Today, the Environmental Protection Agency (“EPA”) announced a new goal to cut methane emissions from the oil and gas industry. (See White House Fact Sheet.) The EPA’s goal is to reduce methane emissions from the oil and gas sector by 40-45% from 2012 levels by 2025. The proposed regulations will set standards to reduce methane and volatile organic compounds (“VOC”) emissions from “new and modified oil and gas production sources, and natural gas processing and transmission sources.” The EPA will issue a proposed rule in summer 2015, and will issue a final rule as early as next year, in 2016.
Today’s announcement furthers the “Strategy to Reduce Methane Emissions” issued in March 2014, which is an initiative under the Obama Administration’s Climate Act Plan. Further, the EPA previously published standards for VOC emissions from the oil and gas industry in 2012 which aim to protect public health and the environment while permitting expansion of oil and gas production.
Methane is a target of the Obama Administration’s strategy to tackle climate change because methane is a “potent” greenhouse gas. In 2012, methane emissions alone accounted for almost 10% of the total U.S. greenhouse gas emissions. The EPA has focused on the oil and gas industry because methane is the primary component of natural gas, and 30% of the 2012 methane emissions resulted from the production, transmission, and distribution of oil and natural gas. The White House Fact Sheet reports a 16% reduction in emissions from the oil and gas industry since 1990. The need for new regulations is due to the projected increases in oil and gas production, though. The Fact Sheet forecasts a 25% rise in emissions by 2025 unless the Administration takes steps to address the increase.
The Obama Administration recognizes that the oil and gas industry provides energy security and economic benefit. The EPA describes the future regulations as “commonsense standards” and purports that they will promote economic productivity by “capturing valuable fuel that is otherwise wasted.” In an effort to promote cooperation, the Administration encourages voluntary industry actions to reduce methane emissions, predicting that these efforts could reduce the need for future regulations.
Industry Reactions & Impact
The oil and gas industry is booming: oil production in the U.S. is at its highest level in almost 30 years and the U.S. is currently the world’s largest natural gas producer. How, then, is the industry reacting to the rulemaking proposal? The oil and gas industry agrees that capturing methane emissions makes economic sense: methane is a valuable commodity, and many oil and gas producers already reduce methane emissions through capture methods. But industry representatives contend that additional regulations are expensive and unnecessary because the industry has already significantly reduced methane emissions. Emissions will continue to fall due to improved technology without the need for new regulations. Most notably, the EPA reports that methane emissions from hydraulically fractured natural gas wells have been reduced by 73% since 2011.
Methane Emissions Regulation for Other Sectors
The effects of EPA action to regulate methane emissions will not be limited to the oil and gas industry. For example, the EPA has proposed updates to its 1996 New Source Performance Standards for new municipal solid waste landfills that will reduce methane emissions. The federal government also intends to regulate methane waste from coal mines. In April 2014, the Bureau of Land Management (“BLM”) released an Advance Notice of Proposed Rulemaking in order to collect public input on the development of regulations for the capture and sale, or disposal of methane emissions from coal and other minerals.
By Mike Mills (firstname.lastname@example.org), Krista McIntyre (email@example.com) and Shannon Morrissey. Ms. Morrissey is a Law Clerk with Stoel Rives LLP and is not currently licensed to practice law in California.