taxes

“Clean Coal” Fantasy Finally Losing Federal Support, But Industry Never Took It Seriously Anyway

The phrase “clean coal” has about as much merit as saying “sanitary sewage,” but that hasn’t stopped the industry and pro-coal talking heads from repeating that phrase ad nauseum to the American public.

The Orwellian industry buzzphrase was so successful that the Obama administration, as part of the 2009 stimulus package, pledged more than $1 billion to create the largest carbon-capturing system known as FutureGen 2.0. The total cost of the project was estimated at $1.65 billion, with $116 million already spent by the federal government.

But this week, the Department of Energy (DOE) announced it is pulling funding from the project, officially killing the FutureGen 2.0 project. The original goal of the project was to retrofit an existing coal-fired plant near Springfield, Illinois with carbon capture and storage technology to reduce emissions by capturing and storing the CO2 underground.

The FutureGen Alliance – the coalition of companies involved in the project – derided the DOE’s decision, claiming that the federal funding was a “key component” to keeping the project alive.

The official line is that there is “insufficient time” to finish the project before the funding deadline of September 2015. But the government misses deadlines all the time – they impose them upon themselves and then move them as necessary. If the deadline were truly the only issue, they would have simply pushed it back to a more suitable and realistic time frame.

The real reason the carbon capture and storage (CCS) project was scrapped was revealed in a statement by FutureGen supporter and Democratic Senator from Illinois Richard Durbin: “A decade-long bipartisan effort made certain that federal funding was available for the FutureGen Alliance to engage in a large-scale carbon-capture demonstration project. But, the project has always depended on a private commitment and can’t go forward without it.” [emphasis added.]

Durbin’s statement was echoed in a story from RT, which pointed out that the remaining $600 million needed for the project – the portion of funds that were supposed to come from FutureGen Alliance members (the coal industry) – never materialized.

And that’s the part of the story that most of the media is ignoring. The project didn’t die because the DOE pulled taxpayer funding; the project ground to a halt by a lack of interest and investment from the dirty energy industry.

Marcellus Shale Fracking Rush Brings Worries of Boom-Bust Cycle

Across the U.S., the shale gas industry's arrival has been marked by wariness, not only of the environmental impacts associated with fracking, but also due to the oil and gas industry's long history of flashy booms followed by devestating busts.

In towns across the state, the lingering effects of past economic downturns – the flight of manufacturing, the 2008 financial collapse, the slow erosion of the auto and steel industries – have left communities eager for jobs, but also experienced with job loss.

Nowhere better illustrates the potential for a shale rush to heal old economic wounds, or communities' vulnerability to new ones, than Cameron County, Pennsylvania. At the eastern edges of the rust belt, Cameron County has been hit hard by the decline of the American auto industry.

Hopes for a shale renassiance are running up against some difficult realities. A report released Monday by the Post-Carbon Institute, titled “Drilling Deeper: A Reality Check on US Government Forecasts for a Lasting Tight Oil & Shale Gas Boom,” concludes that the Marcellus shale is unlikely to fully live up to government forecasts, and that natural gas prices will have to rise to keep drilling going across the state. The vast majority of the Marcellus shale is not the same high quality as the areas where drillers are currently focusing most of their efforts, referred to in the industry as “sweet spots,” making the gas there more expensive to produce.

The report also finds that shale gas production in the Marcellus is expected to reach it's peak in 2018 or 2019 – meaning that within five years, production will begin dropping. “These projections are optimistic in that they assume the capital will be available for the drilling treadmill that must be maintained to keep production up,” the report says. “This is not a sure thing as drilling in the poorer quality parts of the play will require higher gas prices to make it economic.”

Shale Oil Drillers Deliberately Wasted Nearly $1 Billion in Gas, Harming Climate

In Texas and North Dakota, where an oil rush triggered by the development of new fracking methods has taken many towns by storm, drillers have run into a major problem.

