If you externalize the costs of a business activity, it means other people pay the costs--environmental, social and otherwise--and you get the profits. It goes on all the time in extractive industries such as oil and natural gas and mining. And, it is also a natural strategy for manufacturers who dump their pollution into the air and the water. It's even practiced in finance where the executives of Wall Street banks have managed to collect the bonuses made off a phony boom in the last decade and saddle taxpayers with the losses of the inevitable bust caused by bad and often fraudulent loans, misleading derivative contracts, and leveraged speculation in stocks and commodities.
If the loopholes are there, you can be assured that people in business will take advantages of them. That's exactly what is happening in the business of shale gas drilling. Drillers are exempt from federal clean air and water regulations under a bill shepherded through Congress in 2005 by none other former Halliburton CEO Dick Cheney in his capacity as the then vice president of the United States. (Halliburton is one of the world's largest providers of drilling fluids for shale gas drilling and other oil and gas drilling operations.) That means the drillers can externalize the environmental costs of these hazardous fluids and other materials needed to fracture the shale and thereby free the natural gas. They can foist those costs on nearby residents in the form of ruined water supplies, toxic air pollution, poisoned land, and health problems for humans and animals.
The environmental and health horrors associated with shale gas drilling are now in the news on a daily basis. But I have begun to think about the issue in another way. All of these externalized costs have an energy cost. And, the toxic fracturing fluid--millions of gallons of which are pumped into each and every shale gas well--will stretch out the time frame during which such costs are borne. No one knows what will happen to the half of that fluid which never returns to the surface during operations. There is concern that it could migrate to drinking water aquifers and destroy the drinking water not just for the few who happen to live near a drilling site, but for people living in huge swaths of the United States by polluting water sources for large cities such as New York.
Now, of course, that water could be cleaned up if it becomes toxic. Already shale gas drillers are having to provide filtering systems for people whose well water has become contaminated. In some cases, even this isn't enough, and water must now be trucked in to families whose water is no longer fit to drink even with filtering.
In order to judge whether shale gas will provide any net energy to society, we must first decide where to set its system boundaries. It is hard to know exactly where to stop spatially: Should we, for example, include the energy needs of a family dependent on a worker at a subcontractor that provides software services to the driller? But, it is even harder to know what time frame to use.
One thing is certain. The legacy energy costs of doing shale gas drilling will not disappear anytime soon. The country and its people could be paying the externalized costs of such drilling decades after it ceases to provide any material benefit to society.
If New York city is forced to expend considerable energy to purify its water to clean out toxic chemicals leaching from wells in its watershed 50 years from now, how shall we then judge the presumed bounty of energy that shale gas supposedly represents?
The same kinds of questions have been raised about nuclear energy. If one takes into account the entire energy cost over time of building, operating, decommissioning, and then protecting decommissioned plants and their wastes--wastes that will remain dangerous for conceivably tens of thousands of years--it is possible to understand why some people claim that nuclear energy provides no net energy to society. Rather, it burdens future generations with huge legacy energy costs. We who are alive today get to externalize the energy costs of nuclear power by foisting them on future generations. This is probably the only way that one can consider nuclear power--as it is currently configured--an energy source rather than an energy sink.
I believe we may ultimately find that shale gas is nothing but an energy sink. It will provide net energy for a while to those who are living now while burdening future generations with huge cleanup costs that, in terms of energy, may equal or exceed the energy gain we are currently receiving from this supposedly "clean" energy source.
Kurt,
ReplyDeleteYour comments about nuclear energy are silly. The French provide 80% of their power via nuclear and one of the largest exports of electrical power in the world.
You should provide figures supporting your position or retract.
Please check your facts.
ReplyDeleteFracking for shale gas is exempt from CWA in the same way that a septic tank is exempt: Neither is covered.
There is, in fact, no specific exemption from CWA, or from CAA, or from EPCRA, or from CERCLA -- despite the mythology of 20 kabillion fully propagandized web sites.
And on the so-called "Halliburton loophole" from SDWA... read about the (successful) Alabama coalbed methane lawsuit which triggered it.
Truly, the drilling opposition has come unglued from the actual facts.
The accepted modus operandi has long been to postpone and/or externalize the costs, ethics and morals be damned. By those criteria, the shale folks are a savvy crowd. The fact that the system as a whole ultimately falls apart when manipulated thus, is offset by the assiduous feathernig of one's own nest.
ReplyDeleteI don't see how the percentage of France's nuclear power disproves what Kurt has said. When the last nuclear plant shuts down and there is no more electricity or dancing in France, the fiddler must still be paid by many succeeding generations.
ReplyDeleteIt has been shown how French (and others) nuclear waste is shipped abroad to be disposed off illegally (for instance http://en.wikipedia.org/wiki/Radioactive_waste_dumping_by_the_'Ndrangheta).
ReplyDeleteAs for France being a net exporter of electricity : no more during peak need.
"For the first time since the winter of 1982-1983, France has been in October 2009 a net importer of electricity from its neighbors, a situation caused by the [temporary] shut-down of several nuclear power stations as well as a prolongued dry period that has reduced the electricity production by hydro power stations.
Since the beginning of the new millennium: the consumption of electricity grows rapidly due to the fast increase of electric heating systems while few new nuclear power stations have been constructed. Since then, France has been importing electricity during peak hours (evenings during winter months) while exporting electricity during other times. For this reason, the net export figures that France achieved in 2008 are the weakest since 1990.
"
It is an interesting and important way to think about the energy industry. Unfortunately, one can find this claim of negative return on energy (nRoE) pretty much for every engery "source" (be it oil sand, nuclear, solar, wind, natural gas, ethanol etc.). And it seems to me that the most determinant factor of which energy "source" supposedly have a NRoE is the personal interest of the institution which published the study.
