At the end of last year, governor Andrew Cuomo announced that New York State will put a stop to high volume hydraulic fracking (HVHF, also known as ‘fracking’) within its borders – making it the second state (Vermont being the first) to ban the controversial practice. Environmentalists have applauded the decision, and a recent Quinnipiac University poll found that over half of New Yorkers approve as well.
Here we look at three questions about New York’s decision to put fracking activities on hold:
- Why was fracking banned in New York state?
- How will the ban affect electricity prices in New York?
- How does the fracking ban fit into the state’s longer-term goal of fostering greater uptake of renewable energy technologies like rooftop solar panels?
Why was fracking banned in New York? Uncertainties about health impacts
A good portion of New York state sits on top of the Marcellus Shale Formation, whose natural gas reserves have recently become accessible due to advances in fracking technology. These resources are already being actively exploited in neighboring Pennsylvania, but New York has long been hesitant to give the okay to drill. As a result, gas companies have not established presence in the state that they have in other states. And while other states have moved ahead quickly, New York is taking a decidedly more cautious approach.
Why has New York, where solar panels are so popular, decided that it doesn’t need to partake in the shale gas boom, despite abundant resources? The governor’s decision to place a moratorium on fracking was implemented as a result of an investigation into the health and environmental impacts of the practice. In December of 2014, the Department of Health released a comprehensive report on the matter. The “Public Health Review of High Volume Hydraulic Fracturing for Shale Gas Development” report concludes that there are “significant uncertainties” about the potential health impacts of fracking, and recommends that it be halted in the state until it can be proven that it poses minimal risk to the public health.
The study investigates a number of areas of potential health hazards associated with fracking:
- Air quality: Fracking wells can result in emissions of methane (a powerful greenhouse gas), volatile organic compounds and particulate matter.
- Water quality: Faulty fracking wells could result in leakage of methane and other compounds into drinking water.
- Earthquakes: Some studies have suggested that fracking may be responsible for inducing seismic activity.
- Indirect community social health risks: The review looks at historic instances of the impacts of rapid growth in extractive industries on local communities; potential negative effects include a detrimental impact on quality of life (more odors, noise, etc) and an increase in social problems.
- Long-term health impacts: No conclusive studies have yet been conducted to determine if there are any health risks for those living near fracking activities over long periods of time.
The DoH’S conclusion is sound: even as the health impacts of fracking are unclear, we do know that there is no danger posed to the public health by disallowing the practice. Therefore, fracking should be halted until scientific evidence demonstrates that there is no risk – in keeping with the ‘Precautionary Principle‘. There are a number of studies underway to reduce this uncertainty (Inspired Economist has a summary), but it may be years before they are complete. In fact, Department of Conservation minister Joseph Martens, who oversaw the report, has suggested that the ban is unlikely to be revisited anytime soon in light of the large number of health questions which need answering.
How will the ban affect electricity prices in New York?
New York generates a large amount of electricity by burning natural gas. It is unlikely that this will change in the near future, even with the ban in place. This is because gas can be imported in from other states where fracking is still allowed. And thanks to fracking activities elsewhere in the country, nationally natural gas-generated electricity prices are at their lowest in over a decade. New York, by importing natural gas from outside the state, stands to benefit to some degree from this boom even as it refrains from allowing fracking to further develop its own natural gas resources
However, in the longer term, two things remain in doubt:
- The fracking boom is helping to bring down natural gas-fired electricity prices in the short-term, but will the prices stay down? Fracking for natural gas may not be the energy panacea it has been made out to be by its proponents. Gas-fired electricity generation prices are relatively volatile (especially when compared solar and wind electricity prices): Once export terminals are built and US natural gas resources are exposed to the broader global market, it is highly likely that prices will go up.
- Is New York positioned to benefit from the lower price of gas at all? Because fracking has been banned in New York, new pipelines to carry it are unlikely to be built. This puts the state in a similar situation as Massachusetts and Connecticut, who are also highly reliant on gas for electricity generation. Electricity prices are set to spike in those two states this winter due to a ‘bottleneck’ caused by a (supposed) shortage of pipelines. However, as we noted in the cases of MA and CT, building new pipelines will not solve the problem of rising electricity prices in the long-term, and at best will serve only to mitigate the impacts of price fluctuations in the short- and medium-term.
How does the ban affect New York state’s future energy plans?
The Wall Street Journal and Forbes have both voiced incredulity about the wisdom of the state’s fracking ban – criticizing it a bad move for both jobs and electricity ratepayers. Such comments indicate a lack of imagination when it comes to the future.
And indeed, the state has big-picture energy reform in its sights. The REV (Reforming the Energy Vision) initiative, announced in December of last year, has been set in motion to establish a new keystone energy policy for the state, and will determine the best path for New York to bring its electrical system into the modern age. While this initiative is not part of the same policy initiative as the fracking moratorium, the two complement each other well, moving New York toward a cleaner, more efficient and more affordable electricity system.
A key focus of REV will be to expand ‘distributed energy’ technologies such as rooftop solar panels and energy efficiency by fostering self-sustaining markets. The state’s keystone program for distributed solar power – in place since 2012 – is the NY-Sun initiative. In the 2 years following the launch of NY-Sun, more solar power capacity was installed in the state than the entire decade prior – about 300 megawatts (MW).
While this is a drop in the bucket in terms of the state’s total electricity generation capacity, it is nevertheless an important milestone, and solar capacity in the state is set to increase dramatically in the coming years. By 2023 – less than a decade from now – this number is expected to increase 1,000-fold, with 3 gigawatts (GW) installed total.
The rapid uptake of solar power in New York goes to show that more and more New Yorkers find solar energy to be worthwhile investment. Do you live in New York and are you thinking about going solar? Join the EnergySage Solar Marketplace and shop for options in your area