Four ways EPA methane rollbacks threaten American natural gas
At the behest of the American Petroleum Institute, the Environmental Protection Agency is proposing to eliminate nationwide limits on methane pollution, sending America’s natural gas industry backwards to the days of uncontrolled emissions. This dangerous proposal threatens the climate, the communities living near oil and gas development and the increasingly vulnerable status of American natural gas in a transition to a net-zero carbon emission economy.
Any business depends on four fundamentals to operate successfully: demand from customers, acceptance from society at large, financial capital to invest and talent to do the work. America’s natural gas industry is no different.
Eliminating methane standards would increase risk to each part of this foundation, making this proposed rollback a prime opportunity for risk-conscious executives and investors to speak out this fall.
In a climate conscious world, there is less demand for dirty gas
Roughly one-third of U.S. demand for natural gas comes from the electric power sector, which is undergoing dramatic changes as renewable energy becomes cheaper and state leaders prioritize clean energy. Many electric utilities are touting climate leadership and committing to greenhouse gas reduction goals while maintaining — or even increasing — natural gas investments. But methane rollbacks would increase harmful emissions in the supply chain, making it difficult for the utility of the future to consistently source low-emission gas.
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Globally, the natural gas market is becoming increasingly transparent as technologies like satellite monitoring and blockchain make emissions visible and traceable. Uncontrolled methane emissions in the U.S. could become a competitive disadvantage as climate-conscious natural gas importers like the European Union act on their preferences.
Public outcry for cleaner energy will impact license to operate
The urgency to act on climate is reaching a new level among U.S. voters. Public sentiment is turning against fossil fuels, and methane rollbacks are an unforced error that the natural gas industry cannot afford. Methane emissions are not the only important issue the natural gas value chain must address in the energy transition, but methane is the easiest because solutions are so immediate and cost effective. If the public cannot trust industry to keep methane out of the air, how can it trust industry to safely store carbon underground?
Deregulating methane impacts the industry’s reputation and license to operate. With most of U.S. production and gas-fired generation in blue, purple or red states with changing demographics, methane rollbacks fuel reputational risk — particularly as cleaner forms of energy get cheaper.
Investors don’t need another reason to doubt natural gas
As financial returns for oil and gas shrink, unaddressed environmental, social and governance issues — such as methane emissions — magnify investor risk. In a carbon- and capital-constrained world, this situation is unsustainable. Methane rollbacks create industry-level risks that cannot be solved by voluntary programs from a fraction of industry participants.
Unchecked methane emissions could accelerate investors’ exit from oil and gas to less volatile, greener pastures. Ultimately, these sorts of shifts portend a higher cost of capital and a less forgiving financial environment.
The next generation of workers wants to be a part of the climate solution
Dismantling limits on methane emissions would send a signal that the American natural gas industry is unattractive to a rising post-millennial workforce that cares about climate. The energy industry increasingly requires highly-skilled, technology-focused employees. But energy companies don’t just compete with each other for this talent, they also compete with the most innovative technology companies.
According to real field measurement — not trade association spin based on methodologies known to underestimate emissions — today American natural gas is nearly as damaging to climate in the near term as coal. Not a good look for companies recruiting the next generation of high-skilled talent in a hyper-competitive labor market.
It’s time to speak up
Gutting nationwide rules that would limit methane emissions is as bad for business as it is for climate. Every company and investor with an interest in America’s natural gas has a stake in preserving commonsense standards that manage risk.
Business leaders can make their voices heard by speaking publicly and submitting comments in the weeks and months to come.