by Patricia DeMarco
November 15, 2019
Fresh water lies at the nexus of the existential crises of our time- global warming and global pollution. Two mutually exclusive visions for the future played out on the streets of Pittsburgh this October. The Shale Insight Conference at the David Lawrence Convention Center gathered gas and petrochemical industry corporations, workers, and supporters to share development plans and hear President Trump present his vision for this area as “the energy hub of America.” Throughout the day, three protests organized by Bend the Arc, the Indigenous People Water Protectors, and the Women’s Climate March demonstrated against the petrochemical build-out plans calling for protection of the water. A week later, Mayor Peduto speaking at the P4 Climate Summit decried the petrochemical build-out in Western Pennsylvania as a backwards looking development and painted a vision for a more resilient and sustainable future for the region. The two messages define the great divide that is pulling America apart, but within the controversy, elements of common ground have the potential to unite all of us in common purpose – to secure the future for our children.
Two points of contrast emerge from this dichotomy: What do we value? Who profits and who pays? We may find common ground when we consider What is our legacy?
What do we value?
Pittsburgh sits at the confluence of the Allegheny and Monongahela rivers whose waters flow together to form the Ohio River and then into the Mississippi River. We are part of the great Mississippi River drainage that serves nearly one third of the American mainland. This geographic distinction held this place we call Pittsburgh as a center for commerce, trade and civilization from ancient times forward, long before the French and British battled for dominance here at the Point.
For the Indigenous Peoples gathered here to celebrate the life-force of fresh water, unity with the land, the earth, the sky and the water is essential for all life. Preserving these elements of Nature is a sacred trust handed from one generation to the next for seven generations. As the water blessing ceremony began, Cheryl Angel spoke most passionately in her own Lakota tongue of the unifying force of water. “Water is Life. Without it we cannot live, so it is our sacred duty to protect the water, to keep it running free and pure for our time, and for our children and their grandchildren.” The concept of connection to the water, the air, the land is embedded in the civilization of the Standing Rock Sioux, as expressed by Guy Jones, “The drums share the heartbeat of the Earth, our provider. Peace is our goal, at all costs, but we have no peace from the invasion of pollution, from the poison of industries and mining. We have no peace from the taking of the water and the taking of our land.” As the ceremony unfolded to the drumming and chanting and dancing of the tribal leaders, water samples brought for sharing were arranged in a circle, co-mingled and blessed, then poured into the rivers’ confluence as a symbolic unity with the waters of the entire Mississippi system. We who stood here in solidarity with this ancient ritual are moved with the solemnity and the significance of this tradition – holding sacred the priceless gifts of the living Earth: fresh water, clean air, fertile ground and the many species that constitute the interconnected web of life.
For the Standing Rock Sioux, the Seminole, the Algonquin, the Tribes of the Iroquois Nation, humans are essentially part of nature, not dominant over nature. The sufficiency of all in the community depends on the interdependence of each person. Each contributes for the benefit of the whole, and the community is celebrated as a unit. Decisions honor the ways of the past, recorded in the wisdom of Elders, and consider the implications for seven generations forward. The obligation to protect the water, the land, the resources of Earth is a sacred duty. They speak for all of the people who rely on fresh water as a critical need for life. They speak for all of us and the yet to be born children of the 21stcentury.
By contrast, the Shale Gas Industry sees water as a component of production, taken for free from the surface waters at a tremendous rate. Each event of hydraulic fracturing in a deep shale well takes 500,000 gallons of fresh water. The coexistence of abundant water resources with the deep shale seams of the Marcellus and Utica gas deposits makes the Western Pennsylvania corridor attractive for this industry.
As the increase in frequency and severity of storms in the Gulf Coast has damaged or destroyed infrastructure for petrochemical production, the industry scans north and east to this region for the resources it needs to produce gas, and plastic. The federal and state rules that strive to protect water- The Clean Water Act, Safe Drinking Water Act, Resource Conservation and Recovery Act and several others, were suspended for hydraulic fracturing industries by the “Haliburton Loophole” in the National Energy Act of 2005. This permits the process of slick-water hydraulic fracturing to inject water laced heavily with salt (1,300 times more concentrated salt than sea water) and a cocktail of chemicals and fine sand that make it possible to extract gas from deep underground. Water that comes up to the surface with the gas becomes heavily contaminated not only with the chemicals introduced but also with materials extracted from the deep shale formations, including radioactive Boron, hydrocarbons, and minerals.
