Fracking: The Economy Vs. The Environment

We would be totally remiss if we did not present all sides to the debate we are now engaging – starting with a discussion of the most recent parry on the natural gas front.

It seems, as of an April 11 story in the New York Times, that natural gas, after about a decade of being hyped as a “clean” energy source (by both the industry and the treehuggers) is not as environmentally squeaky as it seems.

According to a study done by a couple of (wouldn’t you know it) professors, including ones who work at places like Cornell, natural gas production can produce a great many environmental problems – ones that could seriously challenge the effects of natural gas use (which in terms of usage, has about half the carbon footprint of coal and 30% less than petroleum).

The issue, it appears, is one that could in effect splinter a budding coalition of enviros and industry (for once). The controversy stems from the amount (and kind) of gases that are also released into the atmosphere during the drilling process. Staring with Methane, a heat-trapping gas far more “efficient” than CO2.

Here’s the rub. Uncontained Methane release on the industrial level, apparently then creates an impact as dirty as coal. We assume that the beancounters had no way of estimating the amount of “natural” Methane produced by the other large “polluter” in this area (cows) however the first results sound pretty daunting

The issue in particular starts with a fairly controversial practice to remove the gas, particularly from shale, called “fracking.” We are not familiar enough with the practice environmentally to have much say. However, we would suggest, given our experience with something that Americans outside of Gulf States and maybe Alaska have but few other Americans seem to be aware of, that there is a considerable “off-shore” gas drilling industry in this country as well as the North Atlantic. And there is no such thing as an entirely “safe” or “green” method of energy production and use – even today – from even “clean” sources. After all, hydro-electric power (for one) is known to be very environmentally destructive too even if there is no release of greenhouse gasses. There are also major problems right now we would argue, in the middle of a solar thermal plant in the desert. The cleantech movement has many environmental problems. We also note that Clean Energy Fuels, for one, the natural gas refueling company started by Pickens, does specialize in Methane collection too. Given this dual opportunity, we highly doubt that the modern gas wells at least, particularly the ones run by this company, would throw something away that represents a potential profit center.

There have been some dark hints by certain enviros that in fact the gas produced by “fracking” is actually a plot to extract cheap fuel for export and that indeed might very well be the dark “hidden” motives behind the cabal that is pushing this legislation. We see things a little differently. The reality is that in places like India (for example) where pollution is as much of an economic issue as it is here if not an environmental one (see the fascinating study of Delhi taxis and other vehicles we have attached to the site), there is no city today globally where environmental pollution of any kind is off the radar. While CNG has its place, we also know that just about everyone, even in CNG fuel using countries (like India) there will always be another (potentially cheaper) option. Starting with electric vehicles, which we are also a huge fan of, but having lived in England for quite some years, we also know that electric vehicles can’t be too heavy. The beloved milk carts still in use daily by the Brits (for one) have been electric since the 1960’s. They also have top speeds about about 15 mph.

We are going to take the position at this time that frankly any alternative to petroleum is something to be heralded. Given CNG’s obvious similarity and transferability to heavy vehicles (in particular) at a time when the jump in petroleum prices will most certainly doom the “Great Recession” to linger, not to mention gas’ reputation as one solution to America’s energy if not economic crisis (not the only one), we will keep an eye on future studies and developments. This study was the first of its kind, however it did address an issue of some concern in professional circles. Like any kind of energy, we suggest that high safety standards if not (we know, groans are in the audience) regulation to help contain the negative outputs of natural gas drilling. This of course includes significant regulation on water supplies and aquifer levels as well. We won’t engage in a policy discussion here about the privatization of water, but as we are fond of reminding people, Goldman Sachs (for one) thinks “water is the next oil.” It is no surprise then that Pickens, along with other (corporate) supporters of this bill, including apparently one of the largest landholders in the United States (Ted Turner) would also be looking to profit from water sales. We are not entirely uninvolved in that issue either and our stance at this time is that regulation works, it should be followed and that the growing global awareness about water rights as an issue will be, we think a very good moderating influence on those whose sole interest is in privatization rather than economic justice and quality issues.

As a childhood resident of Great Britain, where natural gas has always been a much higher profile energy source than the U.S. (and petroleum has always been far more expensive relative to incomes), the switch to natural gas for certainly heavier transportation as a “transition” fuel, if not heating and most certainly cooking, is one that is natural as breathing. Hopefully the effects of drilling, particularly in places like shale grounds, will not prove to be so environmentally damaging that natural gas cannot serve as a vital “intermediary” energy source if not serve as one of a patchwork of the alt fuel portfolio.

We think at this point at least that with the right inspection and regulation standards if not a push for new technological development to capture all the attendant gasses released during gas drilling and the proper treatment of “extraction water” will help improve if not standardize the production industry. Given this, we think at this time, that CNG in particular still remains a very viable and exciting “alt”.

Just the cost differential alone will make a huge dent in both economic stimulation as well as holding down the costs of other things that are heavily petroleum and transportation dependent, from the cost of food to the cost of government. In the space we hope opens up here with all those cost savings (and we’ll do an economic breakdown in another blog) that leaves lots of disposable income to invest in new technology.

Including, we presuppose, the redesign of the combustion engine to a far more sustainable if not efficient driver of transportation across the entire range of options now coming online.

H.R. 1380 Refuels the Pace of Change for CNG Powered Vehicles

Once upon a time, when dinosaurs ruled the earth (circa the 1980’s) the nation reveled in its superiority over the Russians, if not theoretically conquering the recessionary (energy strapped) 1970’s. During such wacky times, the nation if not our policy makers also did a couple of very stupid things.

