The credibility of recent industry methane commitments is under the microscope.
One year ago, many of the world’s top oil and gas companies publicly committed to support methane policies and regulations to reduce emissions from the global oil and gas industry. But today, serious doubts are emerging about whether the companies will keep their promise in the face of extreme regulatory rollbacks in the largest oil and gas producing nation in the world—the United States.
Companies with significant U.S. production—like BP, Chevron, Equinor, ExxonMobil, and Shell—committed to “advocate sound policy and regulations on methane emissions,” including working “constructively” with governments and others “in the development and implementation of effective methane abatement policies or regulations.” EDF, which worked with industry and others to develop the principles, welcomed the companies’ commitments. We noted that “done right, voluntary action is a way for leaders to raise the bar for industry’s performance, but fair competition and a healthy environment are not possible unless all companies meet the same basic standards that only sensible government regulation can achieve.” The five companies noted above have since joined others in the Oil and Gas Climate Initiative in committing to a voluntary methane target. But government regulations are under threat, creating the imperative for an unequivocal industry response.
In the U.S., a major recent scientific study found emissions are 60 percent higher than prior estimates—enough to double the climate impact of U.S. natural gas. A broadly applicable regulatory floor is the only credible way to bring along all of industry in reducing methane. But EPA rollbacks would deliberately let the bottom fall out, to the detriment of leading companies whose investments in natural gas could be compromised by the broader industry’s underperformance.
How have companies responded?
Early indications of industry lobbying are cause for concern. According to trade publication E&E News, “White House officials urged EPA to make changes to an Obama-era methane rule that would maximize cost savings for the oil and gas industry while allowing the release of more planet-warming emissions, government documents show.” Reportedly Chevron and Shell were among those joining the American Petroleum Institute for a May meeting with administration officials that included “monitoring frequency” as an agenda item.
Weeks later, the EPA began implementing less frequent inspections, in line with “the wish list of several oil and gas industry groups,” per E&E. The resulting proposal—now in open comment period—slashes leak detection requirements by 75 percent for some wells. According to EPA, the proposal will allow hundreds of thousands of tons of additional methane pollution by 2025.
This existential threat to methane regulation flies in the face of the spirit and letter of the methane guiding principles.
An even larger deregulatory threat looms—the administration is reportedly considering wholly eliminating EPA regulation of methane. This proposal would not only give a free pass to pollute for newer facilities covered by the Obama era rule, it would attempt to cut out a key legal building block for regulation of the vast network of existing—and emitting—oil and gas infrastructure.
This existential threat to methane regulation flies in the face of the spirit and letter of the methane guiding principles. So how have companies that signed the principles responded thus far?
- ExxonMobil stated theoretical support for “a cost-effective federal regulatory standard to manage methane emissions for both new and existing source oil and gas facilities”. However, ExxonMobil has stopped short of supporting continued EPA methane regulation, raising questions about what its position really means.
- BP stated that “We’re not going to go out and criticize any government around their role. That’s not productive.”
- Shell stated that “We are not in politics. We are in business. I need to do the right things for business… I’m not here to advocate for or against an administration or a particular political development.”
- As of the publication of this piece, EDF did not locate public statements on federal methane rollbacks from Chevron, Equinor, or other guiding principle signatories.
Companies like these have positioned themselves as corporate leaders on methane emissions through the OGCI methane target and emission control initiatives in their own operations. But the ultimate reflection of industry leadership is industry-wide performance. And with OGCI membership representing less than 20 percent of U.S. natural gas market share, it’s clear that voluntary targets by a fraction of industry are no substitute for developing an enforceable, level playing field for industry as a whole.
It is no secret that oil and gas companies wield tremendous influence in the political process on matters of importance to their businesses. Advocating for continued, effective EPA methane regulation is good business because it keeps an important public promise and supports the credibility of natural gas. EDF and others will watch closely to see how companies move forward.
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Originally Published on November 16, 2018
The Energy Exchange Blog is a forum where EDF‘s energy experts discuss how to accelerate the transition to a clean, low-carbon energy economy. Follow them on Twitter here: @EDFEnergyEX
