To Drill or Not to Drill

A Natural Gas Rush in the Northeast Is Forcing Farmers to Choose Between Income and Land.

by Adam Federman

Last November, 15 families in Dimock announced that they were suing Cabot for poisoning their water, and that exposure to toxic chemicals related to natural gas drilling had led to personal injury, including neurological and gastrointestinal complications. (adapted photo flickr user mydphotos)

Today, Stone wishes she were ten years younger, because the biggest battle of her life has just begun. In 2006, Cabot Oil and Gas, a Houston-based energy company, tapped its first natural gas well in Dimock. Since then, the Marcellus Shale, a geologic formation that stretches from New York to Tennessee and is believed to contain some of the world’s largest reserves of natural gas, has become something of a household name. Last year, Pennsylvania’s Department of Environmental Protection issued 1,984 Marcellus Shale drilling permits, 763 of which were tapped. In New York, drilling hasn’t yet begun, but the state’s Department of Environmental Conservation is expected to start issuing permits this year. The potential threat to New York City’s drinking water – its reservoirs are located within the Marcellus Shale – has been a flashpoint in the debate over gas drilling. 

Last spring, Stone reached out to some of her neighbors after learning that Cabot was considering storing 55-gallon drums of methanol at a site close to her home. Methanol – a flammable toxin that can cause blindness if consumed – is used to prevent pipes from freezing, and Stone was worried that the tanks were too close to residential areas. She thought it would be wise to ask Cabot how they were planning to store the chemicals and what they would do in the event of a spill. “I thought, well, I’ll see if I can get people on the road to go in with me to talk to the Cabot representatives,” she said. She didn’t hear back from anyone and finally called one of her neighbors who said he’d rather go on his own. Another told her she’d go with her only if Stone wasn’t rude and disrespectful. “These are people I’ve known for 34 years, half my life,” Stone told me. “The people who’ve known me and my children growing up and who knew my husband and loved my husband and who are just treating me like I’m the enemy or something.”

Previous efforts to organize opposition to the nuclear waste industry were far less complicated in at least one respect: Today, nearly everyone in Dimock has leased their land to Cabot and has a personal investment in the promise of gas drilling. Dozens of gas wells were drilled in 2009, and Cabot has plans to tap at least 70 more in 2010. “Definitely the factor of people getting money for their land I think has to be the difference,” Stone said.

On the surface, gas drilling doesn’t seem to have changed Dimock. The landscape – a patchwork of forest, farmland, and rolling hills – obscures many of the 150-foot-tall drilling rigs. Because vantage points are rare, one could easily drive through town – the center of which is little more than a blinking yellow light and a one-room post office – without noticing a single well. But evidence of seismic testing is everywhere. The irregularity of the terrain has forced gas companies to drop by helicopter what are known as “shot hole drills” over a large area to measure gas depth. Explosives are placed in the holes and the sound waves measured. Orange cables, connected to geophone receivers and energy source stations, line the roads. According to Stone, every day for two months helicopters circled her property.

Indeed, few in this township of 1,500 have been left untouched. Last November, 15 families in Dimock announced that they were suing Cabot for poisoning their water, and that exposure to toxic chemicals related to natural gas drilling had led to personal injury, including neurological and gastrointestinal complications. The lawsuit was prompted, in part, by the explosion of a drinking water well on New Year’s Day 2009. Investigators later determined that the migration of methane gas released because of faulty well casings had likely caused the explosion. Soon after, neighbors started to report foul smelling tap water the color of unpasteurized cider.

In September, Pennsylvania’s Department of Environmental Protection (DEP) fined Cabot $56,650 for three hydraulic fracturing fluid spills that emptied more than 8,000 gallons of a lubricant gel mixed with water at a Dimock drill site. Some of the chemicals leached into a nearby wetland and creek, resulting in a fish die-off. Two months later, the DEP levied an additional fine of $120,000 and ordered the company to provide temporary water supplies to 13 families in the affected area. Meanwhile, the drilling continues.

On a cold evening in December I met Stone, a wetlands specialist who lives in a house her husband built after they moved to Dimock in the 1970s (he died ten years ago in a kayaking accident). They came to the area to work as naturalists at the Woodbourne Preserve, a 648-acre parcel of forest and wetlands owned by The Nature Conservancy. Set aside in 1956, it contains the largest remaining stand of old growth forest in northeast Pennsylvania and is home to more than 180 species of birds and nine kinds of salamanders.

The preserve abuts Stone’s property and may be the only swath of land this large that will be spared Cabot’s reach. Not that the company isn’t interested. According to The Nature Conservancy, Cabot representatives have made several offers to drill in Woodbourne. There is still discussion about whether the conservancy will lease the subsurface rights.

Stone is a lively woman in her late sixties with a weathered face and youthful eyes. She has been speaking out on environmental issues since her early twenties and seems to measure her life in terms of environmental battles won and lost. She sees herself as a scientist whose role is to weigh the facts and present them to the public. But she has always taken a clear position in defense of the environment. “She would lay down in front of a bulldozer,” an acquaintance told me.

The question of gas drilling, though, has presented a sweeping challenge to her environmental principles, as it has to many in the region. “The whole thing is unreal,” she explained. “I’ve worked since I was twenty to try to get clean water and clean air. So many people have. We’ve made such huge strides. Back in Connecticut, where I’m from, so many rivers have been cleaned up. And Pennsylvania. And it’s like the gas industry is just exempt from everything. They are reversing everything and poisoning the rivers that have been so clean now for forty years.”

Yet in October 2008, after holding out longer than most, Stone reluctantly signed a no-surface lease with Cabot; the company can drill underneath her land, but not on it. She’ll avoid the intrusion and impact of having a well pad on her property, but the risk to her water remains. She owns 12 acres and lives on social security, about $10,000 a year. She needed the money. At the same time, all of the landowners around her had leased their land and Stone felt that even if she refused, there was no guarantee that her land and water would be protected. She also believes that there is an environmental case to be made for natural gas – it burns 50 percent cleaner than coal and a third cleaner than petroleum.

