Ohio Governor John Kasich showed real leadership earlier this month when he introduced energy bill with the most comprehensive rules in the country for chemical disclosure during oil and gas operations. The Governor's bill would have required disclosure of not only the chemicals used in hydraulic fracturing – as a number of other states have done – but also the full range of chemicals used throughout the lifecycle of a well. Hydraulic fracturing gets all the attention, but the Governor and his team understand that dangerous chemicals are also used in drilling, producing, servicing and shutting down wells. The entire process should be transparent from beginning to end — "from spud to plug," as it’s called.

This was smart policy when the Governor proposed it. And it’s smart policy today. Unfortunately, the energy bill passed yesterday by the Ohio General Assembly fails to fully deliver on that vision. In the face of intense industry opposition, lawmakers eliminated many of the reporting requirements contained in the original bill. EDF is disappointed the final bill does not live up to what Governor Kasich proposed, but we give the Governor credit for putting the idea forward and expanding the terms of the debate – both in Ohio and nationally.

To be fair, even in its scaled-back version, the Ohio disclosure policy breaks new ground. It requires disclosure of the chemicals used in stimulating a well. This includes not just hydraulic fracturing but also other kinds of stimulation techniques – something most states have missed in their disclosure rules.

Additionally, companies will be required to disclose the chemicals used in a well until the surface casing is set in place. As we testified in the Ohio House, this still leaves the public in the dark about a lot of dangerous chemicals that are used to drill and operate a well. But again, it’s a step forward compared to what other states have done.

We’re disappointed, though, by changes the House made to the trade secret provisions in the bill. In the original version, companies would have been required to report trade secret information to the Department of Natural Resources. This would have ensured that the agency had quick access to chemical information it might need to respond to a spill, initiate an investigation or respond to a complaint.  Under industry pressure, the Assembly caved on that language, and companies will now be allowed to withhold trade secret information from the regulators. 

The bill establishes an unqualified right for certain land owners to challenge trade secret claims in court. So, there’s at least a mechanism in place to police the system and make sure companies aren’t hiding behind bogus trade secret claims. But it would have been far better to have trade secrets turned over to the state – not only in cases where this information is needed to protect public health and safety, but also because it would have given anyone, not just the land owners, a right to challenge trade secrets under the Ohio Public Records Act.

This is a big bill. It addresses a wide range of issues – not just oil and gas – and includes far too much to cover here. It has some good provisions, such as new requirements for companies to report where they’re getting their water from and how much they’re using, and requirements for companies to test the baseline water quality in nearby water wells before they start drilling. The bill also has some really bad provisions – like an egregious one that strips citizens of the right to appeal permits issued to oil and gas operators.

The passage of the energy bill is not the end of the process: the agency rules implementing this bill will be written in the months ahead, and EDF will be working to make sure they are as strong as possible. And we’ll be working on other rules to reduce the risks oil and gas operations pose to communities and the environment.

This includes improving Ohio’s rules for air pollution from oil and gas operations. It means making sure we have tough standards in place to manage the huge waste streams these operations produce. It means putting smart planning in place to preserve landscapes and protect the fabric of local communities. And sooner rather than later, it’s going to mean coming back to the General Assembly and fixing what didn’t get done right the first time.

For those of you who've scoured EDF’s blogs for news from EDF Climate Corps, life is about to get much easier. From here on out, you'll find all posts and updates from EDF Climate Corps fellows, host organizations and staff on the EDF Climate Corps blog, which launched Tuesday.

For those of you unfamiliar with EDF Climate Corps, it’s EDF’s innovative fellowship program that places specially trained MBA and MPA students in companies, cities and universities to build the business case for energy efficiency. This year’s class of 98 fellows starts this week with an intensive energy efficiency training underway in Charlotte, NC before they’re set loose to sleuth out energy savings at 88 leading companies, cities and universities across the nation.

Visit us here for news from the frontlines of energy efficiency. This summer we'll also feature several ongoing series, such as a weekly report on themes in organizational change we see bubbling up from the collective experience of our fellows.