To the petrochemical industry, the water has value as a cheap production element to be used and discarded with minimum concern for the by-products. The methane (natural gas) produced from fracking is used for heating and cooking, and large amounts are liquefied and set for export to other countries. The liquids (ethane and other components of “wet gas”) are destined for the petrochemical industry, a much more lucrative undertaking that makes polypropylene plastic pellets, the precursors to many products such as food packaging, film, trash bags, diapers, toys, crates, drums, bottles, food containers and housewares.
As of 2019, the gas production from fracking fails to return sufficient profits to continue the capital-intensive process, but, the expectation for producing plastic from the hydrocarbon liquids produced with the gas keeps this industry rolling forward.[1] In addition to the 17,000 wells already drilled in Pennsylvania, the industry expects to need 1,000 fully producing wells annually to serve the contemplated plastics production enterprise they plan for a petrochemical hub in Western PA, Eastern Ohio and West Virginia. The Shell Appalachia Petrochemical facility under construction in Mercer County will produce 2.2 million tons per year of carbon dioxide, emissions of greater than major facility thresholds for emissions of 100 tons per year of NOx, 100 tons per year of particulates, and 50 tons per year of volatile organic compounds such as benzene.[2] The company plans to buy carbon offsets to abate its emissions, so sees no problem in producing so much greenhouse gas from the plant. The plant will produce 1.6 million metric tons per year of polyethylene plastic pellets, much of it destined for discard within 24 hours of first use. There is no plan for recapturing or recycling any of this material. “Where we are coming from is that plastic, in most of its forms, is good and it serves to be good for humanity,” according to Hilary Mercer, who is overseeing the construction project for Shell.[3]
Who Profits and Who Pays?
The fossil industries profit. Certainly, the petrochemical companies that are investing in this enterprise have stacked the cards in their own favor as much as possible to produce profits for their corporations and shareholders. Three principal tools have generated the profits to the fossil industries: direct and indirect federal subsidies extending back as far as 1837, state and local tax incentives, and abatement of environmental regulations at both the federal and state levels.
According to the Office of Management and Budget report of Subsides to Oil, Gas and Coal Industry, in 2018 taxpayers paid $20.5 Billion/year in direct production subsidies for oil, gas and coal extraction.[4] Permanent Investment Tax Credits for oil, gas, coal of $7.4 Billion/year are included in the federal budget. This is compared to $1.3 billion in Investment Tax Credits for renewables, which need to be specifically reauthorized every five years. Oil and gas companies also receive indirect subsidies such as drilling cost deductions for oil and gas, valued at $2.3 billion per year, and other accounting advantages such as:
•Excess of percentage over cost depletion ($1.5 billion)
•Master Limited Partnerships tax exemption ($1.6 billion)
•Last-in, first-out (LIFO) accounting ($1.7 billion)
•Lost royalties from onshore and offshore drilling ($1.2 billion)
•Low-cost leasing of coal-production in the Powder River Basin ($963 million)[5]
In 2015, the U.S. spent $649 billion on direct and indirect fossil industry subsidies, more than the federal spending for the entire defense budget and ten times more than the federal spending for education.[6] State level subsidies also support fossil industries. For example, Pennsylvania provided $3.2 Billion in tax breaks and direct grants for fossil industries during fiscal year 2012-2013 alone.[7] Specific projects such as the Shell Appalachia Petrochemical plant have received commitments of $1.6 Billion in subsidies and tax incentives. Subsidies matter. According to an International Monetary Fund study issued in 2018, 50% of yet-to-be-drilled oil and gas wells are not profitable (at $50/barrel oil price) if they do not have tax preferences.[8]
Relief from environmental regulation also comprises a significant profit to fossil development, especially to the hydraulic fracturing industry. From the first major environmental regulation packages of the 1970s, industry has steadily objected, protested and lobbied to erode environmental restrictions. What the public sees as protections of vital resources such as clean air and safe drinking water and important natural resources, industry sees as a cost without benefit or a negative salvage value. The “Haliburton Loophole” was adopted with minimum scrutiny and debate, giving the fracking industry advantages not enjoyed by oil, coal or any other major industry with regard to pollution controls. While the dynamic tension between public interest and private profits has always played out within the regulatory system, under the Trump Administration, most regulatory agencies now have major industry leaders at the head.
