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The Facts —
- In the latest move to peel back Obama-era environmental rules, the US House of Representatives voted to strip funding for the so-called “methane rule” that was enacted in May 2016. The regulation seeks to cut the level of methane emissions by 40-45% from 2012 levels, all from oil and gas operations.
- Three Democrats and all but 11 Republicans in the House voted to eliminate the funds to enforce the rule, with the majority arguing that it burdens explorers and that undoing it would create jobs. President Trump’s Environmental Protection Agency (EPA) estimates the cost of the regulation to be $530 million a year.
- But ICF International counters that oil and gas companies could cut their emissions by 40% below the projected 2018 levels. And it would cost less than one cent per thousand cubic feet of natural gas produced. That amounts to a capital investment of $2.2 billion, which the Oil &Gas Journal says is less than 1% of annual industry capital expenditure.
- BP said in its global energy outlook that between 2015 and 2035 oil, natural gas, and coal will each comprise about 27% of the global energy mix.
- If escaping natural gas could be captured and resold, industry could increase its revenues by as much as $188 million a year, the Obama administration had said. Methane is a “wet gas” and a building block used in the manufacturing process.
- If not captured and released into the atmosphere, however, “Methane risk is a potent form of carbon risk, and left unmanaged it can literally leak away shareholder value. This is both an enormous risk and opportunity to improve performance in the oil and gas industry,” according to Thibaud Clisson of BNP Paribas Asset Management.
- According to the EPA:
“Methane’s lifetime in the atmosphere is much shorter than carbon dioxide (CO2), but [methane] is more efficient at trapping radiation than CO2. Pound for pound, the comparative impact of [methane] is more than 25 times greater than CO2 over a 100-year period.”
The Context —
- Since coming to office last January, President Trump has said that he would loosen the regulations imposed on the oil and gas and coal industries — all to prompt more domestic energy production. To that end, his administration has supported the rollback of 13 “midnight” rules, which were enacted during the last 12 months of President Obama’s tenure. At least two of those have applied to domestic energy producers: the Stream Protection Rule and the Methane Rule.
- Under the so-called Congressional Review Act, those regulations can be reversed with a simple majority in both chambers, avoiding the filibuster in the US Senate that requires 60 votes to pass bills. The only “midnight” regulation that failed to win a simple majority in the US Senate was the methane rule.
- The Trump administration then tried to delay that rule for two years. But environmental groups petitioned the US Court of Appeals for the District of Columbia, which ruled in July that the Trump administration must begin immediately enforcing the regulation.
- An EPA study released in March 2017 shows that methane emissions from all petroleum systems decreased by 28% since 1990. EPA attributed this improvement to decreases in emissions from associated gas venting and flaring.
- A Government Accountability Office study found that 40% of that could be captured. The Obama administration said investing in technologies to capture methane is a “sound economic and public health strategy because reducing methane emissions means capturing valuable fuel that is otherwise wasted and reducing other harmful pollutants – a win for public health and the economy.”
- Ultimately, the House and Senate spending bills must be reconciled. So unless the US Senate votes differently the next time around, the methane rule will receive the funding necessary to carry out the regulation.
Supporters of Reversing the Methane Rule —
- Eric Milito, director of industry operations for the American Petroleum Institute, said:
“The goal is to prevent emissions, not impede US energy production.”
“Methane emissions from oil and natural gas have significantly declined in recent decades without multiple, overlapping federal regulations, and this is no exception.”
Opponents of Reversing the Methane Rule —
- Rep. Betty McCollum (Minnesota) said during floor debate:
“There is no doubt at all that methane contributes to the increased levels of greenhouse gas concentrations, which contribute to the long-lasting changes in our climate, such as rising global temperatures, sea level change, in weather and precipitation patterns and changes in the ecosystem’s habits and species diversity.”
- Fred Krupp, president of the Environmental Defense Fund, said:
“The US oil and gas industry pumps out almost 10 million metric tons of methane pollution a year from thousands of sites in communities all across the nation… It’s a tremendous threat to our climate, and a needless waste of valuable resources. Cutting this pollution is the fastest, cheapest path to slow the warming we will otherwise see in the next 20 years.”
Ken Silverstein contributed to this report.