CMU Research Finds Shale Gas Jobs Don’t Offset Damages Done

Is shale development worth the costs? A CMU study says no!

From the Article Published in Pittsburgh Post-Gazette, December 8, 2019

Although the massive shale gas build-out in the Appalachian Basin has produced significant economic benefits, a new Carnegie Mellon University study says all the drilling, fracking and cracking isn’t worth the environmental, health and climate damage.

The study estimates air pollution from shale gas development activities in Pennsylvania, Ohio and West Virginia from 2004 to 2016 resulted in 1,200 to 4,600 premature deaths in the region, and while most of the added employment occurred in rural areas, most of the health impacts were felt in urban areas.

“It’s a rural job phenomenon with urban health impacts,” said Nicholas Muller, associate professor of economics, engineering and public policy at CMU and one of five study authors. “That’s the trade-off. How are regulators able to evaluate that trade?”

Advocacy groups on either side of the issue reacted to the study with a mix of skepticism and praise. The Marcellus Shale Coalition, which represents oil and gas companies, cited other studies that found little pollution impact and significant economic benefits. The Breathe Project, a coalition that includes environmental advocates, public health professionals and academics, hailed the CMU study as groundbreaking and said such a comprehensive analysis is long overdue.

The study is the first to put dollar values on some of the external and cumulative costs of shale gas development, and could help better evaluate the positive and negative impacts, said Jared Cohon, former CMU president and one of the study authors.

“We’re saying there are employment benefits and environmental and climate costs. Whether shale gas development is worth the costs is a value judgment in my view, one that individuals and policymakers can make,” said Mr. Cohon, a professor in CMU’s Civil and Environmental Engineering and Engineering and Public Policy departments.

Specifically, the study looked at public health, environmental impacts and climate change in assessing the industry impact. Premature deaths had an economic toll of $23 billion, based on mid-range calculations that were the median and most likely outcomes of a wide range of potential results. according to the peer-reviewed study, which appeared in the Nov. 18 journal Nature Sustainability.

The shale gas trade-off can now be instituted

Climate impacts produced mid-range costs of an additional $34 billion based on emissions from 2004 to 2016 and those will persist generations longer than gas industry jobs, the study found. The jobs and related economic benefits have an estimated mid-range value of $21 billion, based on employment calculations in counties throughout the region.

Meanwhile, the study found that the cumulative impacts of natural gas development on water and air quality, ecosystem, climate, labor markets and public health “are still largely unexplored and unaccounted for in public and private decision-making.”

Better analytic tools are now available

The study’s lead author, Erin Mayfield, a postdoctoral research associate at Princeton University’s Princeton Environmental Institute, said better analytic tools that account for climate, environmental and public health impacts are needed to help policymakers make good decisions.

The study modeled a wide range of health, environmental and climate impacts that directly stem from natural gas development activities, and provides a method for calculating environmental and pollution damage for comparison with the industry’s economic benefits.

For example, according to the study, for every three job years created by the industry (three people each working one year or one working three years), one year of life is lost for a resident in the region. That means someone died a year prematurely due to increased pollution exposure for every three years of employment in the shale gas industry.

“Jobs are important but you have to look at the whole picture and that’s the context this paper tries to provide,” Mr. Muller said. “Who’s comfortable with the calculation of a life shortened by a year for every three [years of employment] created?”

Mr. Cohon said it’s important for the public and political leaders to know about and evaluate the trade-offs that will continue to occur due to development of the Marcellus and Utica shale gas plays.

“We see the job benefits over the last 10 to 15 years, but there are also air quality and climate impacts. All are statistically significant,” Mr. Cohon said. The environmental impacts of shale gas development are comparable to other heavy industrial development impacts, he said.

RECOMMENDATION: A $2 production tax?

To compensate for the environmental and climate change costs of the region’s shale gas industry, the study recommends a production tax of $2 for every 1,000 cubic feet of gas to account for air quality and climate change impacts.

