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U.S. Fracked Gas Hits the UK

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Wolfgang Meinhart

By Andy Rowell

Soon British consumers will be cooking and heating their homes with American fracked gas for the first time.

But there is growing evidence that fracked U.S. gas—and the infrastructure being built to supply it—has a huge ecological, social and personal impact back in the U.S., which British consumers may not know about.


Last Saturday, in an historic milestone, the first liquefied natural gas (LNG) from the U.S. docked at the Isle of Grain terminal in Kent, which is Europe's largest gas storage terminal.

The ship came from the Sabine Pass export terminal in the Gulf of Mexico. It has been chartered by France's Total looking for a market for gas.

The oil industry will try and sell you fracked gas on the false assumption that this is a secure and safe supply compared to, say, gas from Nigeria or Algeria, which have both had problems in the past.

As the shale boom continues in the U.S., the industry is looking for new markets to send the fracked gas to. And the industry is looking to export. There are currently five export terminals under construction. And Europe is rapidly becoming a destination of choice.

The European gas industry is celebrating the shale arrival, too. "It is great to finally have U.S. shale molecules coming across to the UK grid at such an exciting time for the industry," said Simon Culkin, Grain's terminal manager. "The more sources you can draw on, the better."

But that gas comes at a huge ecological, social and personal cost.

In a great new investigation, the Ferret, an independent award-winning journalistic platform, has published an article on the problems of fracked gas headed to the UK.

The must-read investigation, published Tuesday, focuses on Sunoco Logistics' massive Mariner East 2 pipeline (ME2), which is under construction across southern Pennsylvania's belt, to bring fracked gas to Scotland.

When completed, the multi-billion dollar pipeline will bring up to 70,000 barrels per day of ethane, propane and butane to a storage facility at Sunoco's Marcus Hook Industrial Complex. From there, the ethane will be transported by tanker to Scotland and the vast sprawling petrochemical complex at Grangemouth in Scotland owned by the chemical company Ineos.

While Ineos is leading the UK fracking push, it is also leading the way to import gas from the U.S. Indeed, earlier this year, Ineos received its first cargo of ethane gas from the U.S. for its Grangemouth plant.

The Ferret reports about the anger and resentment brewing against the ME2 pipeline back home. Local campaigners "say their basic rights are being trampled—no small thing in the state where the U.S. Constitution was born—and they are fighting to halt this pipeline and others like it. Or at least, to win the safeguards to which they believe they're entitled."

It is easy to see why people are outraged. Due to arcane laws in the U.S., where companies can seize property via a legal manoeuver called an "eminent domain," locals have had their property seized.

One family, the Gerharts, live near Huntingdon in Pennsylvania. "For 35 years, the Gerharts have lived there amid 27 wooded acres filled with peace, quiet, and wildlife including painted turtles and a protected species of bat," reported the Ferret. "Today, however, three of those forested acres, hosting ponds, streams, and wetlands conserved through the state's forest stewardship program, have been denuded for the Mariner East 2 pipeline right of way."

To make matters worse: "The Gerharts are considered trespassers on their own property," after three acres was condemned after the family refused to sell Sunoco an easement.

The family have been fighting back ever since. They have been arrested and thrown in jail for trying to protect their own property. They are still fighting the company in the courts in an ongoing legal battle. "[That land] is still on our deed, and we still pay taxes on it," Elise Gerhart told the Ferret. "We are being made into criminals for doing things that aren't actually crimes."

Other anti-pipeline protesters who have set up camp are being followed by drones and low flying helicopters.

Elsewhere, residents are up in arms over the fact that the pipeline runs within feet of their homes and they now live in the so-called "blast zone" if anything goes wrong. One local resident, Alison Higgins, a housewife and grandmother, outlined to the Ferret how "I feel my constitutional rights have been trampled on. Our home is our sanctuary, our safe place. Well, I no longer feel safe in my home."

Residents are being supported in their fight against the pipeline company by the Clean Air Council (CAC), a 50-year-old regional environmental group "dedicated to protecting and defending everyone's right to breathe clean air." It has filed two statewide anti-pipeline lawsuits on behalf of local people.

"Sunoco is bullying landowners, it's bullying municipalities," said attorney Alex Bomstein from the CAC. "It's a problem for good governance when you have a company going in and breaking laws everywhere and no one holds them accountable. That has implications for the viability of our democracy."

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Ola Elvestrun, Norway's environment minister, announced Thursday that it is freezing its contributions to the Amazon Fund, and will no longer be transferring €300 million ($33.2 million) to Brazil. In a press release, the Norwegian embassy in Brazil stated:

Given the present circumstances, Norway does not have either the legal or the technical basis for making its annual contribution to the Amazon Fund.