Still, it was a decision she made with deep reservations. She told me, “I just felt like I was betraying who I am to do it. Like I was signing my life away.”

The promise of quick riches and a regional economic revival has driven a frenzied land rush in New York’s southern tier and much of Pennsylvania since the discovery of the Marcellus Shale. The term “discovery” is slightly misleading, given that for more than 75 years the Marcellus Shale has been known to hold large reserves of gas. It is only in the last few years, however, that unconventional shale gas – trapped in tight rock formations deep underground – has become profitable. The integration of two technological advancements, horizontal drilling and hydraulic fracturing (often referred to as “fracking”), has made shale gas economically viable. It has also made it controversial. The method involves pumping large quantities of water, sand, and chemicals under high pressure into the well bore to shatter the rock and release the gas.

In the Marcellus Shale, it has been reported that more than two-thirds of the fracking fluid (up to three million gallons for each well) stays underground. Meanwhile, the wastewater that comes to the surface, which often contains naturally occurring radioactive materials, must be treated and disposed of. Yet the Safe Drinking Water Act, designed to regulate the injection of fluids underground so that they don’t contaminate drinking water aquifers, does not apply to hydraulic fracturing. The so-called Halliburton Loophole (Halliburton invented fracking), inserted into the 2005 energy bill, essentially said that the EPA no longer had the authority to regulate hydraulic fracturing; the industry has never been forced to disclose the fluids it uses to fracture wells, a major sticking point as it seeks to expand production in the Northeast. Since 2005, the industry has also been exempt from the Clean Water Act, Clean Air Act, and Superfund rules.

The investigative news Web site ProPublica has documented more than a thousand cases of water contamination related to gas drilling, both from spills and underground seepage, across the country. According to the site, “a string of documented cases of gas escaping into drinking water – not just in Pennsylvania but across North America – is raising concerns about the hidden costs of this economic tide and strengthening arguments across the country that drilling can put drinking water at risk.”

Reports of groundwater contamination, however, have not dampened shale gas expansion. Fear of eventual petroleum shortages and the fact that there are large domestic reserves of natural gas have made fracking extraction attractive to investors, politicians, and cash-strapped state and local governments. In October, a Congressional Natural Gas Caucus was formed, led by Pennsylvania Republican Congressman Tim Murphy. The caucus is pushing hard for the passage of the 2009 Natural Gas Act, which would provide funding for natural gas vehicle manufacturing facilities and fueling infrastructure.

Environmental groups are not wholly against the practice either. The Sierra Club’s former Executive Director, Carl Pope, has supported natural gas as a so-called “bridge fuel” in the transition from oil and coal to wind and renewables (though many local affiliates are opposed). Robert F. Kennedy Jr., has written that, “a quick conversion from coal to gas is the quickest route for jumpstarting our economy and saving our planet.”

Even though the price of natural gas has remained relatively low and the International Energy Agency has said there will likely be a “looming glut” until at least 2013, the race for lease holdings in the Marcellus Shale has only intensified. In December, Exxon Mobil purchased XTO Energy, which has large holdings in the Marcellus Shale, for $31 billion. Remarkably, the terms of the agreement include an escape clause that says Exxon may back out of the deal if Congress regulates hydraulic fracturing to the point that it becomes “illegal or commercially impracticable.” In the last year, Congress has moved to reverse the exemptions granted the industry in 2005 and the EPA has undertaken its first full review of the controversial drilling method.

Still, many industry observers believe it is only a matter of time before other big players – Dutch Royal Shell, British Petroleum, and Chevron – move in. In rural parts of New York and Pennsylvania, residents are already speaking of a future industrialized landscape, one that will forever alter the character of the region. Small roads will have to accommodate heavy truck traffic – a recent study of gas drilling in Texas found that an average of 592 one-way truck trips were needed for each well. Noise, air, and light pollution (rigs are often active 24 hours a day) are also part of the cumulative impact of gas drilling. As Brett Chedzoy, a forester with Cornell Cooperative Extension, noted recently, gas drilling is “perhaps the largest rural land issue that we’ve ever been faced with in upstate New York.”

New York’s southern tier, which refers to the counties west of the Catskill Mountains just north of Pennsylvania, was once known as New York City’s milkshed and egg basket. Dairy farmers are some of the region’s largest landowners and most are ready to lease their land, if they haven’t already. “We’re hugely in favor of gas drilling,” Peter Gregg, a spokesman for the New York Farm Bureau told me. “It turns out that a lot of the drilling potential happens to lay underneath our farms,” he added. “So we’ve advised our farmers that they negotiate good and fair leases with the gas companies.”

Stefan Gieger, who lives in the New York township of Callicoon and has 70 head of cattle, says that there are probably only a handful of dairy farmers who will resist the pressure to lease. In recent years, the price of milk has fallen to levels last seen in the 1970s even as the cost of feed and equipment has skyrocketed. “Farmers have been cash strapped and unable to make a living for decades,” he told me.

Gieger fears that rather than save dairy farmers, gas drilling will mark the end of an agrarian economy with roots in the region since at least the mid-1800s. Indirectly, he says, gas drilling will kill agriculture: The easy earnings from the extraction industry will dissuade people from continuing the hard work of farming. “I think people should be very concerned about the farmers going out of business,” he said.

And not only dairy farmers. Mark Dunau, an organic vegetable farmer with 50 acres in nearby Hancock, says that he bought his land more than 20 years ago because of the access to clean, abundant water. His livelihood is dependent on the quality of his well and a spring fed pond. “I resent people who say this is the only way farmers can survive, because I’m a farmer and it’s threatening me,” Dunau said.

