By Ellen R. Wald
The updated regulation will get rid of methane-specific emission limits on oil and gas processing and production elements and will also eliminate the transmission and storage segments from regulation. Limits on the emission of all volatile organic compounds (which include methane) will remain.
The Environmental Protection Agency said it sought the change because the methane-specific regulations were unnecessary, redundant and costly. Environmental groups countered that the amended regulation could mean millions more tons of the greenhouse gas being released into the atmosphere.
Weighing both sides, I have to agree with the EPA’s assessment. In this case, it is clear that the old methane regulation, put in place during the Obama administration, isn’t necessary or effective. Rather, it contributes to an overly burdensome regulatory system that especially hurts smaller oil and gas companies—the kinds that are necessary as employers and are also struggling to survive amid the plunge in energy prices caused by the global Covid-19 pandemic.
First, the old regulation includes unnecessary requirements for the industry to prevent methane leakage in pipelines and at other steps in the production and transmission process. The economics of oil and gas production today already incentivize companies to prevent excess leakage on their own, because this methane is valuable as a fuel. The onerous conditions that come with the methane regulation have made this market less efficient with firms struggling to follow the letter of a rule instead of simply doing what they would already be doing, reducing leaks.
Many companies also recognize that methane leaks are environmentally destructive and have formed industry coalitions that work with government entities at the state level. These coalitions, such as the Texas Methane & Flaring Coalition, seek to prevent methane leakage and cut down on flaring, which can release methane into the atmosphere if the flare goes out. There is no need for a rule when businesses are already incentivized to reduce methane emissions and leaks.
The old methane regulation was especially burdensome on smaller firms, as the increased costs of adhering to it were more of a squeeze for them than their larger rivals; this may explain in part why many of the bigger companies supported it. The change will give smaller businesses more breathing room.
With almost 40% of the jobs in the oil and gas industry created by that part of the industry, according to the Small Business Administration, that in turn may help support jobs in the sector.
The oil and gas industry isn’t even the biggest source of methane emissions in the U.S. — agriculture is, according to the EPA – and the issue was a decreasing problem for energy producers even before the old regulation came about. The EPA’s latest Greenhouse Gas Inventory from 2019 reported an overall decline in methane emissions of 23% from oil and gas systems from 1990 to 2018. The industry nearly doubled production while simultaneously reducing methane emissions, and mostly before the old regulation was even conceived. In particular, methane emissions from the five largest fracking regions in the U.S. fell by more than 60% between 2011 and 2018 while production in these regions tripled, and the old regulation didn’t come into full effect until 2016.
For a year already, the EPA’s rule change has been contested, but it should not be. The federal government should not interfering with economic drivers and job creators if it doesn’t need to, especially now. Rather, in this time of severe economic disruption and uncertainty, government needs to get out of the way whenever it can.