The result is that eighty-five significant environmental regulations have been rolled back as of December 2018, including provisions of the Endangered Species Act, provisions of the National Environmental Policy Act, and the Clean Power Plan- Carbon Pollution Emission Guidelines.[9] The stated objective of regulatory rollbacks, such as changing the oil and gas rules to eliminate control of methane emissions, is “to remove regulatory requirements that are not appropriate to regulate, and will reduce unnecessary regulatory duplication, saving $85 million in regulatory costs from 2019 to 2025.”[10]
The people pay.
Fracking and the petrochemical buildup to produce plastics threaten prospects for addressing global warming and global pollution. The plastics industry based on raw materials extracted from fossil gas deposits will accelerate both global warming by producing tons of greenhouse gas emissions throughout the production cycle, and the product of this operation will contribute tons of plastic materials to the waste stream contaminating the oceans and landfills. Industry analysts and labor unions look at the immediate jobs scenario, projected to last for 20 years with escalating levels of manufacturing associated with the petrochemical operations. The cost of this industrial expansion comes from the climate impact, environmental degradation, and deterioration of worker and public health and safety.
The regulatory policies applied to fracking for natural gas and petrochemical production support destruction of the natural environment. Environmental damage to land and ecosystems is the inevitable consequence of the fracking process from the hydraulic fracturing itself, the pipelines, separation facilities, transportation and production infrastructure. Fracking fragments forests, compromises wetlands, destroys watersheds, emits methane and fugitive hydrocarbon pollutants, and contaminates land with deposits of particulates, radioactive material and organic compounds.
Removing millions of gallons of fresh water from the surface flows of rivers and streams of Pennsylvania to pump underground for hydraulic fracturing will have long-lasting consequences for the geology of the area. Stream paths will be re-directed, groundwater recharge rates will be affected, and plumes of heavy salt will travel through the hydrology of the area. Unknown consequences of this massive redistribution of the water flows will impose both tangible costs to communities as they struggle to assure safe drinking water supplies and indirect costs in the loss of functioning ecosystems. Taxpayers and communities will pay for the transient profits of these multi-national corporations for generations into the future.
The single Shell Appalachia Petrochemical plant under construction in Beaver County now will send out enough pollution and greenhouse gasses to totally obliterate the climate action efforts of the entire surrounding area. The complex of such facilities touted at the Shale Insight Conference would doom this whole area to a future devoid of hope for reaching any meaningful response to the climate crisis and the global plastics pollution crisis that is compromising the very existence of life on earth. The profits will enrich a few multi-national corporations, who will pay as little as possible to their workers, and as little as they can manage to the communities, with extended tax credits and subsidies from the tax payers of the state and nation.
Meanwhile, the costs of failing to address or mitigate the effects of climate change extract an enormous cost from all of us. A summary of the principal economic effects of failing to address climate change was reported in the fourth congressional climate Assessment. [11]
- Labor Losses: Heat-induced productivity reduction costs $160 billion in lost wages a year
- Higher Energy Costs: $87 billion a year by 2100 due to mounting demand on a power system made less reliable by extreme weather.
- Infrastructure damages: Coastal areas face $507 billion worth of real estate from risk of being inundated by rising sea levels by 2100.
- Inland infrastructure damage: Inland flooding could destroy thousands of bridges by 2050 at a cost of $1.2 to $1.4 Billion/year in addition to landslides and collapsing roadways from storm damage and super-saturation of the soil;
- Shrinking Environmental capital: industries dependent on functioning ecosystems such as fishing face huge losses, for example $230 million/ year in loss on shellfish harvests alone.
- Recreation and tourism losses: $140 Billion/year recreation industry losses from disappearing coral reefs alone, and cold-water fishing and skiing would also be affected.
- Agricultural productivity losses: the drought of 2012 alone cost $14.5 billion as determined by crop failure insurance payments.
- Health Effects: stress from extreme weather both cold and heat, affect the health of humans affected both in direct ways from heat stress, asthma, respiratory afflictions and allergies to indirect effects of chronic stress, economic loss, and increased disease vectors.
The costs of continuing this intense investment in extending the fossil-based industries far into the future will have catastrophic effects on our ability to mitigate climate change in our communities.
What is our legacy?