He also says it is wishful thinking to suggest that dairy farmers will continue to farm once they’ve leased their land. His neighbor, Brian Begeal, who owns a 312-acre dairy farm, has already leased his land and plans to retire as soon as possible. Two of Dunau’s close friends – a fifth-generation and a third-generation dairy farmer – also plan to lease. “Farmers who are signing are stopping production,” Gieger said.

In late October, I caught up with Earl Myers, one of Gieger’s neighbors, on a ridgeline overlooking a valley on the outskirts of Callicoon. The earth was wet from a steady rain that had fallen since early morning and the clouds had parted, filling the fields with late afternoon sunlight. Across several fields, Gieger’s farm was visible. That evening Myers would attend the first public hearing for comments on New York State’s draft environmental impact statement for drilling in the Marcellus Shale. The comment period, which ended December 31, revealed the faultlines that have opened up over gas drilling. State officials received more than 12,000 comments and, at what were often marathon sessions, pro- and anti-drilling factions faced off over the potential impacts of gas drilling on the environment, economy, and communities of the southern tier. Myers had already attended close to 15 public meetings and information sessions, as well as several screenings of Split Estate, a harrowing film on natural gas drilling contamination in Colorado.

When Myers started farming 50 years ago, he had more than 20 neighbors. Today, he and his family farm nearly 1,000 acres, more than half of it acquired from neighbors who have left. He can see why dairy farmers would lease their land. He knows many who have. “The money’s the one that talks really,” he told me. “That’s what worries me.” As for whether he’ll lease his own land, Myers said, “I think about it. At the same time I still don’t endorse it.”

In the last decade, as dairy farms have declined, the number of organic vegetable farms in New York has grown. Last year, the North East Organic Farming Association certified 569 farms in the state, up from 200 a decade ago. Greg Swartz came to the region in 1999 to apprentice on an organic farm in Sullivan County and recently purchased 12 acres in nearby Abrahamsville, PA, where he grows 50 varieties of vegetables. This year he started a community supported agriculture (CSA) program and says that interest is high. “There’s really endless potential for making a living with the land,” he told me in December. “Dairy farmers know that the only way for farming in this area to be revitalized is to not be focused on dairy.” But if the choice is one of diversifying or leasing to a gas company, there is little hope that they will choose the former.

When I met Swartz, the last of the end-of-season leeks and celeriac could be seen in the field in front of his house. A light rain was falling and the valley was quiet and empty. Swartz pointed out a stream to the east, a wetland to the north, and several small creeks that border his field. All of Swartz’s neighbors have leased their land to gas companies and Swartz now faces a dilemma: whether to sell his land (he has no intention of leasing it to the gas companies), or stay and make an investment in the future of his farm. Over Thanksgiving his brother advised him to sell. But Swartz is wedded to the area – his wife runs a small theater company, they have an infant son, and the success of the farm is tied to the community. He can’t just pick up and start over.

“I wouldn’t be nervous about making the investment if gas drilling wasn’t part of the equation,” Swartz says. There’s an old saying, Swartz told me, that a farmer’s bank account is his soil. “Anytime you have something that you can reinvest, you put that back in the soil to ensure that the soil is going to continue producing for you.”

For the first time in years dairy farmers stand to profit. But they may be betting against their farms and the agricultural history of an entire region. In January, Swartz sent me an email and said that he and his wife, after many sleepless nights, had decided to go ahead and make the investment. “The risks are great,” he wrote, “but we can’t leave.”

Swartz’s situation is hardly an exception. In the last few years, nearly everyone who owns land along the Upper Delaware has been presented with offers to lease their mineral rights. Some of the heaviest leasing activity in New York has occurred in Hancock, where the east and west branches of the Delaware River converge. As of April 2009, nearly 25,000 acres, or 25 percent of the total land area, had been leased.

“Everyone looked at the up front money and was blinded by it because to challenge it was like tearing up a winning lottery ticket,” said Hancock-area vegetable farmer Dunau. Many landowners were approached long before the Marcellus Shale was being celebrated, and leased their land for as little as $25 an acre. Today, gas companies are offering as much as $6,000 an acre in addition to royalties.

Perhaps more than anything, the oil and gas companies have promised small towns like Hancock a way out of economic freefall. Katie DuBois grew up in Hancock and recently returned with her husband, a contractor. They live on the Pennsylvania side of the river, and own 100 acres, which they leased to Hess last summer after several years of deliberation. DuBois’s parents have also leased their property and she has relatives who have found work as surveyors as a result of drilling. “If you look at it, it’s really not scary,” she told me. “If you look at the benefit of what it will do for people who really have just been blue collar people their whole life, you know, that’s something not to be taken for granted.”

In the last 15 years, Hancock, along with many of the towns in the region, has experienced a steady decline. Industries have left, including Bard Parker, a surgical blade manufacturer that once employed 750 people. Today, the largely empty space is rented to a dental supply company with 12 employees. Shrubs have overtaken the entrance. Inside, the clocks are stopped at some forgotten time and an old photograph of the factory shows a gleaming white building with an American flag in front. A sign above the door reads, “Bard-Parker celebrates 75 Years of Surgical Blade Excellence.”

But will gas drilling save Hancock? The experience of oil and gas towns in the West offers a cautionary example. In 1974, ElDean Kohrs, a clinical psychologist working in Gillette, Wyoming, coined the phrase “Gillette Syndrome” to describe the disruptions often associated with the boom and bust cycle of oil and gas drilling. Crime rates and drug use skyrocketed. The influx of temporary workers placed unexpected burdens on municipalities. Families were torn apart.

A more recent analysis of drilling in Texas’s Barnett Shale shows that the largest gains have gone to the oil and gas companies and that leasing and royalty incomes account for a small percentage of the total gross product. But for individual landowners, that small percentage can be a windfall.

