Four Reasons Why EIP’s Emissions Study Lacks Integrity

A recent report from the Environmental Integrity Project (EIP) claims projected growth in the U.S. petrochemical industry – which has been sparked by hydraulic fracturing and subsequent low oil and natural gas prices – will result in an annual increase in CO2 emissions equivalent to 39 coal-fired power plants. EIP claims this would offset the climate benefits of increased natural gas use:

“Although natural gas is often touted as a clean, “green” fuel because it produces less carbon dioxide than coal, low natural gas and oil prices – driven by the hydraulic fracturing boom – continue to spark waves of projects with a heavy greenhouse gas footprint.” (pg. 5)

Of course EIP willfully ignores the fact that the Energy Information Administration (EIA) has found that natural gas has prevented more than one billion metric tons of carbon dioxide from being emitted from power plants in the United States. And even the Intergovernmental Panel on Climate Change (IPCC) has said that fracking is “an important reason for a reduction of GHG emissions in the United States.”

But that’s just the beginning with the problems in the report. Here are the top facts to know:

#1: EIP exaggerates projected petrochemical emissions by basing them on limits

EIP’s projected GHG emissions from 140 petrochemical construction and expansion projects is based on maximum greenhouse gas limits placed in permits, rather than on the actual emissions or indeed reasonable estimates.

According to an article on the EIP study in The Advocate, based on an interview with Louisiana Department of Environmental Quality Air Permit Division senior environmental scientist Bryan Johnston, “The amount of carbon dioxide included in the permit is what would be released if the plant ran at full capacity year-round. The actual amount released is always less.”

In other words, not only is the projected emission total (179 mmt a year) from the EIP report a projection rather than actual emission total (a majority of the projects haven’t even begun yet) the emission projections are effectively worst-case scenarios.

#2: Meanwhile, EPA says petrochemicals actually release “small amounts” of GHGs

It is also important to understand what a small piece of the GHG emission pie the petrochemical industry is responsible for.

Though EIP claims a “heavy” greenhouse gas footprint from petrochemical industry, the 2016 Environmental Protection Agency (EPA) Draft Greenhouse Gas Inventory notes: “the production of some petrochemicals results in the release of small amounts of CO2 and CH4 emissions.”

Indeed, the EPA’s 2016 Draft GHG Inventory shows that petrochemical production accounted for just 26.6 million metric tons (mmt) of CO2 and methane emissions in 2014. EPA even groups petrochemical production in the category of industrial processes – which also included iron, steel, cement and other manufacturing processes. Still, industrial processes accounted for just 6 percent of total GHG emissions in 2014 (388.6 mmt).

So even if EIP’s projected increases in GHG emissions from the petrochemical industry were accurate, they would still pale in comparison to those from major CO2 emitters, such as electrical generation, which brings us to our next problem with the report.

#3: Reduced CO2 emissions from natural gas-fired plants easily trumps petrochemical emissions

Electrical generation accounted for 38 percent of total U.S. energy-related CO2 emissions in 2014, according to the Energy Information Administration (EIA). That percentage dwarfs the percentage attributable to industrial processes such as petrochemical production. But of course, increased use of affordable natural gas made possible by the shale gas revolution has helped lower CO2 emissions from the electricity generation sector to 27-year lows.

A recent report by the Manhattan Institute shows that natural gas is responsible for nearly 20 percent of total carbon dioxide emission cuts from 2007 to 2013 and that for every ton of CO2 emission reductions attributable to solar power, 13 tons can be attributed to natural gas. That is because natural gas is quickly becoming the electrical generation fuel of choice. It became the leading source of U.S. electricity for the first time in April 2015 and was the top electrical generation fuel in each of the last six months of 2015.

Natural-gas fired electrical generation has seen a 438,478 megawatt hour (48 percent) increase since 2007. That means that even if EIP’s projection of the proposed petrochemical projects emitting CO2 the equivalent of 39 coal-fired power plants annually were true (and they’re not, mind you) those increases would more than be offset by the current pace of natural-gas fired electrical generation, considering natural gas produces half of the carbon emissions of coal when it burns.

