Obama's methane curbs split gap between industry, greens

The Obama administration announced plans today to regulate methane emissions from new and modified oil and gas operations -- but not from existing pollution sources.

U.S. EPA plans to propose new source rules for methane this summer and finalize them in 2016. The agency will follow the same timeline to expand its rules for ozone-forming emissions at existing oil and gas wellheads, which will reduce smog and leaking methane. States would have to address those sources as part of their plans for curbing ozone.

The administration strategy is part of an interagency blueprint on methane aimed at reducing by 2025 petroleum-sector emissions of the potent greenhouse gas by 40 to 45 percent from 2012 levels. The Interior and Energy departments will also do their parts to hit the target.

White House energy and climate adviser Dan Utech said the methane strategy is integral to President Obama's promise at a China summit in November that the United States would slash its emissions by 26 to 28 percent from 2005 levels by 2025.

"I think that will make a significant contribution to our overall effort to meet the goal the president laid out in Beijing," he said.

In promulgating methane rules for new sources but not existing ones, EPA is splitting the difference between the all-regulatory approach favored by environmentalists and the mostly voluntary one advocated by industry.

Environmentalists hoped EPA would use the Clean Air Act's Section 111 (b) and (d) to go after both new and existing petroleum-industry methane emitters -- the nation's largest unregulated source of greenhouse gases. The American Petroleum Institute and America's Natural Gas Alliance said they would accept an expansion of EPA's wellhead ozone controls but urged the agency to limit methane curbs to voluntary measures.

Utech and acting EPA air chief Janet McCabe stressed today that EPA engaged with industry ahead of releasing its plans and looks forward to "cooperating" with producers on voluntary reduction measures for existing emitters. They promised that the mandatory requirements for new sources would be cost-effective and allow the domestic petroleum industry to continue to grow.

Utech cast the effort as a key part of Obama's "all-of-the-above approach to develop homegrown energy."

McCabe said the new source rules were designed to keep the sector's emissions from growing as the industry continues to boom. Emissions from the industry are likely to grow by 25 percent by 2025 under a business-as-usual scenario because domestic production is growing so quickly.

"We're going to focus our rulemaking on the emissions sources that make the most sense to address now: new emissions sources in areas of this industry where new investment and growth are occurring, and where emissions are increasing as a result," she said.

By using Section 111(b) to curb new and modified emission sources, EPA is obligating itself to eventually write rules for existing sources under Section 111(d).

Utech left the door open for eventual regulations on existing emitters.

"What additional steps are appropriate beyond those steps that we're outlining today will become more clear over time as we work through the steps we're outlining today," he said.

But the upshot of today's announcement is that Obama will leave office before existing-source methane rules are written, and the Clean Air Act doesn't provide a deadline for the next administration to finish the job.

"There's no clock in the law," said Dina Kruger, an environmental consultant and former director of EPA's climate division. "If a new administration came in and was not interested in doing existing [source] regulations, they would have to be sued, and then the question is how much deference does the court give EPA for balancing its own regulatory agenda?"

Courts have held that EPA has the authority to set its own timeline, she said. So it is likely to be some time before EPA writes methane rules under Section 111 (d).

Greens seek 'clearer road map'

Environmentalists signaled earlier in the week that they would not be happy with any option that limits future methane emissions but leaves today's infrastructure alone.

Conrad Schneider, advocacy director of the Clean Air Task Force, and other environmentalists had urged EPA to regulate all existing petroleum-sector equipment -- from wellheads to pipelines. "If they don't, they're going to miss the lion's share of the emissions," he warned.

But today's announcement is likely to capture more emissions than would a simple extension of EPA's 2012 regulations for volatile organic compounds (VOCs) at new hydraulically fractured gas wells.

Environmentalists estimate that approach would have captured only a 10th as many emissions as the Section 111 rules would, and it would likely have taken direct methane regulation off the table indefinitely.

Fred Krupp, president of the Environmental Defense Fund, said in a statement the White House's overall methane strategy is "a landmark moment."

"However, we will need a clearer road map and more decisive action to ensure the administration tackles the most important part of the problem -- emissions from existing wells, pipelines and facilities," he said. "There is no reason to wait 10 years to fix a problem that can be addressed right now at low cost."

Gene Karpinski, president of the League of Conservation Voters, also referred to today's announcement as a "first step."

"We look forward to continuing to work with the Obama administration to reduce methane pollution across the board to hold polluters accountable and protect our planet for future generations," he said in a statement.

Industry 'disappointed'

But while environmentalists expressed frustration over the lack of immediate regulation for existing sources, industry was unhappy that the administration plans to regulate new ones.

API President Jack Gerard said the new rules could "disrupt America's energy renaissance."

The petroleum sector has reduced emissions by 16 percent since 1990 even as development grew by more than a third. He said that was because the industry has invested in new technology. The industry already has an incentive to capture and sell as much of its product as possible, and methane is the main component of natural gas, he said.

"Another layer of burdensome requirements could actually slow down industry progress to reduce methane emissions," he asserted.

ANGA President and CEO Marty Durbin also expressed surprise that EPA didn't limit itself to voluntary programs.

"We are disappointed the administration is choosing to take a regulatory approach that will take years to implement, rather than a cooperative approach with the industry that we believe will ultimately result in greater emissions reductions in a shorter timeframe," he said in a statement.

The industry said before today's announcement that it could back an expansion of EPA's 2012 regulations for VOCs to cover other segments of the petroleum supply chain, and EPA included those rules in today's strategy.

Those rules will apply to existing wellheads in ozone nonattainment areas and will be implemented largely by states.

"We've been working with both the industry and the states ever since we started developing our 2012 rule, so we have a good basis of working relationship there, and information," McCabe said today.

Interagency effort

EPA is not the only agency that will participate in the administration methane strategy.

Interior's Bureau of Land Management is also readying a proposal to change how royalties are levied on millions of acres of mostly Western public lands (E&ENews PM, Jan. 5).

Utech said today that the BLM draft, which is due this spring, will not only curb methane but ensure a fair return to taxpayers.

But he said the White House would ensure that the BLM rules and the EPA rules don't overlap in a way that will be burdensome to industry.

"We're certainly aware that we don't want to have that outcome, and we're working hard to prevent that," he said.

Obama will also include $15 million in his fiscal 2016 budget request for a DOE program to improve the way methane leaks are detected and repaired. An additional $10 million will be requested to fund a new DOE program aimed at better assessing how much methane is released from natural gas infrastructure, with the results included in EPA's annual Greenhouse Gas Inventory.

The Department of Transportation will issue new pipeline safety standards.

Jean Chemnick, E&E reporter

Republished from GreenWire with permission. GreenWire covers the energy and environmental policy news. Click here for a free trial

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