According to Jeffrey Jacquet, a natural gas consultant who lived in Sublette, WY for four years before moving east to Ithaca in 2008, the size of a town and its previous experience with resource extraction often determines its ability to absorb the social and environmental pressures of drilling. In a sweeping report on the potential impacts of gas drilling in the Marcellus Shale, Jacquet writes that many of the communities in the region are “sufficiently small and rural” so that large-scale development will produce similar outcomes to those that have been documented in other parts of the country. For example, in Towanda, PA, a town of about 3,000 residents where nearly everyone has leased their land, rents have ballooned, in some cases to triple what they were a year ago. Those unable to pay their rent are being evicted. A sign in front of the Towanda Motel, which has been entirely occupied by gas company employees since April reads, “Welcome Chesapeake and Nomac & Thank You.”

Although there will undoubtedly be some economic growth, Jacquet writes that, “Expectations for economic benefits are often unrealistically high.”

Of course, the Northeast differs from Wyoming in significant ways. Population densities are far greater, exposing more people to the risk of contamination and pollution. There’s also more forestland throughout the Northeast, much of it undisturbed, in areas where gas drilling will occur. (This is particularly true of the land that surrounds the Catskill Park). Land disturbance will be greater but Jacquet says it may also be easier to reclaim than western lands. For both regions, the potential damage to critical water resources – rivers, aquifers, and wetlands – is the greatest concern.

The entire Delaware river basin, which includes surface water diversions (rivers, streams, and reservoirs) and groundwater withdrawals (aquifers), provides drinking water for about 17 million people in four states. This fact has prompted a sizable opposition movement, especially in New York, where the threat to the city’s watershed has become a potent rallying cry. Those same water resources, however, are part of what makes Hancock, known as the “Gateway to the Upper Delaware,” so attractive to the gas companies; between two and nine million gallons of water are needed to frack each well.

Yet the area’s uniqueness could also be its saving grace. In 1978, Congress added the Upper Delaware to the National Wild and Scenic Rivers System. In the early 1990s, the Delaware River Basin Commission designated the same stretch as part of a “specially protected area” subject to heightened regulatory measures. Farmers like Dunau and Swartz see their proximity to the Upper Delaware as perhaps their greatest asset. Its distinction may, in the end, protect them.

Just beyond the center of Hancock a narrow road follows the east branch of the Delaware for several miles. On a chilly afternoon in December I met Tim Connolly, a third generation landowner who has lived along this stretch of river for his whole life. At 49, Connolly gets by cutting stone and firewood, and he seems the ideal candidate to sign a gas lease. Last year, he was approached by a landman who offered him $3,000 an acre and 14 percent royalties. He refused. “People have got to have money,” he told me. “But they don’t need their land messed up at the same time.”

Connolly led me along a muddy trail behind his house, across a small stream, and to a clearing where he gets his drinking water from what he says is one of the best springs in the world. As far as the eye can see, Connolly is surrounded by neighbors who have leased their land. A well site 500 feet away is already marked with a surveyor’s stake. This landscape of dense northeast forest intercut with rivers, streams, and springs is said to be one of the sweetest spots for gas deposits within the Marcellus Shale.

When I asked Connolly what will happen once they start drilling he said, “We’ll probably have a war between drillers and non-drillers.”

Adam Federman is a journalist in New York City. He has written for The Nation, Columbia Journalism Review, and Adirondack Life.

Economists: Another Financial Crisis on the Way

Nonpartisan Group Led by Nobel Winner Calls for Stronger Financial Reforms

by Matthew Jaffe

Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis — one that will be even worse than the current one — is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

Elizabeth Warren, who was chair of the Congressional Oversight Panel, reiterates her calls for an independent agency to protect consumers from abusive Wall Street practices.

In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high risk investing that precipitated the near collapse of the U.S. economy in 2008.  

The report warns that the country is now immersed in a “doomsday cycle” wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management — and when the risks go wrong, the banks receive taxpayer bailouts from the government.

“Risk-taking at banks,” the report cautions, “will soon be larger than ever.”

Without more stringent reforms, “another crisis — a bigger crisis that weakens both our financial sector and our larger economy — is more than predictable, it is inevitable,” Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.

The institute’s chief economist, Nobel Prize-winner Joseph Stiglitz, calls the report “an important point of departure for a debate on where we are on the road to regulatory reform.”

The report blasts some of Washington’s key players. Johnson writes, “Our government leaders have shown little capacity to fix the flaws in our market system.” Two other panelists, Simon Johnson, a professor at MIT, and Peter Boone of the Centre for Economic Performance, voiced similar criticisms.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner “oversaw policy as the bubble was inflating,” write Johnson and Boone, and “these same men are now designing our ‘rescue.’”

The study says that “In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so ‘lucky.’ The threat of the doomsday cycle remains strong and growing,” they say. “What will happen when the next shock hits? We may be nearing the stage where the answer will be — just as it was in the Great Depression — a calamitous global collapse.”

The panelists call for major banks to maintain liquid capital of at least 15 to 25 percent of their assets, the enactment of stiffer consequences for executives of bailout recipients and for government officials to start breaking up firms that grow too big.

In the report, Elizabeth Warren, who was chair of the Congressional Oversight Panel, reiterates her calls for an independent agency to protect consumers from abusive Wall Street practices.

“While manufacturers have developed iPods and flat-screen televisions, the financial industry has perfected the art of offering mortgages, credit cards and check overdrafts laden with hidden terms that obscure price and risk,” Warren writes. “Good products are mixed with dangerous products, and consumers are left on their own to try to sort out which is which. The consequences can be disastrous.”