Brazilian President Jair Bolsonaro reacted with sarcasm to Norway's decision, which had been widely expected. After an official event, he commented: "Isn't Norway the country that kills whales at the North Pole? Doesn't it also produce oil? It has no basis for telling us what to do. It should give the money to Angela Merkel [the German Chancellor] to reforest Germany."

According to its website, the Amazon Fund is a "REDD+ mechanism created to raise donations for non-reimbursable investments in efforts to prevent, monitor and combat deforestation, as well as to promote the preservation and sustainable use in the Brazilian Amazon." The bulk of funding comes from Norway and Germany.

The annual transfer of funds from developed world donors to the Amazon Fund depends on a report from the Fund's technical committee. This committee meets after the National Institute of Space Research, which gathers official Amazon deforestation data, publishes its annual report with the definitive figures for deforestation in the previous year.

But this year the Amazon Fund's technical committee, along with its steering committee, COFA, were abolished by the Bolsonaro government on 11 April as part of a sweeping move to dissolve some 600 bodies, most of which had NGO involvement. The Bolsonaro government views NGO work in Brazil as a conspiracy to undermine Brazil's sovereignty.

The Brazilian government then demanded far-reaching changes in the way the fund is managed, as documented in a previous article. As a result, the Amazon Fund's technical committee has been unable to meet; Norway says it therefore cannot continue making donations without a favorable report from the committee.

Archer Daniels Midland soy silos in Mato Grosso along the BR-163 highway, where Amazon rainforest has largely been replaced by soy destined for the EU, UK, China and other international markets.

Thaís Borges.

An Uncertain Future

The Amazon Fund was announced during the 2007 United Nations Climate Change Conference in Bali, during a period when environmentalists were alarmed at the rocketing rate of deforestation in the Brazilian Amazon. It was created as a way of encouraging Brazil to continue bringing down the rate of forest conversion to pastures and croplands.

Government agencies, such as IBAMA, Brazil's environmental agency, and NGOs shared Amazon Fund donations. IBAMA used the money primarily to enforce deforestation laws, while the NGOs oversaw projects to support sustainable communities and livelihoods in the Amazon.

There has been some controversy as to whether the Fund has actually achieved its goals: in the three years before the deal, the rate of deforestation fell dramatically but, after money from the Fund started pouring into the Amazon, the rate remained fairly stationary until 2014, when it began to rise once again. But, in general, the international donors have been pleased with the Fund's performance, and until the Bolsonaro government came to office, the program was expected to continue indefinitely.

Norway has been the main donor (94 percent) to the Amazon Fund, followed by Germany (5 percent), and Brazil's state-owned oil company, Petrobrás (1 percent). Over the past 11 years, the Norwegians have made, by far, the biggest contribution: R$3.2 billion ($855 million) out of the total of R$3.4 billion ($903 million).

Up till now the Fund has approved 103 projects, with the dispersal of R$1.8 billion ($478 million). These projects will not be affected by Norway's funding freeze because the donors have already provided the funding and the Brazilian Development Bank is contractually obliged to disburse the money until the end of the projects. But there are another 54 projects, currently being analyzed, whose future is far less secure.

One of the projects left stranded by the dissolution of the Fund's committees is Projeto Frutificar, which should be a three-year project, with a budget of R$29 million ($7.3 million), for the production of açai and cacao by 1,000 small-scale farmers in the states of Amapá and Pará. The project was drawn up by the Brazilian NGO IPAM (Institute of Environmental research in Amazonia).

Paulo Moutinho, an IPAM researcher, told Globo newspaper: "Our program was ready to go when the [Brazilian] government asked for changes in the Fund. It's now stuck in the BNDES. Without funding from Norway, we don't know what will happen to it."

Norway is not the only European nation to be reconsidering the way it funds environmental projects in Brazil. Germany has many environmental projects in the Latin American country, apart from its small contribution to the Amazon Fund, and is deeply concerned about the way the rate of deforestation has been soaring this year.

The German environment ministry told Mongabay that its minister, Svenja Schulze, had decided to put financial support for forest and biodiversity projects in Brazil on hold, with €35 million ($39 million) for various projects now frozen.

The ministry explained why: "The Brazilian government's policy in the Amazon raises doubts whether a consistent reduction in deforestation rates is still being pursued. Only when clarity is restored, can project collaboration be continued."

Bauxite mines in Paragominas, Brazil. The Bolsonaro administration is urging new laws that would allow large-scale mining within Brazil's indigenous reserves.

