks and costs of both as Congress and the Obama Administration deliberate on policy incentives for offshore wind and oil that are pursued through legislation or Executive Branch action.
In Louisiana, an estimated 5,000 barrels of oil a day are leaking from BP's Macondo well in the Gulf of Mexico after Transocean Ltd.'s Deepwater Horizon rig exploded a few days ago. Reports are that people in Louisiana can already smell the oil. BP is working to stop the flow of oil and experts suggest BP will need to drill a “relief well” to halt the leak. Such a mitigation process can take upwards of 3 months. BP is reportedly spending $6 million a day in this effort and preparation of two relief wells will cost an estimated $200 million. (Adding in US Government support costs, Evolution Securities suggests that the “net cost to BP of the cleanup operation so far plus the drilling of two relief wells would be around $845 million.” This figure does not necessarily address harm some experts anticipate to Louisiana coastal communities and their ecosystem services, and potential punitive damages that could emerge. The punitive damage figure for ExxonMobil as a result of the Valdez spill in Alaska was approximately $507.5 million after the Supreme Court struck down the original figure of $2.5 billion as excessive.)
Continue Reading...Jobs or Litigation?
It is now well-documented that Senator Graham has pulled back from co-sponsorship of a climate and energy bill. Whether Senator Graham gets assurances regarding sequencing of climate and energy before an immigration bill going to the Senate floor, and comes back into the fold over the next few days remains to be seen. But its fairly clear that a tough political hurdle to climb is now even more difficult than ever as a bipartisan vote that brings a few more Republicans on board becomes problematic without the Senator from South Carolina working his colleagues on that side of the aisle. If this is not turned around, the promise of green jobs in the US will make way to a season of litigation.
Continue Reading...Clean Energy Standard and Canadian Hydro1
Senator Graham has floated a “Clean Energy Standard” in place of a national “Renewable Energy Standard,” as part of his bipartisan effort to pass comprehensive climate and energy legislation with Senators Kerry and Lieberman. The provisions would create significant demand for increased use of natural gas, nuclear and carbon capture & storage alongside renewable energy. However, forgotten in this proposed standard is the role that Canadian hydropower plays in the US transition to a low carbon economy.
Hydropower produces 90 times fewer greenhouse gases than coal-fired plants and over 40 times fewer than the least carbon intensive of the thermal generation options, the natural gas combined cycle. Electricity from the Canadian province of Québec alone has contributed to reduce emissions in the Northeast region of the US by approximately 30 Mt of CO2 equivalent, from 2001 to 2008. Canada has plans to bring on significant new sources of hydropower. This energy in large part will be exported to the US utilities. All sources of hydropower energy sold in or to the United States, where such facilities are certified by regulatory authorities to have complied stringent environmental laws should qualify for clean energy standards. There is no doubt that large hydropower has its share of risks, but so do other sources of energy proposed for a clean energy standard and without the same climate benefits and Canadian hydro should not be put at a disadvantage by pending legislation.
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