Frank Partnoy, a panelist from the University of San Diego, claims that “the balance sheets of most Wall Street banks are fiction.” Another panelist, Raj Date of the Cambridge Winter Center for Financial Institutions Policy, argues that government-backed mortgage giants Fannie Mae and Freddie Mac have become “needlessly complex and irretrievably flawed” and should be eliminated. The report also calls for greater competition among credit rating agencies and increased regulation of the derivatives market, including requiring that credit-default swaps be traded on regulated exchanges.

With the Senate Banking Committee, led by Chris Dodd, D-Conn., poised to unveil its financial regulatory reform proposal sometime in the next week, the report calls on Congress to enact reforms strong enough to prevent another meltdown.

“Sen. Dick Durbin once said the banks ‘owned’ the Senate,” says Johnson. “The next few weeks will determine whether or not that statement is true.”

We owe Ralph Nader and Cynthia McKinney an apology. They were right about Barack Obama. They were right about the corporate state. They had the courage of their convictions and they stood fast despite wholesale defections and ridicule by liberals and progressives. 

Obama lies as cravenly, if not as crudely, as George W. Bush. He promised us that the transfer of $12.8 trillion in taxpayer money to Wall Street would open up credit and lending to the average consumer. The Federal Deposit Insurance Corp. (FDIC), however, admitted last week that banks have reduced lending at the sharpest pace since 1942. As a senator, Obama promised he would filibuster amendments to the FISA Reform Act that retroactively made legal the wiretapping and monitoring of millions of American citizens without warrant; instead he supported passage of the loathsome legislation. He told us he would withdraw American troops from Iraq, close the detention facility at Guantánamo, end torture, restore civil liberties such as habeas corpus and create new jobs. None of this has happened.

He is shoving a health care bill down our throats that would give hundreds of billions of taxpayer dollars to the private health insurance industry in the form of subsidies, and force millions of uninsured Americans to buy insurers’ defective products. These policies would come with ever-rising co-pays, deductibles and premiums and see most of the seriously ill left bankrupt and unable to afford medical care. Obama did nothing to halt the collapse of the Copenhagen climate conference, after promising meaningful environmental reform, and has left us at the mercy of corporations such as ExxonMobil. He empowers Israel’s brutal apartheid state. He has expanded the war in Afghanistan and Pakistan, where hundreds of civilians, including entire families, have been slaughtered by sophisticated weapons systems such as the Hellfire missile, which sucks the air out of victims’ lungs. And he is delivering war and death to Yemen, Somalia and perhaps Iran.

The illegal wars and occupations, the largest transference of wealth upward in American history and the egregious assault on civil liberties, all begun under George W. Bush, raise only a flicker of tepid protest from liberals when propagated by the Democrats. Liberals, unlike the right wing, are emotionally disabled. They appear not to feel. The tea party protesters, the myopic supporters of Sarah Palin, the veterans signing up for Oath Keepers and the myriad of armed patriot groups have swept into their ranks legions of disenfranchised workers, angry libertarians, John Birchers and many who, until now, were never politically active. They articulate a legitimate rage. Yet liberals continue to speak in the bloodless language of issues and policies, and leave emotion and anger to the protofascists. Take a look at the 3,000-word suicide note left by Joe Stack, who flew his Piper Cherokee last month into an IRS office in Austin, Texas, murdering an IRS worker and injuring dozens. He was not alone in his rage.

“Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours?” Stack wrote. “Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political ‘representatives’ (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the ‘terrible health care problem’. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.”

The timidity of the left exposes its cowardice, lack of a moral compass and mounting political impotence. The left stands for nothing. The damage Obama and the Democrats have done is immense. But the damage liberals do the longer they beg Obama and the Democrats for a few scraps is worse. It is time to walk out on the Democrats. It is time to back alternative third-party candidates and grass-roots movements, no matter how marginal such support may be. If we do not take a stand soon we must prepare for the rise of a frightening protofascist movement, one that is already gaining huge ground among the permanently unemployed, a frightened middle class and frustrated low-wage workers. We are, even more than Glenn Beck or tea party protesters, responsible for the gusts fanning the flames of right-wing revolt because we have failed to articulate a credible alternative.

A shift to the Green Party, McKinney and Nader, along with genuine grass-roots movements, will not be a quick fix. It will require years in the wilderness. We will again be told by the Democrats that the least-worse candidate they select for office is better than the Republican troll trotted out as an alternative. We will be bombarded with slick commercials about hope and change and spoken to in a cloying feel-your-pain language. We will be made afraid. But if we again acquiesce we will be reduced to sad and pathetic footnotes in our accelerating transformation from a democracy to a totalitarian corporate state. Isolation and ridicule-ask Nader or McKinney-is the cost of defying power, speaking truth and building movements. Anger at injustice, as Martin Luther King wrote, is the political expression of love. And it is vital that this anger become our own. We have historical precedents to fall back upon. 

“Here in the United States, at the beginning of the twentieth century, before there was a Soviet Union to spoil it, you see, socialism had a good name,” the late historian and activist Howard Zinn said in a lecture a year ago at Binghamton University. “Millions of people in the United States read socialist newspapers. They elected socialist members of Congress and socialist members of state legislatures. You know, there were like fourteen socialist chapters in Oklahoma. Really. I mean, you know, socialism-who stood for socialism? Eugene Debs, Helen Keller, Emma Goldman, Clarence Darrow, Jack London, Upton Sinclair. Yeah, socialism had a good name. It needs to be restored.”

Social change does not come through voting. It is delivered through activism, organizing and mobilization that empower groups to confront the hegemony of the corporate state and the power elite. The longer socialism is identified with the corporatist policies of the Democratic Party, the longer we allow the right wing to tag Obama as a socialist, the more absurd and ineffectual we become. The right-wing mantra of “Obama the socialist,” repeated a few days ago to a room full of Georgia Republicans, by Newt Gingrich, the former U.S. speaker of the House, is discrediting socialism itself. Gingrich, who looks set to run for president, called Obama the “most radical president” the country had seen in decades. “By any standard of government control of the economy, he is a socialist,” Gingrich said. If only the critique was true.