This area has seen the boom and bust cycle repeatedly over its history, most recently in the dramatic decline of steel and heavy manufacturing in the 1970-1980 decade. The population fell, unemployment reached 25% among those who stayed, and the city was close to bankruptcy. This was an industrial transition without a plan, without consideration of the social and environmental justice issues, and without compassion for the human suffering. The trauma and scars of that time run deep and linger to this day. People see system change as fraught with danger. The myth that air and water pollution are inevitable, if not necessary, side effects to having good jobs is well entrenched in the culture of Pittsburgh.
We can take many important lessons from the trauma of that sad time. First is to recognize that powerful industries will shape the social conditions for their success without regard for the impact on individuals, communities, or future citizens. They will shape the laws to their advantage for as long as they can. The net effect of regulations today is to protect polluters and criminalize protestors. Taxpayer subsidies originally applied to encourage the public convenience and necessity of certain enterprises have not been reviewed and evaluated for current conditions. Do subsidies to multi-national corporations with annual profits in excess of the gross domestic product of many countries really support a public convenience and necessity when the result is increased pollution and global warming?
Second, workers are rarely paid what they deserve; they are paid what they negotiate. Unions had a major role in obtaining fair wages, safe working conditions and humane hours through battle with the barons of the industrial revolution. Now, the strength of unions has been undermined and eroded by the same forces that offer good wages on the condition of workers enduring the effects of lax environmental and public health and safety regulations. The fraught labor movement has alienated entrepreneurs and innovative companies emerging in the renewable energy arena, and in the high technology industries as well. Do we need a better model for determining a fair wage, or is there another way to reflect the value for “the public convenience and necessity” in moving away from a fossil-based economy?
Third, we must recognize that the laws of nature are not negotiable. The laws of chemistry, physics, and the biological responses to changes in the physical environment cannot be changed by human declarations or wishes. Our laws and actions must conform to the laws of nature, or we will join the growing list of living things that are going extinct in the face of a warming planet. Increasing greenhouse gas concentrations in the atmosphere increase the temperature of the planet by holding the sun’s radiation close to the surface. Increasing concentrations of carbon dioxide in the atmosphere cause increased acidity in the oceans as the carbon dioxide absorbs into the water. Changes in the currents of air and water affect the weather patterns and the water cycle in ways that disrupt established patterns of land use and human habitation as well as habitat for creatures all over the globe.
Pittsburgh is on a new path, one that leads to a vibrant, more resilient and sustainable economy with greater hope for equity and environmental stability. Quoting Mayor Peduto’s statement to the P4 Climate Summit,
“These are the facts: In Pennsylvania there are twice as many workers employed by the clean energy industry than by fossil fuel producers. There are more clean energy workers in Allegheny County than any other county in the state, including Philadelphia. The plans the City of Pittsburgh has adopted to cut carbon emissions in half are projected to add 110,000 full-time equivalent jobs by 2030. Pittsburgh has transitioned to a technology-based economy, with its tech firms attracting almost $4 billion in investments the last 10 years – $2.3 billion of which has come in just the last five years, much of it focused on the autonomous vehicle and robotics sectors. … Pittsburgh has willed itself into economic rebirth after its near death. It joins the world in valuing our future over reliving the past.” [12]
We face a critical inflection point where the ecological balance shifts to a new equilibrium that is hostile to life as it has evolved over the last five million years. The invisible hand of the market will not drive the fundamental transformation that is required to maintain climate conditions in a temperature range that supports today’s living things, including humans. We must apply the moral judgment to make decisions that will sustain a living planet for the future. Where we choose to make investments and what we choose to enable by law will determine the fate of our children. The greatest tragedy of the Haliburton Loophole is the huge diversion of capital and expectations from a path that sustains life to one of destruction. The enormous subsidies and incentives showered on the multi-national corporations of the petrochemical industry foreclose investment in sustainable, resilient development initiatives within communities. This lost opportunity cost of the fracking/petrochemical industry is a moral decision to destroy the future rather than to preserve it.
When empowered to decide on what kind of future is desired for communities, people develop exciting plans. In Johnstown, Beaver, Butler, Meadville and Erie, communities are working to re-define their future. For example, The Re-Imagine Beaver County project facilitated by the League of Women Voters gathered community members and leaders throughout Beaver County over an eighteen- month period.[13] The strategies that evolved from this work established a community vision that is not dependent on a single fossil-based industry but rather establishes a diversified base of businesses in many different industries. The plans call for investing in Energy Innovation, Green Chemistry Eco-Industrial Parks, Sustainable Agriculture and Riverfront Development centered on restoration and natural resources. The community is moving forward to implement this vision, with the premise that if the $1.6 billion in incentives given to the Shell Petrochemical complex were invested in communities instead, this vision would be readily accomplished for far less.
