US Chamber of Commerce Blog
Meeting the commitments President Obama made as part of the Paris climate agreement could cost the U.S. economy $3 trillion and the industrial sector 6.5 million jobs by 2040, according to a comprehensive new study by NERA Economic Consulting commissioned by the American Council for Capital Formation with support from our Institute for 21st Century Energy.
In support of the Paris climate change accord agreed to in December 2015, the Obama administration released its Intended Nationally Determined Contribution, or INDC, setting a goal to cut U.S. net greenhouse gas emissions 26% to 28% from the 2005 level by 2025.
We here at the Energy Institute were among the first to point out that not only was this an unrealistic goal, but that the administration didn’t have the slightest semblance of a plan to achieve it. Indeed, our “gap” analysis—later confirmed by the administration itself—concluded that current policies would only get us about halfway to the needed goal. And that was before the Supreme Court put on hold the Environmental Protection Agency’s legally dubious Clean Power Plan, which widened the gap even further.
Conspicuous by its absence in the INDC was any reference to industrial sector emissions. Nevertheless, the Obama Administration recognized that the deep and rapid cuts in U.S. emissions on the scale envisaged in the INDC could occur without reductions from energy-intensive industrial sectors. EPA’s fiscal year 2015 budget proposal, for example, noted the agency intended to begin considering new GHG regulations on the refining, pulp and paper, iron and steel, livestock, and cement sectors. InsideEPA also reported that, privately, Obama White House officials were clear that industrial sector regulations were essential to closing the Paris gap:
[S]ources familiar with the meeting say that administration officials were candid in their plans to regulate manufacturing GHGs to address an emissions "gap" between current and proposed climate rules and President Obama's INDC pledge to cut GHGs 26 to 28 percent from 2005 levels by 2025. White House and EPA spokespeople did not respond to requests for comment. The administration has not publicly stated it is developing manufacturing GHG rules . . . . . . A second source familiar with the meeting says a White House official was frank about the need for new rules to meet the emissions gap, and that those rules will focus on industrial facilities.
So how much would meeting the 26% to 28% target cost? Well, the Obama Administration’s failure to provide a clear roadmap for its INDC meant there was no basis on which to assess its cost or achievability of the 26% to 28% target. Until now.
The Energy Institute partnered with the American Council on Capital Formation to work with the well-respected firm NERA Consulting to do what the Obama Administration should have done but didn’t: model and analyze its INDC target. The resulting report released today, Impacts of Greenhouse Gas Regulations on the Industrial Sector, provides the first detailed analysis of the additional measures—including regulating industrial emissions and implementing the stayed Clean Power Plan—that would be needed to close the emissions pledge gap.
The report’s central scenario projects achieving the INDC would essentially surrender the competitive edge our industries enjoy thanks to the America’s energy revolution. Specifically, the report estimates that by 2025:U.S. GDP would plunge by $250 billion; the economy would shed 2.7 million jobs; the industrial sector would lose 1.1 million jobs; and average household income would drop $160.
The analysis finds that the cement, iron & steel, and petroleum refining sectors would suffer the biggest losses. Under the study’s core scenario, their 2025 output declines by about 21%, 20%, and 11%, respectively. Higher energy costs also hurt domestic demand and the international competitiveness of U.S. industry, leading to emissions “leakage” and a greater share of U.S. demand for industrial products being met by imports.
In addition to the analysis of the Paris pledge out to 2025, the study examines the potential longer-term impacts of placing U.S. emissions on a trajectory to achieve the Obama Administration’s long-term emissions goal of an 80% reduction by 2050. The study found that in 2040, the last year of the model run:GDP would be cut by nearly $3 trillion; industrial employment would fall by 6.5 million jobs; and average household income would drop $7,000.
There’s a lot more in the study, including analyses of four other policy scenarios and state-level impacts for Ohio, Pennsylvania, Michigan, and Missouri. This and other information on the study can be found here.
This originally appeared on the Institute for 21st Century Energy's blog.
The shale boom is back.
The Energy Information Administration on Monday said it expects an increase in domestic shale-oil production to nearly 5 million barrels a day for April, which would be the highest monthly level in roughly a year.
The EIA offered forecasts for a climb from seven major U.S. shale producers by 109,000 barrels a day to 4.962 million barrels a day in April from March, according to the agencies monthly Drilling Productivity Report.EIA: Monthly oil production by basin.Source: Energy Information Administration.
During the two-year span of falling oil prices, companies retooled. By employing new technology and rethinking the fracking process, they became more efficient and lowered their “brake-even price,” the lowest oil can be for a producer to recoup its costs.