ReplyDeleteSince there are so many free parameter nobody can resonably predict that I can make this claim for any energy source you can name.
Who knows what technology will be invented to more efficiently clean water or store nuclear waste. Who knows how long you will have to maintain these measures and what interest rate to use in order to calculate the present value today?
Look at who is publishing what and do not cherry pick the studies which reflect your personal interest!
I know it is hard but keep trying ...
Anonymous,
ReplyDeleteTwo points.
First, EDF underwent a major maintenance program that involved shutting down a number of nuclear powers from 2007 through 2010.
Nuclear power is cost effective and we know because the costs are largely paid by the end users. The French system is transparent.
Nuclear power has a better safety and environmental than any fossil fuel: fewer deaths, less pollution, zero CO2 emissions.
France has been the largest net electricy exporter for the last thirty years. Picking an outlier like 2009 doesn't impress me.
France is also one of the lowest CO2 emitters on a per capita basis. Why nuclear and an excellent public transportation system that obviates the need to own a car.
As for the waste, the French recycle most of their waste. And the storage costs are quite low.
In a few years global oil production will begin to decline. Between skyrocketing oil prices and global warming, nuclear power will be a clear winner.
PS: Wind and solar power will remain niche players.
Look at what's really coming out of shale. It's not the gas, it's the NGL and condensates that are important. Peak conventional crude was back in 2005 - 2006 and now we are living off 15 mbd of replacement liquids, much of which is from shale. See TOD http://www.theoildrum.com/node/7253
ReplyDeleteNaturally, the apologists for the shale gas industry never address my central concern: Whatever happens to the fracturing fluids which remain underground? No one knows, and, of course, for the industry, it's not their problem. It's somebody else's, and that's just my point about externalizing the costs.
ReplyDeleteCommenter Daniel seems to believe that there are studies which show that solar and wind energy provide no net energy to society, but he cites no such studies.
Most studies that do address net energy only discuss the energy expended during the life cycle of the technology. For a wind tower it might be 20 or 30 years. For a nuclear power plant, it might be 40 or 50 years, and perhaps up to 80 years.
The point is, of course, that this analysis doesn't say what energy is expended after that. With wind power, it might be the disposal or recycling of an antiquated unit. With nuclear it is the care and guarding of decommissioned plants and wastes for hundreds of centuries. That implies a lot of energy expended by future generations.
I don't doubt that if you limit the time factor in a net energy analysis to the life cycle of a nuclear plant up through decommissioning that you get a significant amount of net energy, probably around 11 to 1. But that's just my point. Once you go beyond decommissioning you get no more energy return, only energy input to care for and guard the plant and its wastes. That means that every day the ratio ticks down. In other words, people alive after the decommissioning pay the costs including energy costs without receiving any of the benefit.
There are other forms of nuclear power, particularly, molten salt reactors using thorium which might have avoided much of this problem. But the world chose uranium reactors instead (primarily because they have a dual use for civilian and military purposes) and so we are saddled with these extremely long-lived costs to society.
Thanks to Anonymous for confirming my point that shale gas drillers are exempt from nearly all federal clean air and water regulations. If they aren't covered, that means they're exempt.
He or she also characterizes me as an opponent to drilling. What I oppose is externalizing the environmental costs of drilling and foisting them onto the public and future generations.
Anonymous argues in a disingenuous way by telling us that shale gas drilling is not exempt, but rather not covered. It's not covered, of course, because at the time the laws he refers to were written, it was never anticipated that such fracturing would be done in the way it is being done in shale gas fields.
ReplyDeleteHe pretends that the Safe Drinking Water Act also makes no mention of an exemption. But the Energy Policy Act of 2005 specifically amends this act to exempt underground injection for fracturing purposes. Notice the word "excludes" and what follows. Here is the language:
Paragraph (1) of section 1421(d) of the Safe Drinking Water Act (42 U.S.C. 300h(d)) is amended to read as follows:
‘‘(1) UNDERGROUND INJECTION.—The term ‘underground injection’—
‘‘(A) means the subsurface emplacement of fluids by well injection; and
‘‘(B) excludes—
‘‘(i) the underground injection of natural gas for purposes of storage; and
‘‘(ii) the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.’’
You can download a copy of the act here and look it up for yourself on page 102.
The recently-deceased Dr. David Fleming produced an analysis which concluded that nuclear energy may indeed be at the point of becoming an energy sink, if the system boundaries are set as Kurt suggests.
ReplyDeleteSee: http://www.theleaneconomyconnection.net/nuclear/
Kurt,
ReplyDeleteI've come to think of examples like these legacy costs as a reduction of human carrying capacity, in the same sense as defined by William Catton (post-carbon carrying capacity). Another terminology I've seen is "sacrifice zones."
Don't feel too bad about getting criticism from pro-nuclear folks. I had years of experience in the U.S. advanced nuclear research program (including reactor recycle of long-lived radionuclides), yet changed my attitude toward nuclear development after the breakup of the former soviet union. I concluded that humans are simply not highly enough evolved to be messing with technologies that have legacy periods of hundreds to thousands of years. Our brains apparently discount the future so badly that our species cannot deal with long-term issues. Still, to someone involved in the business, it was a sweet technology and very interesting to have been involved with. Even so, I took major flak from my old nuclear friends for publishing my views in a very minor newsletter. I felt like a heretic.
cheers,
John Rawlins
For all practical purposes, shale gas didn't exist 10 years ago. It was created by science and technology.
ReplyDeleteShale gas will never be an energy sink, because the energy from shale gas will fuel the development of new fuel sources.
This has been the pattern since the start of the industrial revolution.