Hydro / Halvor Molland / Flickr

Alternative Amazon Funding

Although there will certainly be disruption in the short-term as a result of the paralysis in the Amazon Fund, the governors of Brazil's Amazon states, which rely on international funding for their environmental projects, are already scrambling to create alternative channels.

In a press release issued yesterday Helder Barbalho, the governor of Pará, the state with the highest number of projects financed by the Fund, said that he will do all he can to maintain and increase his state partnership with Norway.

Barbalho had announced earlier that his state would be receiving €12.5 million ($11.1 million) to run deforestation monitoring centers in five regions of Pará. Barbalho said: "The state governments' monitoring systems are recording a high level of deforestation in Pará, as in the other Amazon states. The money will be made available to those who want to help [the Pará government reduce deforestation] without this being seen as international intervention."

Amazonas state has funding partnerships with Germany and is negotiating deals with France. "I am talking with countries, mainly European, that are interested in investing in projects in the Amazon," said Amazonas governor Wilson Miranda Lima. "It is important to look at Amazônia, not only from the point of view of conservation, but also — and this is even more important — from the point of view of its citizens. It's impossible to preserve Amazônia if its inhabitants are poor."

Signing of the EU-Mercusor Latin American trading agreement earlier this year. The pact still needs to be ratified.

Council of Hemispheric Affairs

Looming International Difficulties

The Bolsonaro government's perceived reluctance to take effective measures to curb deforestation may in the longer-term lead to a far more serious problem than the paralysis of the Amazon Fund.

In June, the European Union and Mercosur, the South American trade bloc, reached an agreement to create the largest trading bloc in the world. If all goes ahead as planned, the pact would account for a quarter of the world's economy, involving 780 million people, and remove import tariffs on 90 percent of the goods traded between the two blocs. The Brazilian government has predicted that the deal will lead to an increase of almost $100 billion in Brazilian exports, particularly agricultural products, by 2035.

But the huge surge this year in Amazon deforestation is leading some European countries to think twice about ratifying the deal. In an interview with Mongabay, the German environment ministry made it very clear that Germany is very worried about events in the Amazon: "We are deeply concerned given the pace of destruction in Brazil … The Amazon Forest is vital for the atmospheric circulation and considered as one of the tipping points of the climate system."

The ministry stated that, for the trade deal to go ahead, Brazil must carry out its commitment under the Paris Climate agreement to reduce its greenhouse gas emissions by 43 percent below the 2005 level by 2030. The German environment ministry said: If the trade deal is to go ahead, "It is necessary that Brazil is effectively implementing its climate change objectives adopted under the [Paris] Agreement. It is precisely this commitment that is expressly confirmed in the text of the EU-Mercosur Free Trade Agreement."

Blairo Maggi, Brazil agriculture minister under the Temer administration, and a major shareholder in Amaggi, the largest Brazilian-owned commodities trading company, has said very little in public since Bolsonaro came to power; he's been "in a voluntary retreat," as he puts it. But Maggi is so concerned about the damage Bolsonaro's off the cuff remarks and policies are doing to international relationships he decided to speak out earlier this week.

Former Brazil Agriculture Minister Blairo Maggi, who has broken a self-imposed silence to criticize the Bolsonaro government, saying that its rhetoric and policies could threaten Brazil's international commodities trade.

Senado Federal / Visualhunt / CC BY

Maggi, a ruralista who strongly supports agribusiness, told the newspaper, Valor Econômico, that, even if the European Union doesn't get to the point of tearing up a deal that has taken 20 years to negotiate, there could be long delays. "These environmental confusions could create a situation in which the EU says that Brazil isn't sticking to the rules." Maggi speculated. "France doesn't want the deal and perhaps it is taking advantage of the situation to tear it up. Or the deal could take much longer to ratify — three, five years."

Such a delay could have severe repercussions for Brazil's struggling economy which relies heavily on its commodities trade with the EU. Analysists say that Bolsonaro's fears over such an outcome could be one reason for his recently announced October meeting with Chinese President Xi Jinping, another key trading partner.

Maggi is worried about another, even more alarming, potential consequence of Bolsonaro's failure to stem illegal deforestation — Brazil could be hit by a boycott by its foreign customers. "I don't buy this idea that the world needs Brazil … We are only a player and, worse still, replaceable." Maggi warns, "As an exporter, I'm telling you: things are getting very difficult. Brazil has been saying for years that it is possible to produce and preserve, but with this [Bolsonaro administration] rhetoric, we are going back to square one … We could find markets closed to us."

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