The way forward:
We face two visions for the future- one where preserving fresh water symbolizes a civilization that recognizes the value of the living Earth and preserves it as the provider of our life support system and one where water is a production medium and land is to be exploited for transient profits. I close with Rachel Carson’s prescient comment at the end of Silent Spring:
“We stand now where two roads diverge. But unlike the roads in Robert Frost’s familiar poem, they are not equally fair. The road we have long been traveling is deceptively easy, a smooth superhighway on which we travel at great speed, but at its end lies disaster. The other fork of the road – the one less traveled by – offers our last, our only chance to reach a destination that assures the preservation of our earth.”[14]
The pathways to a sustainable future and the technologies we need to pursue them are at hand. We are not facing a technology crisis, but rather a crisis of ethics. Will we leave a legacy of a living earth for our children, or will we remain focused on immediate profits and condemn our children to a future hurtling toward certain destruction of life? Imagine what we can accomplish if we invest in the future instead of subsidizing the past.
Sources and Citations
[1] Rebecca Elliot, Christopher Matthews. “Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale.” The Wall Street Journal. August 30, 2019. https://www.wsj.com/articles/oil-and-gas-bankruptcies-grow-as-investors-lose-appetite-for-shale-11567157401 Accessed November 7, 2019.
[2] Air Quality Plan Approval Application – Petrochemicals Complex. Shell Chemical Appalachia LLC Beaver County, Pennsylvania. May 2014. Submitted to PA Department of Environmental Protection. https://gasp-pgh.org/wp-content/uploads/2014/05/Shell-Petrochemicals-Complex-Plan-Approval-Application.pdf
[3] Michael Corkery. “Deluged by Plastics but Bustling to Make More.” New York Times. Aug. 12, 2019, Section A, Page 1 of the New York edition. https://www.nytimes.com/2019/08/12/business/energy-environment/plastics-shell-pennsylvania-plant.html Accessed October 23, 2019.
[4] For a fuller discussion of oil and gas subsidies and effects see https://patriciademarco.com/2019/05/23/green-jobs-and-a-living-planet-make-it-happen/
[5] http://priceofoil.org/2017/10/03/dirty-energy-dominance-us-subsidies
[6] https://www.forbes.com/sites/jamesellsmoor/2019/06/15/united-states-spend-ten-times-more-on-fossil-fuel-subsidies-than-education/#414b6e784473
[7] https://www.pennfuture.org/Files/News/FossilFuelSubsidyReport_PennFuture.pdf
[8] David Coady, Ian Parry, Nghia-Piotr Le, and Baoping Shang. Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates. International Monetary Fund Working Paper, Fiscal Affairs Department. May 2019. https://www.imf.org/en/Publications/WP/Issues/2019/05/02/Global-Fossil-Fuel-Subsidies-Remain-Large-An-Update-Based-on-Country-Level-Estimates-46509 Accessed November 7, 2019.
[9] Harvard University. Environmental and Energy Law Project. Regulatory Rollback Tracker. https://eelp.law.harvard.edu/regulatory-rollback-tracker/ Accessed November 7, 2019.
[10] https://www.post-gazette.com/business/powersource/2019/08/13/Shell-cracker-Trump-protesters-plastics-ethane-oil-gas-Beaver-EPA-regulations-pennsylvania/stories/201908130059
[11] USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
https://nca2018.globalchange.gov/downloads/NCA4_2018_FullReport.pdf Accessed November 7, 2019.
[12] Oliver Morrison. “Peduto Speaks Out Publicly for the first time against a petrochemical expansion in western Pennsylvania.” Public Source. October 30, 2019. https://www.publicsource.org/peduto-speaks-out-publicly-for-the-first-time-against-a-petrochemical-expansion-in-western-pennsylvania/ Accessed November 7, 2019.
[13] Re-Imagine! Beaver County. Joanne Martin, Heather Haar, Mark Dixon, Andre Goes, Connor Mulvaney, Sophie Reidel. Funded by Colcom Foundation, Heinz Endowments, League of Women voters of Pennsylvania Citizen Education Fund, Three Rivers community Foundation. Spring 2019.
[14] Rachel Carson. Silent Spring. Houghton Mifflin Company. Boston. 1962. Page 277.
Patricia DeMarco Ph.D. 