Energy policy in Louisiana

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Energy policy in Louisiana
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Quick Facts
Energy Department Louisiana Department of Natural Resources, Technology Assessment Division
State Population 4.6 million
Per Capita Income $39,413
Energy Consumption
Total Energy Consumption 4,055 trillion BTU[1][2]
Per Capita Energy Consumption 886 million BTU
Energy Spending
Total Energy Spending $46,833 million
Per Capita Energy Spending $10,237
Price of Residential Natural Gas $11.70 per thousand cubic foot
Price of Electricity 9.15 cents per kWh
See also
Energy on the ballot
Statewide fracking on the ballot
Local fracking on the ballot
Policypedia
Energy Policy Project
Energy policy in the United States
Energy use in the United States
Energy policy in Louisiana
Energy terms and definitions

Energy policy in Louisiana depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in Louisiana focuses on exploring, conserving and efficiently using the state’s natural resources to ensure quality of life for citizens. Because of its vast fossil fuel resources, Louisiana emphasizes production of traditional energy resources over developing renewable energy resources.[3] As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.

Energy overview

State facts

Below are quick facts about Louisiana’s energy climate.

Louisiana

  • has fossil fuels in the form of crude oil, natural gas and coal.
  • has renewable energy in the form of biomass and hydropower.
  • ranks second in the U.S. for total and operating refinery capacity and has 18 operating refineries that account for one-fifth of the nation’s refining capacity.
  • is home to two U.S. Strategic Petroleum Reserve facilities, whose salt caverns can hold 300 million barrels of crude oil.
  • has the nation's only deepwater oil port, the Louisiana Offshore Oil Port (LOOP).[4]

In Louisiana

  • per capita energy consumption ranks second in the United States.
  • two-thirds of the state’s total energy consumption is industrial sector use by the state’s many refineries and petrochemical plants.
  • the transportation sector consumes 17.7 percent of the state’s total energy consumption, the second-highest energy consuming sector.
  • electricity and natural gas are the main sources of energy used in home heating.[4]

Available energy resources

Louisiana has plentiful traditional energy resources including oil, natural gas and some amounts of coal. The state is home to one-fifth of the nation’s total proved natural gas reserves, a large portion of which is housed in the Haynesville Shale formation. Because of its ample natural resources and its access to both the mouth of the Mississippi River and the Gulf of Mexico, Louisiana is a center for refining and transporting oil and natural gas. This hub, with easy access to transportation, is one reason the state has so many refineries, with 19 total refineries and 18 in operation. Louisiana makes up one-fifth of the nation’s total refining capacity.[4]

Although renewable energy resources make up only a small section of Louisiana’s total electricity generation, the state has both biomass and hydropower potential. Two-thirds of the state’s electricity generated from renewable energy resources comes from biomass because wood and wood waste are readily available in the state’s moist climate. The state’s agricultural economy includes pine, hardwood, rice and sugar cane. This agricultural activity provides the state with ample biomass fuel in the form of agricultural byproducts. The remaining one-third of electricity generated from renewable energy resources comes from hydroelectric energy generation.[4]

Consumption and prices

As shown on the pie chart, in 2011 two thirds of Louisiana’s energy use was industrial. About 18 percent was for transportation. The rest was used mostly in residential and commercial buildings--for heating, cooling, lighting and other functions. Most of the energy used in the state is in the form of natural gas followed by petroleum.[4]

Energy consumption in Louisiana
LA energy consumption chart.png

Legend[5]
     Transportation       Residential     Industrial       Commercial
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Generally the price of gasoline in the state follows the national trend, but tracks slightly lower than the national average.[6] According to the U.S. Energy Information Administration’s (EIA) February 2014 report, the federal excise tax is 18.40 cents per gallon of gasoline and 24.4 cents per gallon of diesel fuel. In addition to that, Louisiana collects 20 cents for every gallon of gasoline, diesel and gasohol fuel, ranking it 38th highest in the nation.[7][8] There are over 19,000 alternative fuel vehicles in Louisiana, most of which use E85, an 85 percent gasoline/ethanol blend.[9] Louisiana also has 127 alternative refueling stations.[4]

Comparisons tables

The table below compares Louisiana’s consumption and spending for energy, as well as prices for gas and electricity, and carbon emissions to those of Texas. The eastern part of Texas in particular has similar resources, energy production and consumption, climate and geography to those of Louisiana. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Texas’s rank of first in carbon emissions means that carbon emissions are higher in Texas than in any other state including Louisiana, which ranks seventh.
  • Likewise, per capita income in Texas is higher than in Louisiana, which ranks 30th in the nation compared to Texas’s rank of 26th.
  • Although Texas ranks much higher than Louisiana in terms of population, with a ranking of second to 25th, the two states rank similarly high when it comes to total and per capita energy consumption.
  • Texas ranks first for overall energy consumption and sixth for per capita energy consumption, while Louisiana ranks fourth for overall consumption and second for per capita energy consumption. These high rankings for energy consumption shed light on why the two states also rank so highly for carbon emissions.
  • Texas and Louisiana also rank in the top ten for both total and per capita energy spending.
  • Electricity prices in Texas (21st in the nation) are much higher than in Louisiana (ranked 49th).

