January – February 2017 Commentary

Illustration by James Yang

Energy – Low Carbon Future

As DTE Energy in Detroit moves to retire several aging coal plants by 2030, the utility’s plan to build a 255-mile pipeline to transport natural gas from eastern Ohio to Michigan should be approved by the federal government. Working in partnership with Houston-based Spectra Energy, DTE Energy and its affiliates received approval in late November on a final environmental impact statement from the Federal Energy Regulatory Commission, a division of the U.S. Department of Energy.

By the end of the first quarter, DTE Energy and Spectra Energy hope to receive approval for environmental permits and an FERC certificate — the final step before construction can begin on the so-called NEXUS pipeline. Already, the two utilities, which were developing separate pipelines before forming their partnership, have acquired the necessary land to build NEXUS below grade, mostly near railroad tracks, electrical lines, and farms.

Inside the Numbers

The 36-inch pipeline will be buried three feet below grade on farmland and five feet below grade in urban areas. With four different crews installing 60 miles of pipeline concurrently, NEXUS is projected to begin transporting 1.5 billion cubic feet of natural gas per day in November. The project also includes the development of four compressor stations in Ohio.

By linking with existing connector lines at Willow Run and elsewhere, NEXUS will serve commercial and industrial customers in southeast Michigan, northern Ohio, greater Chicago, and throughout Ontario. Once operational, the new capacity of natural gas is projected to produce more than $2.2 billion in cost savings to Michigan consumers between 2017 and 2032, according to a study by ICF International.

The $2.1-billion pipeline has a lifespan of 50 years, though DTE Energy officials say NEXUS will likely be operational for six or seven decades, given modern building techniques and the use of high-strength alloyed steel. The pipeline, which is being built domestically, will be covered with a thick layer of epoxy coating to prevent corrosion, abrasions, and other potential damage. A harmless electrical current running throughout the pipeline will impede corrosion.

The project is part of DTE Energy’s plan to shift its reliance on coal-fired plants — which in 2015 made up 55 percent of its electric capacity — to 25 percent in 2030. At that time, the utility projects its electrical supply will be generated by natural gas (30 to 45 percent), coal (25 percent), renewables (15 to 30 percent), and nuclear (15 percent).

The exact percentages of future energy sources are difficult to discern, given new renewable energy projects are based on local municipal approvals of new wind turbines and solar arrays, along with transmission lines. Natural gas will meet the high side of its projected capacity with the installation of NEXUS, while the development of additional nuclear plants might get a boost as the Nuclear Regulatory Commission currently reviews what The Wall Street Journal has cited as “a scientifically dubious radiation risk standard that drives up the cost” of such power.

(Detroit) is a city controlled by Democratic politicians at every level, and unless we change policies, we will not change results.” — President-Elect Donald Trump

Given natural gas produces half the greenhouse emissions per BTU of coal, and the fact that Michigan offers the largest storage capacity of natural gas in the country due to an abundance of porous rock left by glaciers centuries ago, FERC should approve the NEXUS pipeline. By boosting the availability of cheap natural gas, DTE Energy will not only meet or exceed our future energy needs, but it will also assist Michigan in attracting residential, commercial, and industrial developments.

Development – Sky High

With Detroit’s central business district running out of available space to meet commercial and residential demand, it’s time for state and local officials to better support the private development of skyscrapers and other large projects in urban areas. After acquiring some 90 buildings in the city since 2010, Dan Gilbert, founder and chairman of Quicken Loans Inc., says the properties are nearly full.

Currently, the Michigan Legislature is studying bills that would allow developers of large projects to capture state sales and income taxes to offset a portion of the costs of construction. The captured revenue would assist developers across the state with cleanup, demolition, construction, and renovation efforts. In Detroit, a developer would be required to provide at least $500 million in private funding for a project in order to qualify for additional incentives.

Large lots in Detroit such as the former site of the Hudson’s department store, land east of the Renaissance Center, and the Uniroyal site by Belle Isle, among others, would qualify for the enhanced incentives. Quicken Loans reports the legislation would generate $2 billion in development for its future plans, including the potential construction of a skyscraper at the Hudson’s site or along the Detroit River east of the RenCen.  

While the state would lose some tax revenue from the plan, it would come out ahead in the long run by providing additional support for so-called brownfield sites. Today, those sites have little, if any, real value. 

Blight – Crime Reduction

As the country prepares for the presidency of Donald Trump, the new administration should focus on the removal of blight in inner cities. Blocks of abandoned buildings, whether in Detroit or Los Angeles, have contributed to violent crime, drug use, arson, murders, and other societal problems. By removing these structures, communities would see a considerable surge in their respective quality of life.

As an adage, if criminals don’t have a place to produce or distribute drugs, set fires, or drag someone to against their will, it becomes much more difficult for them to hide their nefarious activities. By teaming with a number of federal, state, and local units of government, such as the U.S. Department of Housing and Urban Development, as well as nonprofit blight authorities, dangerous, abandoned structures could be all but be eliminated in a few years.

In Pontiac, for example, Bill Pulte, founder of the Detroit Blight Authority, has worked with city officials to demolish nearly 800 abandoned structures. “As a result, Pontiac is over 80 percent blight-free and on track to be 100 percent blight-free by 2018,” Pulte says. “Pontiac’s arsons and violent crimes are down, property values are up over 15 percent, and kids can finally walk to school safely.” 

During the campaign, Trump often cited the poor condition of inner-city neighborhoods. He promised considerable relief, if elected, and now he should bring as many resources as possible to fix the problem. At the same time, job-training programs should be enhanced. By cleaning up distressed neighborhoods and providing employment opportunities, the new president could go a long way toward making America great again.