If you want to stay in the loop, don't forget to sign up for email alerts in the left-hand menu. If you're signed up for EDF Climate Corps alerts from the EDF Business Blog or the EDF Energy Exchange, you should sign up again at our new location to continue receiving them.

The flag's about to drop on EDF’s 2012 Climate Corps season, which kicks off Tuesday, May 22. We’re ramping up for the largest class of fellows EDF Climate Corps has ever seen, and we want to make sure you don’t miss a minute of the action. That’s why Climate Corps is launching its own blog platform – the EDF Climate Corps blog. From this day forward, you'll find all of your favorite updates from EDF Climate Corps fellows, hosts and staff on this new online platform. Sign up here to ensure you get the latest from the EDF Climate Corps blog directly in your inbox.

The blog will feature several ongoing series, including regular updates from the 2012 EDF Climate Corps fellows on the energy efficiency frontlines, a weekly trends piece on themes bubbling up from the collective experience of those fellows, and real-time insights from representatives at the companies, cities and universities in our network.

If you’ve enjoyed the EDF Climate Corps posts from the EDF Business blog and the EDF Energy Exchange, don’t miss out.

Sign up here to continue experiencing EDF Climate Corps.

Throughout 2012, EDF's Energy Innovation Series will highlight more than 20 innovations across a broad range of energy categories, including smart grid and renewable energy technologies, energy efficiency financing, and progressive utilities, to name a few. This series will demonstrate that cost-effective, clean energy solutions are available now and imperative to lowering our dependence on fossil fuels.

For more information on this featured innovation, please view this video on solar financing for SolarCity's project SolarStrong.

Project SolarStrong by SolarCity is not only expected to be the largest residential solar photovoltaic (PV) project in American history if completed, but will also be a groundbreaking milestone for solar financing in the United States.

In November 2011, SolarCity – along with Bank of America and Merrill Lynch – announced Project Solar Strong, an ambitious five-year plan to build more than $1 billion in solar projects for privatized U.S. military housing communities across the country.  SolarCity partners with leading privatized military housing developers to install, own and operate rooftop solar installations and provide solar electricity at a lower cost than utility-provided power.  SolarStrong is expected to create up to 300 megawatts of solar generation capacity that could power up to 120,000 military homes if completed.

This project will allow privatized military housing developers to save money on energy costs that can be reallocated toward quality-of-life improvements and enhanced services for military families.  SolarStrong will also help the Department of Defense (DOD)—the single-largest energy consumer in the U.S.—secure more of its energy needs from renewable sources operated in parallel with the utility grid.

SolarStrong is expected to create thousands of full-time and temporary jobs; SolarCity hopes to provide many of these jobs to U.S. veterans and military family members, which have been among those hardest hit by the economic downturn.  SolarStrong is a groundbreaking innovation that demonstrates the long term viability of distributed solar generation and the potential for creative financing structures to significantly grow residential solar in the U.S..

SolarStrong’s original plan to secure a loan guarantee from the U.S. Department of Energy (DOE) did not come to fruition, but the project was fortunately able to launch without being part of the loan guarantee program.  Aggressive, creative projects that confirm the viability of alternative financing structures, such as SolarCity’s SolarStrong, are paving the way to making affordable clean energy available on a significantly larger scale.

The University at Buffalo's Shale Resources and Society Institute issued a report yesterday, "Environmental Impacts During Shale Gas Drilling: Causes, Impacts and Remedies," which offers a quantitative data review of Pennsylvania's regulation of natural gas development in the Marcellus Shale. The press release notes that I was a reviewer for the report.

While I was a reviewer, this does not mean that all of my suggestions were taken or that I agree with all of the report’s opinions and conclusions.

Does the report have strengths? Absolutely. Unfortunately, it is hard to find understandable, comprehensive data describing natural gas industry environmental violations and the responses taken by enforcement agencies. The University at Buffalo has done a great service by bringing such information to light for the period studied (2008 through August 2011).

At the same time, several of the opinions and conclusions in the report are questionable. These include: 

• The idea that a violation isn’t an “environmental” concern if it is a violation of “paperwork” or “preventative” regulations and didn’t result in immediate, actual harm to the environment.
   
