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Ohio Utica Shale

Ohio should avoid relying too heavily on natural gas, report says

By Bob Downing Published: September 23, 2013

From the Union of Concerned Scientists:

As the Ohio General Assembly reconvenes this month, legislators will likely address the state’s energy future. With state Senator Bill Seitz preparing to release new legislation that may rollback Ohio’s existing clean energy laws, a new report from the Union of Concerned Scientists (UCS) addresses the risks and opportunities of Ohio’s current energy mix.

The report argues that it is essential for Ohio to not only keep its Alternative Energy Portfolio Standard (SB221) intact but to strengthen it in order to cut coal dependence and avoid the pitfalls of a new reliance on natural gas. Diversifying Ohio’s energy mix to use more renewable energy and energy efficiency resources will put Ohio on the path toward a truly clean and low-risk energy future.

Historically reliant on coal for most of its electricity, Ohio is starting to retire its oldest, dirtiest, and least efficient coal plants. The state is now turning primarily to natural gas power plants to fill the void left by retired coal plants. In fact, Ohio’s natural gas power plants now produce six times the electricity they did just five years ago in2008. However, shifting from an electricity system dependent on coal to one also reliant on natural gas does not alleviate the myriad risks—to the environment, economy, or public health—posed by coal alone. In fact, it exacerbates those risks, and creates new ones, as detailed in the new UCS report: Managing Risk in Ohio: Clean Energy’s Role in a Reliable, Diverse Power Supply.”

Risks to Ohio’s Energy Future

Perhaps the biggest risk to Ohio consumers is an increase in the cost of natural gas and coal, which could harm the economic viability of the state’s power plants and increase electricity costs. Natural gas prices have already about doubled since reaching a historic low in March 2012, and many energy experts agree that the average price of natural gas will likely continue to increase over the next three to five years. Coal prices are also expected to rise as demand from foreign markets and extraction and transport costs increase.

Reliability is also a risk. For example, natural gas cannot be stored onsite at power plants, creating distribution constraints in times of high natural gas demand, such as during the winter heating season. Regulatory changes can also increase the costs or impact the availability of both natural gas and coal power plants because each has multiple environmental and public health impacts that are liabilities.

Opportunities for Ohio’s Energy Future

Diversifying Ohio’s electricity portfolio by incorporating greater levels of renewable energy and energy efficiency can mitigate the risks inherent in the state’s current overdependence on coal and natural gas.

Renewable energy currently makes up only about 1 percent of Ohio’s electricity portfolio, but is poised to make a greater contribution to meeting Ohio’s electricity demand in coming decades thanks in part to the state’s renewable energy standard, bringing with them more reliable and cost-effective power.

Both renewable energy and energy efficiency are poised to increase their contributions significantly as Ohio’s Alternative Energy Portfolio Standard is implemented. To date, utility energy efficiency programs have already saved more than 3 billion kilowatt-hours (kWh) of electricity at a cost of only 1 cent per kWh. Through 2012, Ohio’s energy efficiency standard had created more than 4,000 new jobs in Ohio; this total is expected to increase to more than 32,000 by 2025 when the energy efficiency standard is fully implemented, delivering a level of energy savings that will reduce Ohio’s energy bills by an expected $3.3 billion.

Renewable energy industries are also investing in Ohio. There is currently 426 MW of wind power capacity online in the state—enough to power more than 100,000 homes and avoid more than 700,000 metric tons of CO2 emissions annually. In all, the wind industry supports between 5,000 and 6,000 jobs in Ohio, provides $3.6 million in annual property tax payments, and yields more than $2.5 million in lease payments to landowners that host wind turbines. Ohio has also become a leading state for manufacturing wind turbine components, with more than 50 such manufacturing companies in the state.

Ohio’s renewable energy and energy efficiency standards are translating into significant savings for consumers. A March 2013 study by the Center for Resilience at The Ohio State University modeled how the current standards have performed and found that, despite having been implemented for only four years, they have led to a 1.4 percent reduction in ratepayer costs between 2008 and 2012, for a total savings of $230 million.

Yet, despite these gains, Ohio could do more to diversify its electricity resource portfolio, particularly with regard to renewable energy. Ohio’s 12.5 percent by 2025 renewable energy standard ranks toward the bottom compared with state renewable energy standards nationwide. Of the 28 states with standards in place, 17 have targets of 20 percent or higher.

Recommendations

Ohio’s Alternative Energy Portfolio Standards are working and should be strengthened, not weakened. Setting Ohio’s renewable energy standard to require 20 percent or more renewable energy by 2025 would reduce Ohio’s exposure to the risks of overdependence on coal and natural gas and create economic benefits for the state. Along with raising the standards, Ohio should enact policies to encourage utilities to enter into long-term contracts for renewable energy. Long term contracts maximize the risk-mitigating benefits of renewable energy by locking in a supply of renewable energy for a set price over ten years or more. UCS also recommends that Ohio’s energy efficiency standard should be fully implemented as currently written into law to ensure Ohio residents and businesses continue to save money and use electricity wisely.

More than 30 Ohio scientists, engineers and other energy experts endorse Ohio’s current clean energy standards and recently sent a letter to Senator Seitz asking him to maintain these standards and to continue moving Ohio forward in its transition to a cleaner, more sustainable energy future. By maintaining and strengthening the renewable energy and energy efficiency targets under its Alternative Energy Portfolio Standard, Ohio will ensure that its ratepayers have affordable, reliable, clean power for years to come.



 

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Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

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Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

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Stop Fracking Ohio.

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Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

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Allegheny Front, environmental public radio for Western Pennsylvania.