Methane Rules Are Good for the Energy Industry
(Bloomberg Opinion) -- Everywhere you look, it seems there’s another ad trying to persuade people that natural gas is the key to a clean energy future. The American Petroleum Institute (API) is running a seven-figure campaign touting its climate benefits, despite the fact that natural gas is a fossil fuel with a significant carbon footprint.
The industry conducts misleading campaigns like this one because pressure to reduce greenhouse emissions is building. People are coming to realize that we need a 100% clean economy, and they increasingly want pollution-free energy.
To be sure, gas can be lower-emitting than other fossil fuels: For example, gas releases about half as much carbon dioxide as coal during combustion. But natural gas is made of the potent greenhouse gas methane, and methane leaks are far too common across the industry. The result is emissions that can be staggeringly large, threatening to undermine whatever near-term climate advantages gas offered in the first place.
And even as the industry promotes natural gas as an eco-friendly alternative to coal, it’s fighting rules to curb those harmful leaks. Groups like the API are championing the Trump administration’s plans to abolish EPA regulations on methane emissions across the oil and gas supply chain, and to remove all federal air pollution rules for pipeline and storage facilities. Together, that could result in 5 million metric tons of methane entering the atmosphere each year — equivalent to the emissions from 109 coal plants. So much for that clean energy future.
Fortunately, not everybody wants to roll back the environmental clock. Leading producers like Shell, BP, Equinor, Pioneer and Jonah Energy have indicated opposition to Trump’s proposal, with some even calling for stronger federal regulation. Leading gas customers — more than a dozen electric and gas utilities, including Calpine and Exelon — support the standards, too.
But the vast majority of American oil and gas companies, collectively responsible for nearly 90% of total U.S. production, have stayed conspicuously quiet in the face of a rollback that will make their product dirtier.
Consider the implications for climate change. Methane from human activities is responsible for more than a quarter of the global warming we’re experiencing today, and the oil and gas industry is responsible for a quarter of that. Each pound of methane released has more than 80 times the warming power of the same amount of carbon dioxide the first 20 years after it is released.
That means every company with an interest in natural gas — producers, users, distributors — has a vital stake in reducing methane emissions and supporting the policies necessary to do the job. This includes the electric utilities banking on gas to meet their own climate targets, along with investors in each of these areas.
Worldwide, oil and gas companies release an estimated 79 million metric tons of methane each year. A five-year series of studies organized by EDF recently concluded that emissions from the U.S. oil and gas sector were a full 60% higher than EPA estimates. And much of that research predates the massive production boom in the Permian Basin, where research suggests the amount of methane escaping has tripled in just the past two years.
Some operators are setting targets and implementing straightforward measures like replacing leaky valves and inspecting more regularly for leaks. But in a fragmented industry with thousands of companies, regulations are essential to raise the bar for everyone.
The best science tells us that to have a fighting chance at climate stability, the U.S., European Union and other advanced economies need to reach net-zero greenhouse gas emissions by mid-century, with the rest of the world following soon after. While there are different scenarios for achieving that goal, there’s no doubt industry’s methane pollution must be virtually eliminated.
And there’s no doubt it can be done.
The International Energy Agency estimates that oil and gas methane emissions can be cut by 75% using technologies available today, and that two-thirds of that can be achieved at no net cost. And according to the IEA, the environmental upside is staggering: Those no-cost reductions alone would have the same climate benefit as immediately shutting all the coal-fired power plants in China.
That’s one reason why investors managing more than $5.5 trillion across both sides of the Atlantic have opposed the rollback, and have called on the industry to speak up in support of the U.S. methane rules. A growing number of leading oil and gas firms have acknowledged that methane is a major challenge, but also an important opportunity to demonstrate real, measurable climate progress.
The private sector has a critical role to play in opposing rollbacks in the U.S., and supporting new policy in the EU, which has a unique opportunity to leverage its role as a major gas buyer. If oil and gas companies really want to be part of a cleaner global energy future, it’s time for them to step up and support strong methane rules.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Fred Krupp is the president of Environmental Defense Fund and has guided EDF for three decades.
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