• Characterizing the rate of environmental violations (narrowly defined) as “low” in the first eight months of 2011 when, even using a narrow definition of environmental violation, violations were found at 26.5% of the wells drilled.
   
• The suggestion that the present regulatory program is effective because the incidence of “environmental violations” (narrowly defined) declined from 58.2% of wells in 2008 to 26.5% of wells in 2011.

In sum, there’s a lot of good information to be gleaned from the study, but caution should be exercised with regards to some of the conclusions.

Yesterday the Ohio Senate passed Senate Bill 315, major energy legislation that addresses a wide range of issues – including provisions relating to transparency in oil and gas operations.  Unfortunately, the version that passed falls short of Governor Kasich’s ambitious call for broad chemical disclosure.

In the introduced version of the bill put forward by Governor Kasich and sponsored by Chairwoman Shannon Jones, companies would have been required to publicly disclose all chemicals used throughout the entire lifecycle of oil and gas wells – the so-called “spud to plug” approach to chemical reporting.

This comprehensive approach to chemical reporting stands in contrast to other state policies that merely require disclosure of those chemicals used in the hydraulic fracturing process.  It reflects an understanding that a wide range of dangerous chemicals are used in drilling, stimulating, operating and closing wells, and regulators and the public need to know what’s being used in order to evaluate risks and put strong standards in place that protect communities and the environment.  Governor Kasich deserves a lot of credit for advancing this idea in the original version of the bill.

Unfortunately, in the face of intense industry opposition the version of SB315 that passed yesterday eliminates much of the reporting that would have been required under the Governor’s original proposal. 

The version of the bill that passed yesterday still has requirements for reporting the chemicals used in stimulating a well (which includes hydraulic fracturing).  It also has requirements for reporting chemicals used for drilling the surface interval of a well.  And it’s worth noting that the bill language for these provisions – while still needing improvements – is stronger than what was in the introduced version of the bill.

But the requirements for disclosing chemicals used for drilling beyond the surface interval were dropped – as were most of the requirements for disclosing chemicals used to service and operate the well.  So, it’s now up to the Ohio House of Representatives to restore these important provisions.  There’s a lot of nasty stuff that goes down a well during drilling and production.  In fact, it tends to be the case that companies use increasingly dangerous chemicals the deeper they go in the drilling process.  So, limiting disclosure of drilling fluids to just what’s used in the surface interval doesn’t make sense.

In addition to restoring the full “spud to plug” approach to the chemical reporting, the House also needs to add bill language ensuring that Ohio citizens can challenge any trade secret claims that companies may make to conceal the identity of chemicals.  That’s just a basic necessity for policing the system and giving the public a reasonable level of confidence that companies are playing on the up and up.

Finally, the bill should be amended to begin the process of assessing and reporting the chemical composition of waste streams from oil and gas operations.  Without an adequate picture of the chemical makeup of wastewater and other wastes that come from oil and gas operations, it is difficult to impossible to determine whether various methods of waste handling and disposal are protective of human health and the environment.

EDF was pleased to offer our support for the “spud to plug” concept embodied in the introduced version of the bill, but SB315 needs to be strengthened to earn our support going forward.

Transparency is just one small part of all that must to be done to ensure oil and gas operations are safe for communities and the environment, but it’s a critical piece of the puzzle that lays a foundation for developing protective rules and rebuilding the public trust.  So EDF looks forward to working with our partners, leaders in the General Assembly and the Governor to make sure the final version of SB315 lives up to its full promise and sets Ohio on the right path for protecting communities and environment.

Report from the American Council for an Energy-Efficient Economy (ACEEE) Energy Efficiency Finance Forum

This week, I had the pleasure to attend and speak at ACEEE’s annual conference on energy efficiency finance.  Almost 250 executives were in attendance from banks, ESCOs, project developers, venture capitalists, asset managers, property owners/managers, utilities, government officials and nonprofits. 