The hypocrisy and ineptitude of the Democrats become, in the eyes of the wider public, the hypocrisy and ineptitude of the liberal class. We can continue to tie our own hands and bind our own feet or we can break free, endure the inevitable opprobrium, and fight back. This means refusing to support the Democrats. It means undertaking the laborious work of building a viable socialist movement. It is the only alternative left to save our embattled open society. We can begin by sending a message to the Green Party, McKinney and Nader. Let them know they are no longer alone.

Green Fuels Cause More Harm Than Fossil Fuels, According to Report

by Ben Webster, Environment Editor

Using fossil fuel in vehicles is better for the environment than so-called green fuels made from crops, according to a government study seen by The Times.

The expansion of the palm oil industry in Indonesia has turned it into the third-largest CO2 emitter, after China and the US. Indonesia loses an area of forest the size of Wales every year and the orang-utan is on the brink of extinction in Sumatra. (AFP/Conservation International/File/Kabir Bakie)

The findings show that the Department for Transport’s target for raising the level of biofuel in all fuel sold in Britain will result in millions of acres of forest being logged or burnt down and converted to plantations. The study, likely to force a review of the target, concludes that some of the most commonly-used biofuel crops fail to meet the minimum sustainability standard set by the European Commission. 

Under the standard, each litre of biofuel should reduce emissions by at least 35 per cent compared with burning a litre of fossil fuel. Yet the study shows that palm oil increases emissions by 31 per cent because of the carbon released when forest and grassland is turned into plantations. Rape seed and soy also fail to meet the standard.

The Renewable Transport Fuels Obligation this year requires 3¼ per cent of all fuel sold to come from crops. The proportion is due to increase each year and by 2020 is required to be 13 per cent. The DfT commissioned E4tech, a consultancy, to investigate the overall impact of its biofuel target on forests and other undeveloped land.

The EC has conducted its own research, but is refusing to publish the results. A leaked internal memo from the EC’s agriculture directorate reveals its concern that Europe’s entire biofuels industry, which receives almost £3 billion a year in subsidies, would be jeopardised if indirect changes in land use were included in sustainability standards. A senior official added to the memo in handwriting: “An unguided use of ILUC [indirect land use change] would kill biofuels in the EU.”

The EC hopes to protect its biofuel target by issuing revised standards that would give palm plantations the same status as natural forests. Officials appear to have accepted arguments put forward by the palm oil industry that palms are just another type of tree.

A draft of the new rules, obtained by The Times, states that palm oil should be declared sustainable if it comes from a “continuously forested area”, which it defines as areas where trees can reach at least heights of 5m, making up crown cover of more than 30 per cent. “This means, for example, that a change from forest to oil palm plantation would not per se constitute a breach of the criterion,” it adds.

Clearing rainforest for biofuel plantations releases carbon stored in trees and soil. It takes up to 840 years for a palm oil plantation to soak up the carbon emitted when the rainforest it replaced was burnt. The expansion of the palm oil industry in Indonesia has turned it into the third-largest CO2 emitter, after China and the US. Indonesia loses an area of forest the size of Wales every year and the orang-utan is on the brink of extinction in Sumatra.

Last year, 127 million litres of palm oil was added to diesel sold to motorists in Britain, including 64 million litres from Malaysia and 27 million litres from Indonesia. Kenneth Richter, biofuels campaigner for Friends of the Earth, said: “The billions of subsidy for biofuels would be better spent on greener cars and improved public transport.”

Coal-Fired Power on the Way Out?

by Lester R. Brown

WASHINGTON - The past two years have witnessed the emergence of a powerful movement opposing the construction of new coal-fired power plants in the United States. Initially led by environmental groups, both national and local, it has since been joined by prominent national political leaders and many state governors.

Coal power plant in Datteln, Germany. What began as a few local ripples of resistance to coal-fired power quickly evolved into a national tidal wave of grassroots opposition from environmental, health, farm, and community organisations. Despite a heavily funded ad campaign to promote so-called clean coal, the U.S. public is turning against coal. (Wikimedia Creative Commons - Arnold Paul)

The principal reason for opposing coal plants is that they are changing the earth’s climate. There is also the effect of mercury emissions on health and the 23,600 U.S. deaths each year from power plant air pollution. 

Over the last few years the coal industry has suffered one setback after another. The Sierra Club, which has kept a tally of proposed coal-fired power plants and their fates since 2000, reports that 123 plants have been defeated, with another 51 facing opposition in the courts.

Of the 231 plants being tracked, only 25 currently have a chance at gaining the permits necessary to begin construction and eventually come online. Building a coal plant may soon be impossible.

What began as a few local ripples of resistance to coal-fired power quickly evolved into a national tidal wave of grassroots opposition from environmental, health, farm, and community organisations. Despite a heavily funded ad campaign to promote so-called clean coal (one reminiscent of the tobacco industry’s earlier efforts to convince people that cigarettes were not unhealthy), the U.S. public is turning against coal.

One of the first major industry setbacks came in early 2007 when a coalition headed by the Environmental Defence Fund took on Texas-based utility TXU’s plans for 11 new coal-fired power plants. A quick drop in the utility’s stock price caused by the media storm prompted a 45-billion-dollar buyout offer from two private equity firms.

However, only after negotiating a ceasefire with EDF and the Natural Resources Defence Council and reducing the number of proposed plants from 11 to three, thus preserving the value of the company, did the firms proceed with the purchase. It was a major win for the environmental community, which mustered the public support necessary to stop eight plants outright and impose stricter regulations on the remaining three.