What’s new, right?

Well, in terms of energy specifically, it’s nice to say that in a time when we seem to be celebrating fifty year centennials of “rolling back” policy initiatives of all kinds, we appear to be on the brink of a supposedly “progressive” if not “green” watershed that would undo a great deal of the damage done to alt energy during the (sorry to tag this in such a way) Reagan era. Conceived of and supported this time, by the way, by a bunch of ostensible “conservative” if not “Texan” Republicans. Among many others. We won’t tell the former that it’s also the fifty year anniversary of the Freedom Rides this May (only kidding) but maybe the ghosts of civil rights past have come back to steer this bill’s passage (this time) uneventfully to the President’s desk for signature.

The 1980’s, you may recall, was a time when the removal of solar panels from the White House was considered the coup-de-grâce or the nail in the coffin for the “treehuggers” if not “progressives” and Lord help us, “environmentalists.” (There were no “sustainability specialists” in those days – they just worked for the EPA). This bill amends the tax code of 1986 to rev up the pace of adoption of CNG powered “alt” if not “green” transportation.

H.R. 1380, introduced last week with north of 70 original co-sponsors (and way, way over the centennial mark now) and referred to the Energy and Commerce Committee, undoes a great deal of that damage.

Specifically the bill focuses on heavy duty and fleet vehicles, some of the worst guzzlers on the planet and also the most efficient users of CNG (which in studies to date has been shown to be the best alt fuel for heavier vehicles).

The act essentially creates incentives at all points of the chain to spread the use and refueling infrastructure for CNG – starting with vehicle manufacture and going to tax credits for property to build the pumps.

It also has some very nice give-backs for everyone who buys a CNG fueled vehicle. The heavier the better. But for our purposes, it’s still nice to know that Uncle Sam has a $7,500 tax credit in store just for vehicle purchase on the low end.

What appears to be an even greater incentive for heavy duty fleet operators however, is that apparently, the tax credit can be applied to “converted vehicles,” thus going an even longer way to off-setting if not essentially covering the cost of a retrofit. We see this business alone creating jobs for days at least in the first decade or so of our energy conversion away from petroleum APY (after peak year).

There are a lot of other goodies involved for everyone gung-ho about this particular market niche right now. We encourage those so curious to research the text of the bill online and we of course will be keeping an eye on its journey through the House and Senate this time. This would be apparently the third time the forces behind this bill, starting with T. Boone Pickens, have tried to get this past Congress. It has been repeatedly bundled in the past with larger omnibus environmental and clean energy bills that went south. Hopefully on its own, this time, it will finally pass into law. With this amount of original (bi-partisan) co-sponsors, potentially the Hill may have a very green spring if not year.

This passage of this bill alone, we anticipate, will do unbelievable wonders to spur the overall economy. Nationally. We think it will also have a huge impact on this area in particular.

We hope to be a long and steady passenger on that wave as much as we hope to be a driver of innovation and change ourselves.

For more information about the bill as it travels through the legislative process, along with some articles that savvy readers may recognize, go to http://www.opencongress.org/bill/112-h1380/show

Green Tipping Points

There is an inevitability to the direction we are headed, even if for example “we” as Freedom Riders do not succeed in our current venture. The realities if not greenbacks of “real-politik” if not directly in consumer’s (and government’s) wallets are dictating the lockstep of our strategic guidance.

This is no-where more true right now than in the “green” action that is going on in Washington D.C. at the moment, ostensibly even with cutbacks at such agencies as the EPA. In another classic “behind the scenes,” not to mention “I’m not an insider but I play the game” hall and vote jockeying move by Obama, there are some political realities lining up that are decidedly bipartisan and seem to meet everybody’s goals at the moment. This starts with all the careful posturing of the President yesterday about the cuts he has “allowed” in the budget to date along with the “invest in the future” rhetoric. It also happened about a week ago with far less drama on the (mostly) Republican side of the House with the introduction of H.R. 1380, the so-called “Natural Gas Act.” We will examine that piece of nascent legislation in another post no doubt. The White House has already praised the vehicle we plan to use (the MV-1) in a press statement we link to elsewhere on this site. It boggles the mind in the spider-web sensitivity of the White House to the Hill, particularly in this administration, that this legislation didn’t at least make a mention at some White House briefing in the last week. Nor, we surmise, was it entirely unrelated to Obama’s subsequent remarks and actions on the federal budget negotiations.

On the local level, we see these federal developments as a boon (not the one in Watauga County) for North Carolina and even more specifically Charlotte. The region is staggering right now under a very high 11% unemployment rate (the fourth highest of any city in the country), that will prove to be stubborn to combat unless some kind of investment and retraining of a large segment of the population occurs quickly. It will also be inevitably helped by creating opportunities for this cash-strapped (and very petroleum dependent) region to cut their transportation energy costs dramatically. Charlotte is also, for those without the regional knowledge, one of the major North-South transportation hubs for long-haul truckers on the East Coast. This legislation and Charlotte’s early mover advantage in converting to CNG city-wide, could directly (and positively) impact the price of many different commodities (starting with food) on a regional (as in East Coast) basis if not nationally.

If there was ever a “ground zero” for the “green tipping point” to make an (excuse the mixed metaphors) economic “atomic blast” the size of both Hiroshima and Nagasaki domestically with the least amount of other kinds of investment (both public and private), we believe that Charlotte would be it.

We continue to push forwards on all fronts to help make our company one of the ones that is in the forefront of the coming “green” revolution that we hope begins to bloom right along with the azaleas this year.