When oil prices rebounded, companies took advantage and ramped up production.Big Oil Finds in Texas and Alaska
In addition, as technology and techniques to find and get shale oil continue to advance, more areas become commercially available for production.
For instance, late last year, a massive oil and natural gas field was found in Texas:
Geologists say a new survey shows an oilfield in west Texas dwarfs others found so far in the United States, according to the US Geological Survey.
The Midland Basin of the Wolfcamp Shale area in the Permian Basin is now estimated to have 20 billion barrels of oil and 1.6 billion barrels of natural gas, according to a new assessment by the USGS.
That makes it three times larger than the assessment of the oil in the mammoth Bakken formation in North Dakota.
The estimate would make the oilfield, which encompasses the cities of Lubbock and Midland -- 118 miles apart -- the largest "continuous oil" discovery in the United States, according to the USGS.
And Alaska could be the next fracking frontier:
A pioneer of the U.S. shale revolution wants to take fracking to America’s final frontier. Success could help revive Alaska’s flagging oil fortunes.
Paul Basinski, the geologist who helped discover the Eagle Ford basin in Texas, is part of a fledgling effort on Alaska’s North Slope to emulate the shale boom that reinvigorated production in the rest of the U.S. His venture, Project Icewine, has gained rights to 700,000 acres inside the Arctic Circle and says they could hold 3.6 billion barrels of oil, rivaling the legendary Eagle Ford.
The companies’ first well, Icewine 1, confirmed the presence of petroleum in the shale and found a geology that should be conducive to fracking, Basinski said. Their second well, due to be drilled in the first half of 2017, will fracture a small section of that range and see how readily the oil flows.
“We don’t know what we have yet," said Michael McFarlane, Burgundy’s president. “We know that the shale has sourced a tremendous amount of oil, but is it commercial? That’s a question that we haven’t answered yet."
If companies can figure out how to safely get and transport shale oil at a cost that makes business sense, we’ll see it come to market.Great for U.S. Companies and Workers
Rising domestic energy production is great news for U.S. companies and workers.
Even with the fall in oil prices in the last few years, since President Barack Obama lifted the oil export ban in 2015, exports have surged. As production increases, there will be more opportunity for American workers to satisfy overseas energy appetites.
Abundant shale energy is also good for manufacturing. ExxonMobil recently announced $20 billion in manufacturing investments that will create 45,000 jobs.
After some dark times, it’s looking brighter for American shale energy.
UPDATE: Check out this facinating 360-degree video from a drilling rig in Texas' Permian Basin.
More Evidence that the Energy Revolution has Sparked a Manufacturing Renaissance in the U.S. | Mar 6 2017
The energy revolution continues to bring good economic news to an otherwise anemic economy. For years, we’ve been arguing that America’s energy revolution will bring jobs and investment to our economy. Now, there’s a new example to demonstrate just how true that is. Today at the annual CERAWeek 2017 conference, ExxonMobil CEO Darren Woods announced a new Growing the Gulf initiative to increase its manufacturing capabilities in the Gulf coast region.
As part of the initiative, the company will be investing $20 billion to build or expand 11 different facilities—creating 45,000 new American jobs.
So why is a giant company best known for oil production investing so much in manufacturing? Last year, the Chamber’s Sean Hackbarth captured the essence of how America’s energy revolution has sparked a manufacturing revolution as well. The natural gas, crude oil, and gas liquids being produced across the country in record amounts are the chemical building blocks to products we use every day, from clothing to cosmetics to pharmaceuticals. One needs to look no further than the aisles of a department store to see all the plastic products, and that plastic comes from natural gas and oil. Sophisticated high-tech manufacturing facilities turn these energy resources into the products we buy.
As we produce more home-grown energy, it is leading to more home-grown manufacturing as well. Plentiful energy resources are making it less expensive to build products in the United States, and those same resources are also providing the electricity needed to run manufacturing facilities at reduced costs.
All this manufacturing means more choices for American consumers, and it gives us an opportunity to export products. Domestic U.S. manufacturers are now competing all over the world, helping to reduce our trade deficit and creating jobs back at home.
As a result, the United States, and especially the Gulf coast, is becoming the epicenter of a manufacturing renaissance—exactly as we predicted. In 2014, the Energy Institute launched our “Shale Works for US” campaign, which included a report produced with IHS CERA that quantified the far-reaching benefits from the shale revolution. It is important to note that because of our national supply-chain, the benefits from investments reach each and every state, and in turn bring jobs, revenues and benefits to every corner of our nation.
It’s exciting to see these predictions borne out, and it’s a continued sign that America’s status as an energy superpower will help bring prosperity to us all—while driving innovation and technological advancement that help make America an economic superpower as well.