Oil and gas drilling, the electric grid and renewable power sources are all undergoing transformations that are making the U.S. energy market more environmentally friendly, according to a panel of experts from across the energy landscape.
The changes have come as a surprise to many, especially those in the fossil fuel sector. “I didn’t think we’d be talking about fracking on Earth Day, but here we are,” said Chris Faulkner, the president and CEO of Breitling Energy Corp., a Dallas-based oil and gas exploration and production company. He was speaking April 22 at the annual energy policy conference of the National Capital Area Chapter of the U.S. Association for Energy Economics.
Fracking, as hydraulic fracturing is often called, is a controversial drilling technique that involves injecting millions of gallons of water, sand and chemicals underground to release oil and natural gas locked up in shale deposits. Environmentalists have raised concerns about its effects on, among other things, groundwater and local air quality. At the same time, however, fracking along with horizontal drilling has helped to vastly increase the U.S. production of oil and natural gas in recent years and reduce U.S. emissions of planet-warming greenhouse gases by allowing many utilities to switch from burning carbon-intensive coal to relatively cleaner gas.
Faulkner argued that fracking, which has already changed the economics of the U.S. energy and manufacturing industries, has now begun to change public perceptions. He pointed to a February challenge to New York state’s effective ban on shale drilling filed by some landowners.
“For the first time on this planet, I think, someone has now sued to allow for fracking, to remove a moratorium, where in most places you see — France, Bulgaria, the Netherlands — places are putting moratoriums in place because of the fear of this technology,” he said. “Disruptive technology, in a way, causes fear. People are fearful of the unknown. But there’s an undertone and a tide that’s beginning to shift.”
The same could be said about innovations in the electric system, according to David Malkin, the director of government affairs and policy at General Electric Co.’s digital energy division.
“Some of the innovation that we’re seeing take place at the edge of the grid is really forcing a fundamental rethink around what is the appropriate role of the regulated utility going forward,” Malkin said. Specific changes that he said have the greatest potential to disrupt the electric industry are energy efficiency, advanced metering, demand response, distributed generation, intelligent buildings, microgrids, battery storage, connected appliances and electric vehicles.
While many of the grid innovations Malkin discussed are environmentally beneficial, they cumulatively pose challenges to utility business models, regulatory oversight and consumer behaviors, he noted. The biggest challenge that all sides need to address in adapting to these changes in the coming years is “who pays, and how do those costs get allocated?” he said.
Meanwhile, other panelists suggested that renewables are poised to provide a major share of the U.S. energy mix. Wind and solar have “reached the commercial tipping point,” said Mike Carr, the U.S. Department of Energy’s senior adviser and principal deputy assistant secretary of its Office of Energy Efficiency and Renewable Energy.
The best indication that clean energy technologies are poised to take off is the sale of Nest Labs Inc. to Google Inc. for $3.2 billion, according to Jonathan Silver, a clean energy executive and former executive director of the DOE’s loan programs office. That deal got the attention of the young developers who will produce the renewable innovations of tomorrow, he said in a keynote address.
The revitalized renewable energy loan program, which had gone largely dormant in the wake of the Solyndra Inc. bankruptcy, will also help speed the technology transformation along, Silver predicted in an interview with SNL Energy. “I’m hopeful and cautiously pleased and optimistic that finally the reality of what happened with the program is beginning to sort of make its way into the public consciousness,” he said, noting its 97% success rate.
Asked whether he saw continued political problems for the program, Silver said, “There are people who disagree with the premise of the role that government should play in this, and I doubt they’ll change their minds.”
“The deepest disappointment, in terms of the discussion in Washington, is that people are still talking at each other” about energy policy, Silver added.
On renewables, however, the discussion is now only about how fast to deploy them, according to Silver. “We’re on a glide path that leads us to a dramatic increase in clean and renewable energy,” he said. “Now we need to engage in the debate about how quickly does that need to happen.”
Article Author: Corbin Hair