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December 13, 2013

More Environmental Risks for Fracking Operations
    by Robert Kropp

A report by the Environmental Integrity Project warns that construction or expansion of more than 90 natural gas power plants could increase greenhouse gas emissions by 91 million tons.

SocialFunds.com -- Amid claims of national energy independence and reduced greenhouse gas (GHG) emissions, drilling for shale gas by means of hydraulic fracturing has become the modern equivalent of a gold rush. But the environmental and social risks associated with fracking are serious, and fortunately sustainable investors wasted no time addressing them in their engagements with companies in their portfolios.

In 2009, shareowners filed the first of 21 resolutions that just one year later had already gained an unprecedented 40% support. In 2010, a coalition of institutional investors led by Green Century Capital Management and the Investor Environmental Health Network (IEHN) filed shareowner resolutions with 12 companies, requesting improved transparency regarding the environmental impacts of fracking, and the mitigation of risks associated with it.

By 2012, after IEHN and the Interfaith Center on Corporate Responsibility (ICCR) published an Investor Guide to engaging with oil and gas companies on the practice, the focus of ICCR members in particular had widened to include community impacts. "Negative local impacts are straining community resources and generating opposition to fracturing operations," the resolution filed with Chevron stated.

Yet as recently as last month, a report issued by a group of sustainable investment organizations found that “company disclosures are insufficient to meet the needs of investors seeking to evaluate how companies are reducing the potential health and environmental risks of natural gas and oil operations using hydraulic fracturing in the United States and Canada.”

A case in point: Trillium Asset Management filed a resolution this year requesting that Range Resources report on fugitive methane emissions from its fracking operations. Methane "is a potent contributor to accelerating climate change with 72x the impact of CO2 on global temperatures over a 20 year period," Trillium stated. "And a leakage rate above 3.2% makes natural gas worse than coal in driving global warming."

Yet instead of constructive engagement, the company attacked Trillium for its resolution, describing it as having “as its primary motive the destruction of shareholder value in companies in the natural gas value chain and are asking Range shareholders to pay for a fishing expedition to gather data to use against Range and the industry in what appears to be part of the overall tactic of a small group of activist organizations to attack the responsible development of fossil fuels.”

Now a report published by the Environmental Integrity Project (EIP) has outlined another risk associated with hydraulic fracturing, one that calls into question the characterization of natural gas from fracking operations as a bridge fuel from fossil fuels to renewable energy.

Since 2012, according to EIP, “companies have proposed or already obtained 95 Clean Air Act permits authorizing...construction or expansion of more than 90 oil and gas, chemical, and petroleum plants.” While “Burning shale gas in power plants instead of coal reduces greenhouse gas (GHG) emissions,” the report points out, the new construction “will release about as much greenhouse gas pollution as 20 large baseload coal-fired power plants.”

“The total of 91 million additional tons of GHG pollution does not include new emissions from proposed gas-fired power plants or the multitude of smaller wells, gas processing plants, compressor stations, and flares springing up across the US,” the report continued.

“The Environmental Protection Agency is obligated under a Supreme Court decision that is now nearly seven years old to set limits on greenhouse gas pollution under the Clean Air Act,” the report concluded. “Case by case permitting is not a substitute for the national greenhouse gas emission standards that EPA must establish for each of the industrial categories subject to Clean Air Act regulation.” EIP was founded by former EPA enforcement attorneys to advocate for effective enforcement of environmental laws.

“It’s important that we understand the full climate change picture when it comes to America’s shale gas boom and the related tradeoffs,” EIP Director Eric Schaeffer said. “Declining CO2 emissions from the electric power sector will be partially offset by higher emissions from other industries cashing in on cheap and abundant supplies of oil and gas from shale deposits.”

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