Based on existing severance tax or impact fee revenue and production rates from 2004 to 2016 in Pennsylvania, Ohio and West Virginia, the shale gas industry paid just 8 cents per 1,000 cubic feet of gas produced, the study said.

“Private firms across the supply chain have not faced the full costs of natural gas development,” Ms. Mayfield said, “and the public has effectively subsidized greenhouse gas and air pollution emissions that result in climate change and health impacts.”

Pennsylvania Gov. Tom Wolf has been pushing for a higher severance tax on natural gas production for years but hasn’t been able to overcome opposition from the state Legislature.

Mr. Cohon said a $2 fee would elicit strong opposition from the shale gas industry and would have no political support. Still, he said, it’s helpful to put a dollar figure on the environmental and climate costs. “Consumers make decisions based on price signals. If the price doesn’t reflect the true costs, then they can’t make informed decisions,” he said.

Shell Chemical Appalachia is building a massive petrochemical complex in Potter Township, Beaver County, with support from government-backed incentives. An ethane cracker and three other units at the plant promise to turn the natural gas liquid produced as part of the shale gas drilling into plastic pellets used by other industries.

Mr. Cohon said decisions about building a handful of additional cracker plants would benefit from making a collective assessment of their environmental, health and climate impacts. “The key will be to look at the cumulative impacts of the cracker industry in Western Pennsylvania and the impacts of two or or three or five more,” he said, “and try to project those impacts into the future.”

The study’s scope is limited. It doesn’t look at the air quality benefits that might result from using natural gas instead of coal, or what the use of the gas is substituting for. The study also does not take into account premature deaths avoided by using gas instead of coal for electric power generation.

The wide range of monetary benefits or damages the study found for impacts on employment, the environment and climate reflect the uncertainty of different models and the data. But the findings are statistically significant, Mr. Cohon said. “We now have a powerful tool to analyze the impacts of the shale gas development,” he said, “and that should make the decision-making better.

‘Varying trade-offs’

The Marcellus Shale Coalition, the region’s shale gas trade and lobbying organization, did not comment on specifics of the CMU study, but responded by touting widespread economic benefits and deep concern for and commitment to the region’s environment and public health and safety.

“All energy sources and industries carry associated impacts and varying trade-offs, and we believe firmly — as reflected in a broad and overwhelming body of independent research and analysis, including recent (Pennsylvania Department of Environmental Protection) air quality data that’s been covered by the Post-Gazette — that natural gas is unquestionably enhancing our environment and air quality, boosting job creation and making Americans more secure,” the coalition’s emailed statement said.

“These benefits continue to cascade positively across our entire economy, especially as it related to manufacturing and power generation.”

The DEP air quality study cited in the coalition’s statement, which was released in July 2018, used data collected at four sites surrounded by natural gas wells, compressor stations and processing facilities in Washington County in 2012 and 2013.

That study found limited air quality impacts at those four sites and minimal public health risks. The findings were called into question by state and federal agencies because of problems with missing data, malfunctioning equipment and monitoring sites that were not located downwind from shale gas facilities they were supposed to monitor.

Matt Mehalik, executive director of the Breathe Project, a collaborative of 39 environmental, academic and health organizations, said the new CMU research is “groundbreaking in its scope,” and clearly shows that even as the shale gas industry was rapidly expanding over the past decade, it wasn’t covering its health and environmental impacts.

“The bottom line for me is that they did an analysis of the boom period of development that has already happened and found the petrochemical industry was an economic loser in the region to the tune of tens of billions of dollars,” Mr. Mehalik said.

Some political leaders have suggested opening the discussion about future shale gas development in the region. Mr. Mehalik said, “Our political leaders here need to explain why the region should accept such a bad economic deal.”

>>> Additional authors of the CMU study include Allen Robinson, who heads CMU’s Mechanical Engineering Department and is a professor in the mechanical engineering and the engineering and public policy departments, and director of the Center for Air, Climate and Energy Solutions; and Inez Azevedo, an associate professor in Stanford University’s Department of Energy Resources Engineering and co-director of the university’s Climate and Energy Decision Making Center.