The lower price of electricity in Louisiana may result from the fact that Louisiana does not have a renewable portfolio standard (RPS) that would require utilities to obtain a minimum percentage of electricity production from renewable energy resources, while Texas does have an RPS.[10][11]

Consumption and Expenditures Comparisons Summary
Type LouisianaTexasU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population4.6 million2526.4 million2313.9 million
Per Capita Income Average$39,41330$41,47126$42,693
Total Consumption4,055 trillion BTU412,207 trillion BTU197,301 quadrillion BTU
Per Capita Energy Consumption886 million BTU2476 million BTU6312 million BTU
Total Spending on Energy$46,833 million8$169,290 million1$1,394,088 million
Per Capita Spending on Energy$10,2372$6,6055$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$11.7015$13.0411$12.48
Price of Electricity, cents per kWh9.154911.682112.31
Total Carbon Dioxide Emissions, million metric tons (2010)223.57652.615,631
*Rank is from highest to lowest.

In Louisiana electricity heats a majority of homes, followed by natural gas, which heats 35.3 percent of homes. Liquid petroleum gas is the next most common heating source.

See also: State Energy Rankings to compare all 50 states
Consumption of energy for heating homes in Louisiana
Source Louisiana 2011 U.S. average 2011
Natural gas 35.3% 49.5%
Fuel oil 0% 6.5%
Electricity 61% 35.4%
Liquid Petroleum Gases (LPG) 2.7% 5%
Other/none 0.9% 3.6%

Production and transmission

Electricity produced and consumed in Louisiana is primarily from natural gas. Louisiana is a top producer of natural gas, and one-fifth of Louisiana’s total natural gas production is used to generate electricity. Natural gas produces about half of the state’s total electricity generation, much higher than the national average. The state’s electricity generation from petroleum has declined, while generation from natural gas has increased.[4]

Coal is Louisiana’s second highest source of energy for electricity generation, producing less than one-fourth of the state’s total energy generation. The state’s two nuclear plants produce less than one-fifth of the state’s total electricity generation.[4]

Where electricity comes from in Louisiana[12]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 7,000 0.09% 0.02%
Natural gas-fired 4,275,000 53.85% 0.42%
Coal-fired 1,333,000 16.79% 0.08%
Nuclear 1,554,000 19.58% 0.2%
Hydroelectric 38,000 0.48% 0.01%
Other renewables 212,000 2.67% 0.11%
Total net electricity generation 7,938,000 100% 0.19%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In Louisiana, the top five retailers of electricity are investor-owned. There are also 12 electric cooperatives that are member-owned.[13]

Energy policy

Policy Issues
Louisiana has electricity prices 28 percent below the national average thanks to its high production of natural gas and a state regulatory climate that is favorable to energy development.
See also: Fracking in Louisiana

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. Compared to other states, Louisiana has been slow to adopt efficiency standards and to implement renewable energy, instead focusing on production of energy from fossil fuels. Electricity prices in Louisiana are 28 percent lower than the national average. These low prices may result from the fact that the state produces so much energy from its vast natural gas resources both onshore and offshore. These low prices may also result from the fact that Louisiana has declined to implement regulations like Renewable Portfolio Standards (RPS) that mandate a minimum amount of renewable energy (which is more expensive than coal or natural gas) be used in generating electricity. The state's Public Service Commission is conducting a Renewable Energy Pilot Program to determine if an RPS might be suitable for the state in the future. The state does not cap greenhouse gas emissions and is not a member of any regional agreements that would cap greenhouse gas emissions. Some studies have claimed that higher electricity prices are in part the result of RPS mandates.[14] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gains in energy efficiency will be eroded as consumers consume additional goods and services."[15][16]

Despite the relative lack of energy regulation compared to other states, Louisiana has taken steps toward increasing efficiency. For example, the state does require a 2 percent blend of ethanol in gasoline and a two percent blend of biodiesel in diesel fuel. Louisiana does not have fuel efficiency standards for new vehicles. The state also has efficiency standards for new residential and commercial buildings and for all state-owned building.[17] Louisiana also requires investor-owned utilities to offer net metering to utility customers that generate electricity using solar, wind, hydropower, geothermal and biomass resources.[18] Louisiana ranked 44th on the Energy Efficiency Scorecard produced by the American Council for an Energy-Efficient Economy.[19][20]

