Some of the most recognizable voices from Louisiana’s energy industry are questioning the intent of a recent ruling by the Environmental Protection Agency and wondering if President Barack Obama played too heavy a hand. Earlier this month, the EPA announced its finding that greenhouse gas emissions that drift into the atmosphere from domestic sources pose a “public threat” to the nation’s health and welfare. While the finding was not entirely unexpected, Don Briggs, president of the Louisiana Oil and Gas Association, says Obama’s backing of the EPA opinion establishes a framework for his administration to create an emissions trading system. Congress voted down a similar system earlier this year that was backed by Obama and more commonly known as cap and trade.
Instead of going through the legislative process again, Obama can now have his agency draw up the controversial rules and regulate them, Briggs adds. “The Obama administration has been knocking at the front door,” Briggs says. “While all along, they had the key to the backdoor and are now standing in the living room.” The Louisiana Department of Environmental Quality sent a letter to the EPA stating that its ruling sets the “stage for regulation of greenhouse gas emissions from stationary sources, such as power plants, refineries, pulp and paper mills, etc. under the Clean Air Act.” DEQ’s letter said it “strongly believes that finding carbon dioxide and the other five greenhouse gases as an endangerment will increase regulatory programs and create an undue burden on industries, such as the oil and gas industry.”
Louisiana Department of Natural Resources Secretary Scott Angelle also sent a letter to the EPA earlier this week asking it to reconsider its actions on its so-called “Endangerment Finding.” He says the action could “put in motion a rule-making process on greenhouse gas that could cripple the domestic energy industry and a national economy still struggling to recover from recession.”
Angelle recommended “replacing the potentially reactive and restrictive approach” with an incentive program to encourage the use of cleaner-burning natural gas. He said that natural gas has proven to be a cleaner-burning fuel and that new exploration technology and recent natural gas discoveries have increased estimates of the nation’s domestic natural gas supply to more than 90 years at current consumption levels.
Angelle likewise noted that Federal Reserve Chairman Alan Greenspan testified to Congress in 2003 that America needed to find ways to increase imports of liquefied natural gas. Greenspan indicated at the time that domestic supply could not meet demand, and that situation could have a negative impact on the U.S. economy. Angelle wrote that while Greenspan’s comments were appropriate in the context of information available at the time, only six years later, with recent natural gas discoveries such as the Haynesville Shale in Louisiana and the Barnett Shale in Texas, America’s recoverable natural gas resource base has jumped by 35 percent from just two years prior. “The real question now before us is, ‘How do these discoveries and advances in technology change the energy discussion in the United States?'” Angelle wrote. “We believe a robust energy and environmental policy that rewards the use of natural gas will create American jobs, reduce emissions and lower the trade deficit.”
As proposed to Congress, cap and trade would have established new emission standards for coal-powered plants, manufacturers and chemical facilities like those in Louisiana. Here’s how it would work: each entity would get an emissions allowance under the system that would be based on tradable credits. In theory, a coal plant in the northern United States that exceeds its emission limit could buy – for cash – credits from a south Louisiana chemical plant that has cut its carbon dioxide output or is capturing it. Even though it failed to fly through Congress, the concept has caught on with individual states like California are already exploring ways to incorporate the system back home.