For perspective, consider that the 1 billion metric tons in CO2 reductions the U.S. had from 2007 to 2013 is the equivalent to the annual CO2 emissions of approximately 217 500 megawatt coal-fired power plants, according to a recent report by EIP’s friends at the Sierra Club. That report touts coal plant retirements as the primary reason for U.S. CO2 reductions, noting that 41,978 megawatts of coal plants have been retired since 2010, with another 6,978 megawatts expected to go offline by the end of 2015 (updated totals were not available at the time the report was released). That report also projected another 53,311 megawatts of coal-fired power plants retiring soon. Renewables have filled just three percent of the void, so it is clear that the trend of reduced CO2 reductions from power plants has been spearheaded by the abundant supply of clean-burning natural gas made possible by fracking. And those average annual CO2 reductions per year (200 mmt) would still outpace the exaggerated EIP projection of 179 mmt of annual CO2 emissions by the proposed petrochemical projects.

#4: Petrochemical activity would otherwise occur overseas, resulting in higher emissions

If these petrochemical plants are not located in the United States, the most logical place would be in China, which has far more lax environmental standards and would undoubtedly result in higher CO2 emissions.

Global context is key when discussing greenhouse gas emissions. As Greg Bertelsen, senior director of energy and resources policy at the National Association of Manufacturers (NAM) discussed in an E&E News story on the report:

“If that manufacturing is not taking place here, it’s likely that it’s taking place in some other country. As know from the data, we are more efficient on a greenhouse gas basis than other competitors.”

The American Chemistry Council (ACC) agreed with Bertelsen and made a similar point in the following statement sent to EID and media outlets pushing back against the report:

“The new, shale-related U.S. chemical industry production is advanced, state-of-the-art, and energy-efficient. Since we are drawing market share from areas of the world where chemical manufacturing production may be more greenhouse-gas-intensive (61% of the investment is by companies based abroad), our expansion in the U.S. may result in LOWER net global GHG emissions…”

According to the ACC, their member companies report their progress toward energy- and GHG-related performance measures through the Responsible Care program. And since 1974, the U.S. chemical industry as a whole has improved its energy efficiency by 49 percent, and its energy intensity (energy consumed per unit of output) of Responsible Care companies has improved by 40 percent since 1992. Since 1992, ACC members have reduced their GHG intensity (pounds of CO2-equivalent emissions per pound of production) by 42 percent, as the following ACC graphic illustrates.

ACC Graphic

This ACC graphic illustrates how the chemical industry has improved GHG emission intensity

The ACC also notes that a study by McKinsey & Company found that the products of the U.S. chemical industry save twice the greenhouse gas (GHG) emissions than are emitted making the products. An ACC analysis found that the products of chemistry help save up to 10.9 quadrillion BTUs of energy annually, enough to power, heat and cool up to 56 million households, or run up to 135 million vehicles each year.

Conclusion

Not only would domestic petrochemical production – rather than production in China – help reduce emissions, it will also create hundreds of thousands of new jobs. The ACC has said more than $164 billion in U.S. projects are planned, under construction and completed “will create hundreds of thousands of well-paying new jobs, strengthen communities and put money in the pockets of American families.”

Louisiana Economic Development has projected more than $60 billion in industrial investments announced over the past eight years, with the projects are expected to add as many as 91,000 new jobs in the Bayou state. The Northern Plains Nitrogen plant in North Dakota is projected to create 2,000 jobs, and 84 projects in Texas are expected to create 150,000 direct and indirect jobs, including 400 permanent jobs at a Chevron Phillips plant, 350 permanent jobs at an ExxonMobil plant and 20,000 construction jobs between the two plants. Projects in West Virginia and Ohio are also expected to employ several hundred people.

A report from Nexant, Inc. commissioned by ACC, also found that gross exports of chemical products, including plastics, linked to plentiful and affordable natural gas could grow from $60 billion in 2014 to $123 billion by 2030.

EIP’s claims of significant GHG emission increases as a result of this petrochemical expansion is highly questionable based on the fact that it’s premised on worst-case emission scenarios and even EPA says the contribution is a “small amount” compared to other sources. The fact that the alternative to continued robust natural gas development and subsequent development of our domestic petrochemical industry – potentially higher CO2 emissions and more reliance on foreign sources of petrochemical products – makes even less sense than EIP’s emission projections.

But considering that EIP receives funding from the anti-fracking Park Foundation and was responsible for a 2014 report that incorrectly claimed wells were fracked with diesel in epic proportions, the fact that the group has released yet another report that lacks integrity should come as no surprise.

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