While their shale wells extract valuable oil, natural gas also rises from the wells alongside that oil. That gas could be sold for use for electrical power plants or to heat homes, but it is harder to transport from the well to customers than oil. Oil can be shipped via truck, rail or pipe, but the only practical way to ship gas is by pipeline, and new pipelines are expensive, often costing more to construct than the gas itself can be sold for.

So, instead of losing money on pipeline construction, many shale oil drillers have decided to simply burn the gas from their wells off, a process known in the industry as “flaring.”

It's a process so wasteful that it's sparked class action lawsuits from landowners, who say they've lost millions of dollars worth of gas due to flaring. Some of the air emissions from flared wells can also be toxic or carcinogenic. It's also destructive for the climate – natural gas is made primarily of methane, a potent greenhouse gas, and when methane burns, it produces more than half as much CO2 as burning coal.

Much of the research into the climate change impact the nation's fracking rush – now over a decade long – has focused on methane leaks from shale gas wells, where drillers are deliberately aiming to produce natural gas. The climate change impacts of shale oil drilling have drawn less attention from researchers and regulators alike.

Could California's Shale Oil Boom Be Just a Mirage?

Since the shale rush took off starting in 2005 in Texas, drillers have sprinted from one state to the next, chasing the promise of cheaper, easier, more productive wells. This land rush was fueled by a wild spike in natural gas prices that helped make shale gas drilling attractive even though the costs of fracking were high.

As the selling price of natural gas sank from its historic highs in 2008, much of the luster wore off entire regions that had initially captivated investors, like Louisiana’s Haynesville shale or Arkansas’s Fayetteville, now in decline.

But unlike natural gas prices, oil prices remain high to this day, and investors and policymakers alike remain dazzled by the heady promise of oil from shale rock. Oil and gas companies have wrung significant amounts of black gold from shale oil plays like Texas’s Eagle Ford and North Dakota’s Bakken.

Shale oil, they say, is the next big thing.

“After years of talking about it, we’re finally poised to control our own energy future,” President Obama said in his most recent State of the Union address. “We produce more oil at home than we have in 15 years.”

But once again, the reality may be nothing like the hype. Consider California.

The Fossil 47 Percent: Freeloading Energy Companies That Pay No Income Taxes

Mitt Romney has nothing but disdain for fossil fuel companies. At least those freeloaders that are “dependent on government” and “pay no income taxes.” This is true if you believe Romney's very own words and some very circular logic. Follow along:

According to Romney, his “job is is not to worry about” those 47 percent of Americans that don’t pay income taxes.

And of course we know that, according to Romney, “corporations are people,” too. So reason dictates that if a corporation isn’t paying income taxes, it’s not Mitt Romney’s job to worry about them.

Someone tell that to the 33 energy companies in the S&P 500 that paid either paid no income taxes at all or actually received a tax return last year.

Bloomberg Stunner: How Chesapeake Energy Paid Less Than a 1% Tax Rate On $5.5 Billion in Profits

Chesapeake Energy, a company that is no stranger to financial scandals, has found itself on the front page of the financial papers again. This time, the subject is taxes. Or how Chesapeake barely pays them.  

Over its 23-year history, Chesapeake Energy, the second largest producer of natural gas in the U.S., and the company described by its founder and CEO Aubrey McClendon as “the biggest frackers in the world,” has earned roughly $5.5 billion in pre-tax profits. To date, the company has paid $53 million in taxes. That’s an effective tax rate of under 1 percent - a massive taxpayer subsidy.

The corporate income tax rate in the U.S. is 35 percent. 

The Bloomberg article that exposed these stunning figures is quick to note that this is far less than the 12 percent rate that GE paid in 2010 that caused such public outrage, and even a tiny percentage of the 18 percent effective rate that Google had to answer for.

So how does Chesapeake pull this off? Mostly, it’s due to a rule written in 1916 that allows oil and gas producers to, according to Bloomberg, “postpone income taxes in recognition of the inherent risk of drilling wells that may turn out to be dry.

The break may be outdated for companies such as Chesapeake, which, thanks to advances in technology, struck oil or gas in 99.6 percent of its wells last year.“ When the policy was written, drillers struck “dry wells” roughly 80 percent of the time.

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