Rule Change Allows More Methane into the Air

By John McFerrin

The United States Environmental Protection Agency has eliminated a rule which had limited leaks and flares of methane from oil and gas wells.

Why methane matters                                                                                         

            Methane is the main component of natural gas.  Emissions of methane matter because methane is a potent greenhouse gas.  While carbon dioxide is the greenhouse gas that gets the most attention, in the short term methane is much more potent.  According to the Intergovernmental Panel on Climate Change, over twenty years methane warms the planet 86 times as much as carbon dioxide.

            Methane differs from carbon dioxide as an agent of climate change in how long it lasts.  Methane degrades in the atmosphere over about twenty years.  Carbon dioxide lasts at least for centuries.

            When burned, methane produces about half much carbon dioxide as an equivalent amount of coal.  This difference has prompted advocates of natural gas to promote it as an environmentally friendly alternative to coal.  If, on the other hand, substantial amounts of methane are leaking then the advantage is less.

How bad is the problem?

            The Environmental Protection Agency estimates that the rule will lead to economic benefits of $100 million per year through 2030 while leading to the release of about 850,000 tons of methane to the atmosphere over the same period.  It has justified the rule because, according to its data, leaks from oil and gas operations have remained steady over the last decade while natural gas production has soared.  

            Several scientists disagree.  Robert Howarth, an earth science specialist at Cornell University, told The New York Times that recent research has shown that 80% of the papers published show that methane from oil and gas leaks is two to three times the EPA estimates.  He estimates that North American gas production was responsible for about one third of the global increase in methane emissions over the last decade.

            Methane releases have the potential to cancel any benefit from carbon dioxide production brought about by the Paris Climate Acted.  That agreement requires countries to reduce carbon dioxide emissions.  Even if they succeed in doing so, any global cooling effect could be offset by increases in global warming caused by methane.

The economics of methane regulation

            In most situations, the waste products that come from any activity are just that: waste.  They are not the goal of the activity but rather a byproduct that someone must avoid or dispose of.  Utilities do not operate coal fired power plants because they want to produce smoke.  They produce electricity; the smoke is just a byproduct that they have to work to eliminate or reduce.

            Methane is different.  It is not just a byproduct of production; it is the goal of the production.  The whole point of gas wells, pipelines, etc. is to deliver methane to customers.  If operators can reduce the methane that escapes to the atmosphere, they have more methane to sell.  

            This makes the economics of methane regulation different from other types of pollution control.  In most, if not all, other situations, the cost of pollution control is just that, a cost.  It does not produce any revenue.  With methane, eliminating leaks, etc. is not just a cost but adds revenue by leaving the operator with more methane to sell.

            The fact has been used as an argument for not requiring that methane be controlled.  Industry representatives have argued that the revenue from having more methane to sell is plenty of incentive for companies to plug all leaks, etc.  No government regulation is necessary.

            As a part of an earlier rulemaking (deciding whether to make companies control leaks from gas production on public lands), the Bureau of Land Management studied the question of how much it would cost to control the leaks, etc.  It estimated the value of the gas that would be saved and sold and the cost of equipment necessary.  It found that requiring companies to control leaks would result in a decrease in profits of fifteen hundredths of one per cent.

A little politics (just in case there is someone, somewhere who has not had enough lately)

            Early in his administration, President Trump issued Executive Order 13783, Promoting Energy Independence and Economic Growth, directing agencies to review existing regulations that potentially “burden the development or use of domestically produced energy resources.” In announcing this rollback, the Environmental Protection Agency referred to this Executive Order as justification.

            Executive Order 13783 was the justification for several other deregulation initiatives, many of which involved undoing Obama era regulations.  There is a procedure for undoing regulations of a previous administration, particularly those finalized late in the term of the previous President.  If we have a new President next year there may be some undoing of the undoing.

            EPA Administrator was in Pittsburgh when he announced the new rule.  This prompted the Pocono Record to offer this opinion: “Environmental Protection Agency Administrator Andrew R. Wheeler has bestowed upon Pennsylvania the singular dishonor of being the site of the Trump administration’s most egregious act of environmental vandalism.”

More to come

            As usual, litigation is on the horizon.  EPA Administrator Wheeler had barely gotten his mouth shut from announcing the rule before various groups were threatening/promising litigation.