After weeks of waiting to see what would come out of the EPA transition team headed by Myron Ebell – a renowned climate change denier – it appeared for a while that President-elect Trump might surprise and head towards the middle of the road. A meeting early this week with Al Gore gave hope to some that Trump would heed the warnings of the majority of the scientific community and moderate his thinking on climate change.
Not so. The appointment of Oklahoma AG Scott Pruitt is a stick in the eye towards those who believe that time is running out on this issue. Like Ebell, Pruitt is also a well-known climate change skeptic, and ally of the fossil fuel industry, having formerly sued the EPA over power plant regulations. He wrote in a May 2016 National Review piece,
‘global warming has inspired one of the major policy debates of our time. That debate is far from settled. Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind.’
Climate Change Cognitive Dissonance
The level of cognitive dissonance on this issue could scarcely be higher, as cities across the United States, and utilities themselves, prepare for the anticipated impacts of future climate impacts. In Boston, where I live, the City is preparing to harden its infrastructure and develop resiliency plans. A January forum at MIT (which I will moderate) will explore the potential to create robust responses to an anticipated sea level rise of between two and six feet by the end of this century. Mitigation will be costly.
Utilities will also not be immune. The conservative Edison Electric Institute which represents all U.S. investor-owned utilities states on its website:
“Global climate change presents one of the biggest energy and environmental policy challenges this country has ever faced…Policies to address climate change should seek to minimize impacts on consumers and avoid harm to U.S. industry and the economy.”
So this industry group, which can hardly be characterized as wild-eyed environmentalists, clearly gets it.
We can only hope that Pruitt gets it as well, and that his nomination does not represent the first move in gutting the EPA, especially with respect to climate-related issues. For the first time after many years, the global community has made progress on this issue, while generating significant employment (an estimated 88,000 U.S. jobs in wind – especially in the wind-rich “red states” and 209,000 in the solar industry). Meanwhile, costs of both technologies have fallen precipitously, highlighting the advantages of competitive markets and the power of human innovation. Climate change is a big threat, but responding to it intelligently and proactively creates enormous economic opportunity in our emerging global energy economy.
Regulation Is Not The Biggest Enemy Of Coal And Gas Jobs. Human Ingenuity Is
The incoming Administration throws out the red herring that regulation is responsible for the loss of jobs in the coal mine and oil and gas patch. The more complex truth is that super efficient fracking has done more to kill jobs than any other development.
Approximately two-thirds of U.S. gas production and half of our oil comes from fracking and horizontal drilling, a technology which barely existed a decade ago. This technology has become brutally efficient in the past five years or so. Average output per wells has increased significantly. With better computers and geographical data, multiple wells can be drilled from the same pad. And wells which used to take a month to drill now take half that. The result? A crushing of natural gas prices from a high of $12 per MMBtu in 2008 to around $3 in 2016. As a consequence of low prices, drilling rig counts have fallen off considerably. Regulation didn’t kill these oil and gas jobs. The industry’s own efficiency and advancing technology did. The industry is a victim of its own success.
And while efficiency in the oil and gas patch cannibalized jobs in its own sector, it unknowingly took a huge swipe at coal as well. Cheaper gas resulted in a significant switch from coal to gas in America’s power generation fleet. The table below makes that trade-off pretty clear.
So, Pruitt may come into the EPA thinking that a relaxation of rules and regulations may significantly improve the fortunes of the coal and gas companies and associated workers, and he would be wrong. Efficient and low-cost fracking may benefit the consumer but it ultimately puts drillers and coal miners out of work. That’s an unfortunate inevitable result of our technology-driven age.
Where The Jobs And Economic Gains Are:
Meanwhile, the cost of solar and wind have fallen such that the lowest-cost electric energy contracts ever signed on the planet occurred in August this year, with solar selling in Chile at 2.91 cents per kWh, according to Bloomberg at half the price of coal-fired generation. The following month, Abu Dhabi punched back with a 2.42 cents per kWh price. Wind contracts are not far behind in cost. A focus on supporting these new technologies is one way to bring America’s economic base back.