Key takeaways included:

Commitment from Banks – Despite a lack of meaningful revenue to date, senior bankers from JP Morgan, Wells Fargo, US Bank, Deutsche Bank, Bank of America and Citi all reiterated their commitment to develop low-cost financing solutions for energy efficiency retrofits.  Marshal Salant of Citi did lament that, to date, the number of conferences far exceeds the number of deals, but he was hopeful that we could soon reverse the situation as he, and others, have an attractive pipeline of projects that they hope to close in coming months.

On-Bill Repayment will play a key role – EDF has been working to establish an On-Bill Repayment (OBR) program in California to finance retrofits through the utility bill.  Several speakers expressed hope that OBR may provide the credit enhancement and flexibility necessary to provide low cost financing for the residential and commercial sectors.  I had a chance to speak with representatives from each of the large California utilities at the conference.  While the utilities still have substantial concerns about the OBR proposal, I was pleased with the constructive nature of the dialogue.

EE Financing will be Available – Citi shared a chart indicating a wide range of financing vehicles that they believe are workable and either available today or in the near future.

The American Natural Gas Association (ANGA) released a paper in March titled “Texas Natural Gas: Fuel for Growth,” to a lot of press, and rightly so.  The paper correctly cites several benefits of using and producing natural gas in Texas: it is produced in-state, has water use and air-quality benefits when compared to coal and helps to fund state and local governments through taxes. 

Unfortunately, the paper also makes some claims that are difficult to take seriously; perhaps the first warning sign should be that while the paper was presented as an economic analysis, the authors have no economic credentials.  Dr. Michael J. Economides, a chemical and biomolecular professor at the University of Houston, and petroleum engineering consultant Philip E. Lewis spend little time worrying about the details in this report, serving up a heaping helping of “number salad.”

For instance, the $7.7 billion “loss” is calculated by projecting the potential use of gas in Texas, if it had followed the national trend, against the actual use.  But in looking at the data, it’s not clear that the Texas fuel mix ever tracked the national fuel mix.  Even more importantly, looking at the authors’ own slides, Texas uses 20% more natural gas in its fuel mix than the nation.  If anything, the national fuel mix is following the trend set long ago by Texas —adding more natural gas and wind, while decreasing coal output.

What might shock the authors is that natural gas consumption in the electric power sector has increased by around 5,000 one thousand cubic feet of gas (MCF) since 2006, 800 MCF in transportation and nearly 10,000 MCF in the industrial sector. 

There are so many misleading statistics and inaccuracies that we could practically write a report on the report, but instead I’ll just focus on one aspect that stands out in particular. 

When it comes to comparing natural gas to coal power, the authors are quick to cite the many local benefits of using natural gas energy produced in Texas: it’s cleaner than coal and creates local jobs and a local tax base.  Wind energy has largely produced the same benefits: local wind power has brought jobs and a growing tax base and population to rural Texas counties that “had seen consistent, significant population losses since 1950.”  On top of the economic development benefits, where natural gas beats coal in reducing pollution, wind energy beats both by reducing pollution basically to zero.  But when it comes to discussing any of these benefits from wind energy in the report, the silence is deafening. 

Natural gas is reshaping our energy landscape.  And, done right—with the proper, mandatory environmental safeguards in place and reduced methane leakage rates—compared to coal plants, natural gas power plants offer other distinct air quality benefits.  It emits less greenhouse gases than coal when combusted and avoids mercury and other dangerous air pollutants that come from coal.

However, the same – and more – can be said about wind energy and Texas’ potential clean energy resources, including solar and geothermal power, among others.  Rather than pitting our local clean energy resources against each other as this report does, we should seek to expand and diversify our clean energy mix, reaping health, environmental, economic and security benefits.

This commentary was originally posted on the EDF California Dream 2.0 Blog.

The California Public Utilities Commission (CPUC) recently released a Proposed Decision that included rulings on energy efficiency financing.  One ruling directs the state’s three largest utilities–PG&E, Southern California Edison and San Diego Gas & Electric–to develop an On-Bill Repayment (OBR) program for commercial properties that is based on a proposal developed by Environmental Defense Fund (EDF).