Major legislation

  • The Energy Management Act (Louisiana Act 1184) (2001), created a state policy to minimize energy use and maximize energy efficiency in state buildings. The act requires the division of administration to develop an energy cost index to be used in identifying state-owned buildings or facilities with elevated energy costs. The division will then make recommendations for energy cost-saving measures (ECSM’s). If economically feasible, on-site electric generation may also be implemented. Financial incentives are available for departments that reduce their energy spending.[21]
  • Louisiana Act 869 (2004), requires that performance-based state contracts for services and equipment be for 20 years, or for the average lifespan of the equipment installed, whichever is shorter. Contracts must also guarantee energy savings that will, at minimum, fully fund any financing arrangement made to fund the contract. Any contract that falls under this legislation must include information on energy efficiency including units of energy saved, and cost per unit of energy.[22]
  • Louisiana Act 989 (2003), delegates responsibility to different agencies and offices for reviewing and adopting rules regarding performance-based energy efficiency contracts. The act requires that the Office of Facilities Planning and Control oversee and approve any performance-based energy contracts. The Commissioner of Administration is made responsible for adopting rules and regulations necessary for implementing this section of state legislation. The Department of Natural Resources reviews proposals for performance-based energy efficiency contracts and forwards its results to the commissioner of administration, which then selects an independent third-party group to review and evaluate proposals along with the Department of Natural Resources. The Commissioner of Administration makes the final decision on whether to approve or reject any proposals. The legislative auditor is responsible for auditing performance-based energy efficiency contracts. The proposer of such a contract may be required to pay up to 2.5 percent of the total value of the contract to help fund the costs of review and approval.[23]
  • Louisiana Act 814 (2006), allows political subdivisions to award certain performance-based energy efficiency contracts. The act defines performance-based energy efficiency contracts as "a contract for energy efficiency services and equipment in which the payment obligation for each year of the contract is: (1) Set as a percentage of the annual energy cost savings attributable to the services or equipment under the contract; or (2) Guaranteed by the person under contract to be less than the annual energy cost savings attributable to the services or equipment under the contract." Performance-based energy contracts may cover: insulation and reduced air filtration, storm windows or doors that reduce energy consumption, automated energy control systems, heating or air conditioning replacements, energy efficient lighting, indoor air quality improvements, energy recovery systems, water conservation measures and any other energy efficiency improvement identified through an audit.[24]
  • Louisiana Act 270 (2007), requires that major state-funded facility projects meet energy efficiency standards. The Office of Facility Planning and Control must adopt rules that will increase energy efficiency and conservation by optimizing energy efficiency of state buildings, increasing demand for building materials produced in Louisiana, decreasing pollutants from state buildings, utilizing local and renewable energy resources, reducing water consumption, developing energy efficiency assessment measures and encouraging Energy Star certification. Major facility projects must exceed state efficiency requirements by 30 percent, when it is deemed cost-effective to do so. The act also defines the term "major facility project," which must meet certain square footage requirements based on when the project was built.[25]
  • RS 3:4674 (2006), known as the Louisiana Renewable Fuel Standard, requires that at least 2 percent, by volume, of all gasoline sold in the state must be denatured ethanol. This requirement kicks in six months after the price of ethanol manufactured in Louisiana is less than or equal to the average price of gasoline in the state for at least 60 days. At least 2 percent, by volume, of all biodiesel sold in the state must be biodiesel. These requirements can also be met through the production of an alternative renewable fuel that meets the definition under the Energy Policy Act of 2005.[26]

Government agencies and committees

Policypedia
Policypedia energy logo.PNG
State energy policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.


See also
Local fracking on the ballot

Statewide fracking on the ballot

  • The Technology Assessment Division/State Energy Office is housed within the Louisiana Department of Natural Resources. The Technology Assessment Division assesses and provides detailed information on economic issues related to energy to other state political organizations like the Governor's Office and the state legislature. The State Energy Office promotes efficient energy use and management within the state through demonstrations on energy efficient technologies, reports on energy use in the state and exploration of all of the state's natural resources. The State Energy Office also manages U.S. Department of Energy funded programs and the Louisiana residential energy efficiency program.[28]
  • The Louisiana Public Service Commission (LPSC) is an independent regulatory agency that oversees public utilities and motor carriers. The agency seeks to ensure that services are "safe, reliable and reasonably priced." The LPSC takes "an active and cautious role" when it comes to utility regulation, always aiming for an approach that is in the public interest. While maintaining just and reasonable rates, the LPSC also seeks to allow utilities to earn a fair return on their investments. Five commissioners serve on the LPSC, each serving overlapping terms of six years. The LPSC also has a staff of 92 employees.[29]
  • The Department of Natural Resources mission is "to preserve and enhance the nonrenewable natural resources of the state, consisting of land, water, oil, gas, and other minerals, through conservation, regulation, management and development to ensure that the state of Louisiana realizes appropriate economic benefit from its asset base." The department is headed by the Louisiana Secretary of Natural Resources. There are three primary divisions in the department, the Office of Coastal Management, the Office of Conservation, and the Office of Mineral Resources.[30]

