Written by Ron Bennett
Would you invest in a business whose product continually drops in price to the point where competitors simply dispose of or burn their surplus? What if this business was also feeling pressure from new technology that could replace it at a very low cost? This business sounds like a lousy investment, yet Coloradans double-down on this investment every time the COGCC and AQCC approve another fracking permit. At what cost? Clean air, clean water and most precious of all: children’s health.
Fracking’s Growing Debt Burden
While profits remain elusive under a mountain of debt and there are new laws on the books with clear public health and climate objectives, the permits continue to be approved. In 2019 Colorado fossil-fuel companies extracted and sold over 1.8 trillion cubic feet of fracked gas – three-quarters of which was exported – and in the process as much as two percent of that methane will leak into the air. Not only does that put Coloradans health at risk, but methane (CH4) is a greenhouse gas with 84 times the global warming potential of carbon dioxide (CO2) causing warming on par with CO2-emitting coal plants.
The Texas shale oil industry had so much of the stuff last year it flared or vented enough methane to heat almost five million homes. While shale oil wells and production facilities bleed methane, the shale gas industry continues to bleed money. Falling stock prices, write-downs and a divestment push are creating a credit crunch. Fracked gas is trading at prices that haven’t been this low since 2015’s slump, LNG prices are at a ten-year low and defaults are on the rise.
The Cost Of Cleanup
After acknowledging that fracking has produced dividends for the state in the form of jobs and taxes, let’s consider one hidden cost: closing and maintaining leaky, orphaned wells. Once wells are depleted, they must be plugged to prevent leakage. The GAO speculates that the cost to reclaim each well can reach $174,000 or more, yet operators are currently only required to post a $100,000 total bond for 100+ wells. No wonder hundreds of wells have been abandoned across the state when it’s cheaper to forfeit a bond. If financially stressed operators responsible for thousands of wells walk away, taxpayers will be left holding the bag.
The Roadmap to Zero Carbon Energy
In contrast, what might a low-risk, high-return, future-ready energy portfolio for Colorado look like? HB19-1261 signed into law in May 2019 commits Colorado to economy-wide greenhouse gas (GHG) reductions of 26% from 2005 levels by 2025, 50% by 2030 and 90% by 2050. These ambitious targets can only be met with bold, sweeping changes versus business as usual as illustrated by environmental consulting firm MJ Bradley & Associates’ new report. By projecting emissions through 2030 and considering various abatement strategies the report shows that emissions under current policies will exceed 1261’s near-term targets by about 30-40 million metric tons of CO2e (equivalent) or roughly all emissions from today’s electric sector.
Closing this compliance gap won’t be easy but it’s an opportunity for the state to decarbonize its energy portfolio. A rapid transition from coal and gas to renewables is a big step in the right direction.
Coal still fuels almost half of the electricity generated in Colorado even though coal plants – with their high operating costs – are no longer profitable. First and foremost, AQCC should work with the Public Utilities Commission to rapidly accelerate the timetable to retire all coal-fired power plants statewide and replace lost output with cheap, reliable wind and solar, not gas.
…emissions from natural gas and oil systems nearly doubled from 8.1 million metric tons in 2005 to 15.6 million metric tons in 2015, accounting for over 12 percent of total emissions in that year, largely due to the growth of hydraulic fracturing…1
SB19-181 directed the AQCC to minimize emissions from oil and gas facilities. Testimony at their latest hearing made it clear that the commission doesn’t really know how much methane leaks from Colorado’s gas wells, pipelines, processing, and storage facilities, but it’s most likely more than reported. Considering this, all new fracking permits should be paused pending new rules per 181 and 1261. Prioritize the closure of all leaky, orphaned wells and using the tools in 181 – including continuous monitoring – measure and control leaks from existing wells and gas infrastructure.
Cheap fracked gas stifles innovation in the building sector. The industry is ready to innovate but building efficiency codes alone are not enough to make a significant dent in greenhouse gas emissions from that sector.
Cities in California and elsewhere have begun to ban gas in new construction over public health and safety concerns. The voluntary Denver Green Code with its strong decarbonization requirements will do the same as it becomes mandatory in the next several years. Following Denver’s lead, Colorado should phase-out gas connections to new buildings by 2027. Starting with single-family residential, followed by multi-family and institutional, and lastly commercial and industrial. To run on renewables the entire sector will need to be electrified, by first halting demand from tens of thousands of new buildings each year and then tackling existing buildings.
Supporting widespread adoption of electric vehicles is an important strategy for addressing air quality in the region.2
More incentives are needed to get old, polluting cars off the road and to reach the state’s goal of almost a million electric vehicles in Colorado by 2030. Assessing vehicle ownership tax based on emissions instead of value could accelerate adoption. And prioritize electric over gas for all new fleet and mass transit vehicles.
Like a handful of other states, Colorado’s AQCC has begun work on a hydrofluorocarbon ban that will be phased-in over the next two years. All told, this and the far-more substantial measures above could nearly close the projected compliance gap. Meeting 1261’s targets will require deep decarbonization across many economic sectors. Investments in fracked gas will diminish the deployment of renewables that are vital to any decarbonization effort.
Ron Bennett, architect
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Image credit: Screen grab of video used with permission from Earthworks. https://oilandgasthreatmap.com/media/
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