Chevron, EDF Chat About Fracking, Cap & Trade

Monday evening, two energy business and environmental policy heavyweights duked it out at the Commonwealth Club of San Francisco’s presentation of Climate One, sparring over several economic and environmental issues involving the future of energy in California and beyond. In one corner stood Rhonda Zygocki, Executive Vice President of Policy and Planning at Chevron – in the other, Fred Krupp, President of the Environmental Defense Fund.

Both Zygocki and Krupp agreed business and government should collaborate to develop energy efficiency projects for existing infrastructure. However, they parted ways over the issues of hydraulic fracturing, or “fracking,” and the feasibility of cap-and-trade systems.

Fracking can help grow the economy but poses environmental and public health risks

The U.S. is on the verge of energy independence, Zygocki said. Through further developing fracking technologies to exploit natural gas, the country could attract millions of investment dollars, growing the economy while lessening reliance on foreign fuels. Fracking has already created 1.7 million jobs in the U.S. and could lead to over a million more within a decade. The natural gas acquired by fracking is also one of the cleanest burning fuels, she added.

Acknowledging fracking’s economic potential, Krupp emphasized the need for regulations to guard against the release of fugitive emissions such as methane, a major contributor to climate change – while also protecting people living near fracking sites. Zygocki said energy companies are already doing enough on their own to ensure safety, citing as an example the eight layers of protection used to protect groundwater during the fracking process. Chevron has recognized the lack of solid metrics related to fracking’s environmental and public health risks and is looking to the government to bridge the information gap.

Krupp applauded Chevron’s proactive behavior, but said the industry is too fragmented to go unregulated – while 40 companies make up 50 percent of the country’s onshore production, there are closer to 2,000 constituting the other half. Even if the top 40 companies are behaving as Chevron claims to be, it still does not ensure universal protection – we need governments to take action at the federal, state and local levels to ensure fracking is pursued as safely as possible.

Government cap-and-trade system could mitigate effects of climate change but be tough to implement

Extreme weather events such as last year’s Hurricane Sandy are undeniable evidence of climate change, Krupp said. This also poses an economic threat – in 2012 there were 11 events costing $1 billion or more and this number is expected to grow as the planet continues to heat up. He commended President Obama for breaking the “climate silence” in his recent inaugural address and hopes he will lead a serious conversation in Congress to encourage the passing of legislation establishing a federal cap-and-trade system to reduce emissions and counter climate change.

Zygocki said Chevron shares concerns over climate change and is spending billions of dollars to develop clean energy technologies such as cellulose biofuels. Stressing the importance of “solutions of scale,” she claimed renewable technologies like solar are too small in scope to meet the country’s energy demands. Rather than put a price on carbon, we should focus on energy efficiency, improving fuel economy of the passenger car and researching new technologies such as lightweight materials and more efficient batteries.

A federal cap-and-trade system would encourage private sector innovation and reduce greenhouse emissions, Krupp said. For example, low carbon fuel standards have led to significant improvements in fuel efficiency. At its core, putting a price on carbon is meant to unleash the profit motive to counter climate change. While the U.S. as a whole has lagged on this issue, countries like Brazil have already implemented such a system and reduced emissions more than any other place in the world. Australia is also introducing a carbon tax – the beginning of a cap-and-trade system.

Krupp admitted the current political climate in Washington, D.C. means a federal cap-and-trade system is unlikely to happen any time soon. However, he believes as more states like California and New York develop their own cap-and-trade systems, the rest of the country will follow.

Improving energy efficiency can stimulate the economy and counter global warming

Energy efficiency seemed to be the common ground both Zygocki and Krupp could settle on. The current U.S. electrical grid is still based on the system Thomas Edison devised over a century ago and nearly half of the electricity produced in our power plants is lost during transmission. By improving the efficiency of existing technology, we can make significant reduction in greenhouse emissions and reduce the effects of climate change, Zygocki and Krupp agreed.

New technologies are allowing us to influence demand, Krupp concluded. Modern refrigerators can be programmed to defrost during low-demand periods rather than the middle of the day at peak hours. Energy efficiency is also proving to be profitable, with an average 20 percent payback each year – a much higher rate of return than most traditional investments.

@mikehower is a freelance writer and communications consultant interested in telling the stories of companies and organizations engaged in sustainability, clean technology and social entrepreneurship. He also blogs about sustainable business and politics at SustySavvy.com.