The Proposed Decision notes that the agency lacks the full necessary legal authority to implement an OBR program for residential customers. To address that, EDF is sponsoring legislation introduced by California Senator Kevin de Leon that would provide the CPUC with the necessary authority.

Senator de Leon and EDF have been working together to assemble a broad coalition of supporters including labor, contractors, building owners, banks and other investors, solar installers, energy efficiency project developers, environmental advocacy and environmental justice groups. 

We are excited to report that yesterday the bill passed the California Senate’s Energy, Utilities and Communications Committee. While we have a long way to go, this is another key step toward establishing a program that can invest billions of dollars of private capital in energy efficiency and renewable energy projects in California at no cost to taxpayers or ratepayers.

EDF will continue working with a broad range of stakeholders to successfully create the nation’s first statewide OBR program that is entirely financed by third parties. This landmark approach will enable project developers and building owners to use both conventional and innovative financing options to invest in energy efficiency and renewable energy projects.   

The CPUC is expected to vote on its proposed decision on May 10, 2012. The bill will continue being heard and voted on over the coming months. Once the final votes are in, California aims to have the commercial OBR program up and running by January 2013.

Throughout 2012, EDF's Energy Innovation Series will highlight more than 20 innovations across a broad range of energy categories, including smart grid and renewable energy technologies, energy efficiency financing, and progressive utilities, to name a few. This series will demonstrate that cost-effective, clean energy solutions are available now and imperative to lowering our dependence on fossil fuels.

For more information on this featured innovation, please view this video on Pecan Street Inc.

The last few years have been somewhat of a blur for most of the people involved in Austin-based Pecan Street Inc. (Pecan Street).

"In 2008, this was an idea on a napkin in a coffee shop," says Brewster McCracken, the holder of the napkin and now executive director of Pecan Street. "In 2010 we secured funding to launch a smart grid demonstration project. In 2011 we established the most robust collection of consumer energy use data on the planet. We want to see how people interact with new technology options. What works, what people like, what impact it has on their energy use and the grid itself."

The organization strives to ‘re-imagine’ how we make, move and use energy on our existing system rather than reinvent the system itself. It has been tagged by the smart grid industry press as one of the hottest efforts in the country.

Pecan Street, which was incorporated as a 501(c)(3) non-profit in 2009, is an research and development consortium headquartered at the University of Texas at Austin. Its team consists of nearly a dozen staff and a web of researchers from the University of Texas and more than 10 member companies like Best Buy, Sony, Intel, Oncor, Texas Gas Service and Whirlpool Corporation. The Pecan Street board is comprised of members from the City of Austin, the Austin Chamber of Commerce, the University of Texas, the UT Clean Energy Incubator, Austin Energy and Environmental Defense Fund.

Source: Pecan Street Inc.

The deployment of 100 Volts in one square mile will be among the densest concentrations of plug-in vehicles in the country.

Pecan Street was initially funded through a $10 million grant from the Department of Energy, which was matched locally with another $14 million to conduct detailed research on the consumer energy usage and the smart grid. The organization also received funding by the Doris Duke Foundation to collect "energy lifestyle" data at 15-second intervals on a disaggregated level (measures 6 circuits) on 200 homes.

Its test bed is the Mueller community, a green-built redevelopment of the city's former airport. Just two miles from downtown Austin, Mueller is one of the hottest zip codes in town for people looking for clean, green urban living. Over the course of the five-year demonstration project, Pecan Street will deploy smart grid technology — home energy management systems, solar panels, electric vehicles, new pricing models and more — in up to 1,000 homes in and around Mueller. And did we mention that Pecan Street is the world’s largest LEED-ND certified community?

So far, Pecan Street has loaded up Mueller with some remarkable smart grid stats: a third of the homes have solar panels and, by this summer, 100 Chevy Volts will be tooling around town and parking (and recharging) within Mueller's one-square-mile radius.

Greentech Media calls Pecan Street “the most ambitious EV-solar-smart-grid integration project in the United States.”

And this spring, the organization broke ground on the country's first smart grid commercialization lab, located among the homes and retail in Mueller, that will serve as a testing facility with nationally unique opportunities for commercialization, research and education.