Meanwhile, the energy focus in Texas has shifted to its vast wind resources, pushing it ahead of California in wind-generated electricity.

In May 2007, Florida’s Public Service Commission refused to license a huge 5.7-billion-dollar, 1,960-megawatt coal plant because the utility could not prove that building the plant would be cheaper than investing in conservation, efficiency, and renewable energy sources. This point, made by Earthjustice, a non-profit environmental legal group, combined with strong public opposition to any more coal-fired power plants in Florida, led to the quiet withdrawal of four other coal plant proposals in the state.

Coal’s future is also suffering as Wall Street turns its back on the industry.

In July 2007, Citigroup downgraded coal company stocks across the board and recommended that its clients switch to other energy stocks.

In January 2008, Merrill Lynch also downgraded coal stocks. In early February 2008, investment banks Morgan Stanley, Citi, and J.P. Morgan Chase announced that any future lending for coal-fired power would be contingent on the utilities demonstrating that the plants would be economically viable with the higher costs associated with future federal restrictions on carbon emissions.

Later that month, Bank of America announced it would follow suit.

In August 2007, coal took a heavy political hit when U.S. Senate Majority Leader Harry Reid of Nevada, who had been opposing three coal-fired power plants in his own state, announced that he was now against building coal-fired power plants anywhere in the world.

Former Vice President Al Gore has also voiced strong opposition to building any coal-fired power plants. So too have many state governors, including those in California, Florida, Michigan, Washington, and Wisconsin.

In her 2009 State of the State address, Governor Jennifer Granholm of Michigan argued that the state should not be importing coal from Montana and Wyoming but instead should be investing in technologies to improve energy efficiency and to tap the renewable resources within Michigan, including wind and solar. This, she said, would create thousands of jobs in the state, helping offset those lost in the automobile industry.

One of the unresolved burdens haunting the coal sector, in addition to the emissions of CO2, is what to do with the coal ash - the remnant of burning coal - that is accumulating in 194 landfills and 161 holding ponds in 47 states. This ash is not an easy material to dispose of since it is laced with arsenic, lead, mercury, and many other toxic materials.

The industry’s dirty secret came into full public view just before Christmas 2008 when the containment wall of a coal ash pond in eastern Tennessee collapsed, releasing a billion gallons of toxic brew. Unfortunately, the industry does not have a plan for safely disposing of the 130 million tonnes of ash produced each year, enough to fill one million railroad cars.

The dangers are such that the Department of Homeland Security tried to put 44 of the most vulnerable storage facilities on a classified list lest they fall into the hands of terrorists. The spill of toxic coal ash in Tennessee drove another nail into the lid of the coal industry coffin.

In April 2009, the chairman of the powerful U.S. Federal Energy Regulatory Commission, Jon Wellinghoff, observed that the United States may no longer need any additional coal or nuclear power plants. Regulators, investment banks, and political leaders are now beginning to see what has been obvious for some time to climate scientists such as NASA’s James Hansen, who says that it makes no sense to build coal-fired power plants when we will have to bulldoze them in a few years.

In April 2007, the U.S. Supreme Court ruled that the Environmental Protection Agency (EPA) is both authorised and obligated to regulate CO2 emissions under the Clean Air Act.

This watershed decision prompted the Environmental Appeals Board of the EPA in November 2008 to conclude that a regional EPA office must address CO2 emissions before issuing air pollution permits for a new coal-fired power plant. This not only put the brakes on the plant in question but also set a precedent, stalling permits for all other proposed U.S. coal plants.

Acting on the same Supreme Court decision, in December 2009 the EPA issued a final endangerment finding confirming that CO2 emissions threaten human health and welfare and must be regulated, jeopardising new coal plants everywhere.

The bottom line is that the United States now has, in effect, a de facto moratorium on the building of new coal-fired power plants. This has led the Sierra Club, the national leader on this issue, to expand its campaign to reduce carbon emissions to include the closing of existing plants.

Given the huge potential for reducing electricity use in the United States by switching to more efficient lighting and appliances, for example, this may be much easier than it appears.

If the efficiency level of the other 49 states were raised to that of New York, the most energy-efficient state, the energy saved would be sufficient to close 80 percent of the country’s coal-fired power plants. The few remaining plants could be shut down by turning to renewable energy - wind farms, solar thermal power plants, solar cell rooftop arrays, and geothermal power and heat.

The handwriting is on the wall. With the likelihood that few, if any, new coal-fired power plants will be approved in the United States, this de facto moratorium will send a message to the world. Denmark and New Zealand have already banned new coal-fired power plants. Other countries are likely to join this effort to cut carbon emissions.

Even China, which was building one new coal plant a week, is surging ahead with harnessing renewable energy development and will soon overtake the United States in wind electric generation.

These and other developments suggest that the Plan B goal of cutting net carbon emissions 80 percent by 2020 may be much more attainable than many would have thought.

Lester R. Brown is founder and president of the Earth Policy Institute. “Plan B 4.0: Mobilising to Save Civilisation” can be downloaded for free at www.earthpolicy.org/index.php?/books/pb4.

World’s Top Firms Cause $2.2 Trillion of Environmental Damage, Report Estimates

Report for the UN into the activities of the world’s 3,000 biggest companies estimates one-third of profits would be lost if firms were forced to pay for use, loss and damage of environment

by Juliette Jowit

The cost of pollution and other damage to the natural environment caused by the world’s biggest companies would wipe out more than one-third of their profits if they were held financially accountable, a major unpublished study for the United Nations has found.

Black clouds over the central business district, Jakarta. The report into the activities of the world’s 3,000 biggest public companies has estimated the cost of use, loss and damage of the environment. Photograph: Jewel Samad/AFP/Getty Images

The report comes amid growing concern that no one is made to pay for most of the use, loss and damage of the environment, which is reaching crisis proportions in the form of pollution and the rapid loss of freshwater, fisheries and fertile soils. 