Major organizations

  • The Alliance for Affordable Energy (AAE) is a New Orleans-based organization that "advocates for fair, affordable, environmentally responsible, community-based energy." The group has been active in litigating against government organizations like the Louisiana Public Service Commission, with the goal of holding these organizations accountable and increasing public access to information about energy in the state. The AAE also educates the public on how to increase energy efficiency through home improvements.[31]
  • Louisiana Environmental Action Network (LEAN), founded in 1986, is an environmental group that provides information about pollution to the public and organizes environmental groups across Louisiana into a state network. The group seeks to make Louisiana a healthy place to live by bringing attention to environmental issues caused by the state's need to balance a large petrochemical industry with environmental concerns like land, air and water quality. The group has also helped coordinate emergency relief, provided information and worked toward restoration of habitats in the wake of environmental disasters like Hurricane Katrina and the BP Oil Spill. Over 100 member groups and 1,700 individual members make up LEAN's statewide network.[32]
  • The Center for Energy Studies (CES) is a research center at Louisiana State University mandated with providing information and analysis surrounding the state's energy issues to the legislature, public agencies and both civic and business groups. The group maintains unique energy databases and acts as the official depository of information for the state and the Energy Council.[33]

In the news

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Louisiana Energy News Feed

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See also

External links

References

  1. These figures come from the U.S. Energy Information Administration, State Profiles and Energy Estimates, Louisiana Overview. Statistics for population are for 2013 and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  2. U.S. Energy Information Administration, "Louisiana Overview," accessed February 20, 2014
  3. Department of Natural Resources, "Mission Statement," accessed February 20, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 U.S. Energy Information Administration, "Louisiana Profile Analysis," December 18, 2013
  5. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  6. To compare current gasoline prices in Louisiana to the U.S averages, go to GasBuddy.com
  7. "U.S. Energy Information Administration", "Petroleum Marketing Monthly February 2014," accessed February 22, 2014
  8. The Tax Foundation, "State Gasoline Tax Rates, 2009-2013," March 21, 2013
  9. U.S. Energy Information Administration, "Alternative Fuel Vehicle Data," published April 8, 2013
  10. Institute for Energy Research, "The Status of Renewable Electricity Mandates in the States,", accessed March 28, 2014
  11. This study from the free-market Institute for Energy Research found that in 2010 electricity prices in states with RPS were an average of 35 percent higher than in states without RPS
  12. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, "Louisiana Overview," accessed February 25, 2014
  13. Louisiana Public Service Commission, "Louisiana Electric Utilities Area Maps," accessed February 25, 2014
  14. According to a report called "The Status of Renewable Electricity Mandates in the States," by the free-market Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states without RPS.
  15. International Risk Governance Council, "The Rebound Effect: Implications of Consumer Behavior for Robust Energy Policies," accessed March 3, 2014
  16. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013
  17. Institute for Energy Research, "Louisiana Energy Facts," accessed February 25, 2014
  18. Database of State Incentives for Renewables & Efficiency, "Louisiana," accessed March 14, 2014
  19. American Council for an Energy-Efficient Economy, "State Energy Efficiency Policy Database," accessed February 25, 2014
  20. For a full explanation of how the ACEEE calculates this ranking see the executive summary of their report here: [1]
  21. Department of Natural Resources, "Relevant Legislation," accessed February 26, 2013
  22. Department of Natural Resources, "Relevant Legislation," accessed February 26, 2013
  23. Department of Natural Resources, "Relevant Legislation," accessed February 26, 2013
  24. Department of Natural Resources, "Relevant Legislation," accessed February 26, 2013
  25. Department of Natural Resources, "Relevant Legislation," accessed February 26, 2013
  26. Alternative Fuels Data Center, "Renewable Fuel Standard," accessed February 27, 2014
  27. Louisiana State Legislature, "House Committees," accessed February 27, 2014
  28. Department of Natural Resources, State of Louisiana, "Technology Assessment Division State Energy Office," accessed February 27, 2014
  29. Louisiana Public Service Commission, "Welcome to the Louisiana Public Service Commission Website," accessed February 27, 2014
  30. Department of Natural Resources, "About the Agency," accessed July 15, 2011
  31. Alliance for Affordable Energy, "Home," accessed February 27, 2014
  32. Louisiana Environmental Action Network, "About us," accessed February 27, 2014
  33. Louisiana State University, Center for Energy Studies, "About Us," accessed February 27, 2014