Later this year, another huge UN study - dubbed the “Stern for nature” after the influential report on the economics of climate change by Sir Nicholas Stern - will attempt to put a price on such global environmental damage, and suggest ways to prevent it. The report, led by economist Pavan Sukhdev, is likely to argue for abolition of billions of dollars of subsidies to harmful industries like agriculture, energy and transport, tougher regulations and more taxes on companies that cause the damage.

Ahead of changes which would have a profound effect - not just on companies’ profits but also their customers and pension funds and other investors - the UN-backed Principles for Responsible Investment initiative and the United Nations Environment Programme jointly ordered a report into the activities of the 3,000 biggest public companies in the world, which includes household names from the UK’s FTSE 100 and other major stockmarkets.

The study, conducted by London-based consultancy Trucost and due to be published this summer, found the estimated combined damage was worth US$2.2 trillion (£1.4tn) in 2008 - a figure bigger than the national economies of all but seven countries in the world that year.

The figure equates to 6-7% of the companies’ combined turnover, or an average of one-third of their profits, though some businesses would be much harder hit than others.

“What we’re talking about is a completely new paradigm,” said Richard Mattison, Trucost’s chief operating officer and leader of the report team. “Externalities of this scale and nature pose a major risk to the global economy and markets are not fully aware of these risks, nor do they know how to deal with them.”

The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major “costs” were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater.

The true figure is likely to be even higher because the $2.2tn does not include damage caused by household and government consumption of goods and services, such as energy used to power appliances or waste; the “social impacts” such as the migration of people driven out of affected areas, or the long-term effects of any damage other than that from climate change. The final report will also include a higher total estimate which includes those long-term effects of problems such as toxic waste.

Trucost did not want to comment before the final report on which sectors incurred the highest “costs” of environmental damage, but they are likely to include power companies and heavy energy users like aluminium producers because of the greenhouse gases that result from burning fossil fuels. Heavy water users like food, drink and clothing companies are also likely to feature high up on the list.

Sukhdev said the heads of the major companies at this year’s annual economic summit in Davos, Switzerland, were increasingly concerned about the impact on their business if they were stopped or forced to pay for the damage.

“It can make the difference between profit and loss,” Sukhdev told the annual Earthwatch Oxford lecture last week. “That sense of foreboding is there with many, many [chief executives], and that potential is a good thing because it leads to solutions.”

The aim of the study is to encourage and help investors lobby companies to reduce their environmental impact before concerned governments act to restrict them through taxes or regulations, said Mattison.

“It’s going to be a significant proportion of a lot of companies’ profit margins,” Mattison told the Guardian. “Whether they actually have to pay for these costs will be determined by the appetite for policy makers to enforce the ‘polluter pays’ principle. We should be seeking ways to fix the system, rather than waiting for the economy to adapt. Continued inefficient use of natural resources will cause significant impacts on [national economies] overall, and a massive problem for governments to fix.”

Another major concern is the risk that companies simply run out of resources they need to operate, said Andrea Moffat, of the US-based investor lobby group Ceres, whose members include more than 80 funds with assets worth more than US$8tn. An example was the estimated loss of 20,000 jobs and $1bn last year for agricultural companies because of water shortages in California, said Moffat.

The Price of Environmental Destruction? There Is None

Putting a price on nature becomes meaningless if we treat the ecosystems upon which we depend as mere commodities with a price for trading

by Andrew Simms

The economy is no stranger to creating its own fantasy world with little or no relation to the real one. We witnessed the damage that can cause when the banks thought they had stumbled on financial alchemy and could transform bad debt into good – economic base metal into gold.

Now it’s possible that a much bigger error is coming to light. The rise and rise of global corporations lifted on a wave of apparent productivity gains may have been little more than a mask for the reckless liquidation of natural capital. It’s as if we’ve been so distracted by our impressive speed of economic travel that we forgot to look at the fuel gauge or the cloud of smog left in our wake.

A new UN report estimates that accounting for the environmental damage of the world’s 3,000 biggest companies would wipe out one-third of their profits. Any precise figure, however, is a matter of how risk is quantified and of where you draw the line. In 2006, for example, the New Economics Foundation (NEF), of which I am the policy director, looked at the oil companies BP and Shell, who together had recently reported profits of £25bn. By applying the Treasury’s own estimates of the social and environmental cost of carbon emissions, we calculated that the total bill for those costs would reach £46.5bn, massively outweighing profits and plunging the companies into the red.

Yet in exercises like this, we quickly hit the paradox of environmental economics. By putting a price on nature, hopefully it makes it less likely that we will treat the world, and its natural resources, as if it were a business in liquidation. Yet there is a point when it becomes meaningless to treat the ecosystems upon which we depend as mere commodities with a price for trading. For example, what price would you put on the additional tonne of carbon which, when burned, triggers irreversible, catastrophic climate change? Who would have the right to even consider selling off the climate upon which civilisation depends? The avoidance of such damage is literally priceless.

If that sounds dramatic, consider that last September a large, international group of scientists published a paper in the journal Nature which identified nine key planetary boundaries for key biological systems upon which we depend. They found that we had already transgressed three of those, and were on the cusp of several others. All are potential points of no return as such complex systems begin interacting.

The huge advantage of the UN work is that it attempts to improve the feedback system between the economy and its ultimate parent company, the biosphere. Better risk assessment and value measurement is essential to help prevent what happened to banks happening to the planet.

The concept of a balanced budget, so loved by conservatives in relation to finance and spending, seems to be an alien concept when the consumption of natural resources and the production of waste is concerned. Yet it is far more important to achieve a balanced environmental budget than an economic one. You can always print more money, but you can’t print more planet. As John Ruskin put it, “There is no wealth but life.”