Cutting Methane: Five Major Reduction Initiatives
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There has been a lot of movement internationally and domestically regarding methane emission reduction strategies in the past few weeks, leaving no doubt that implementing these strategies is front and center in the minds of the international community and U.S. government leaders. Recent advancements to curb uncontrolled methane emissions have been articulated by no less than five very public acts including an international proclamation, a federal action plan, pieces of federal legislation, and proposed regulations from the U.S. EPA. Below is a summary of all five of these acts, which intertwine common language aimed at methane reduction strategies.
COP26 Methane Pledge
Over 100 countries, excluding Australia, China, and Russia, pledged voluntary reductions of man-made methane emissions by 30% by 2030. These countries agree to take domestic actions to reduce methane emissions from energy, waste, and agricultural business sectors.
U.S. Methane Emissions Reduction Action Plan
The White House Office of Domestic Climate Policy (Climate Policy Office) implements the President’s domestic climate agenda coordinating the all-of-government approach to tackle the climate crisis. The Climate Policy Office issued a U.S. Methane Emissions Reduction Action Plan (Action Plan) last month to correspond to the commencement of COP26. The Action Plan highlights key methane emission source reductions in the oil and gas industry, the agricultural industry, existing landfills, and abandoned coal mines.
It includes a broad multi-agency approach to addressing methane emissions from the oil and gas sector including:
New EPA proposed rules for methane emissions from new oil and gas sources and new limits on existing oil and gas sources;
The Department of the Interior’s focus on venting and flaring of methane; and
The Department of Transportation’s efforts to upgrade and expand pipeline rules that will target operators to cut methane leaks.
Methane emission reductions from existing landfills are also part of the Action Plan, as is, a focused effort by the Department of Agriculture to create incentive-based programs for reducing methane emissions.
Perhaps the ‘lowest hanging fruit’ resides in the oil and gas industry’s abandoned wells. The Action Plan estimates that close to 2MM oil wells and hundreds of thousands of gas wells across the country are unplugged and emitting methane directly into the atmosphere.
Think this is an issue only affecting Texas, Pennsylvania, or the other better-known oil and gas producing states? Think again.
Indiana has close to 600 known orphaned wells and while Indiana has funding for plugging activities, the infusion of federal dollars will likely be welcome as the current funding mechanisms rely on annual well fees paid by Indiana operators, civil penalty assessments, and forfeited bonds. Based on IDNR reports, an average of 190 wells have been plugged over the course of the last 10 years.
U.S. EPA Proposed New Rule to Reduce Methane
Additionally, under the Action Plan, the U.S. EPA will propose new regulations under the Clean Air Act that will broaden and strengthen methane emissions reduction for new oil and gas facilities. EPA’s proposed regulations include expansion of performance standards applied to existing sources previously not covered, requiring responsible parties to monitor and fix leaks that result in fugitive emissions at new and existing wells and compressor stations. U.S. EPA will be accepting comments here from the public until January 14, 2022.
The Infrastructure Investment and Jobs Act
On November 15, 2021, President Biden signed the $1.2 trillion bipartisan infrastructure bill into law and while much has been written about the law’s emphasis to reinvigorate the country’s aging surface transportation networks including highways and rail, focused fuel and technology infrastructure investments (carbon capture), and clean drinking water infrastructure investments among a myriad of other elements, buried deep within the new law, are references to Methane Reduction Infrastructure strategies.
In addition, this law provides a funding program that states can apply for to address orphan and abandoned oil and gas wells. While the reasons that led to such conditions are quite varied – from economic to perhaps lower than expected yields – the new law can infuse state programs with much-needed funding to properly cap these direct emitters of methane. Methane leaks from orphan and abandoned wells are well documented across the oil and gas regions of the U.S., with the oil and gas industry being the largest industrial source of methane emissions, responsible for approximately 30% of total emissions of the gas, the White House says.
The Build Back Better Act
If the international attention on methane emission reduction wasn’t bright enough, as a potential encore to COP26 and the Infrastructure law, the U.S. House of Representatives passed HR 5376, commonly known as the “Build Back Better” Act, on November 19, 2021. Within this legislation are provisions of imposing a fee on methane from on-shore and off-shore petroleum and natural gas production facilities including natural gas transmission and liquefied natural gas storage facilities.
Petroleum and natural gas production facilities will face a fee calculated from the tons of methane emissions that exceed 0.20 percent of the natural gas sent to sale from the facility.
For classified non-production petroleum and natural gas facilities, the fee will be calculated on the reported tons of methane emissions that exceed 0.05 percent of the natural gas sent to sale from such facilities.
And, lastly, for classified natural gas transmission facilities, the fee will be calculated on the reported tons of methane emissions that exceed 0.11 percent of the natural gas sent to sale from such facilities.
Proceeds from the imposed fees would go toward emissions and ambient methane and other greenhouse gas (GHG) monitoring, preparing inventories, and tracking emissions. The proceeds will also be directed toward providing financial, including grants and rebates, and technical assistance to facility owners and operations preparing and submitting greenhouse gas (GHG) reports.
On an international stage, this five-part play is ready. The performers seem poised, and the curtain is drawn wide. What will the current spotlight on methane emission reductions reveal? Perhaps with a clap of the clipboard, and the shout to “Action”, we’ll witness Oscar-winning performances from across the international community and domestically.
For more information, please contact us or call (800) 508-8034 to speak with one of our Sustainability consultants today.
Contact:
Becky Twohey, Ph.D.
Vice President, ESG Strategy, Planning and Reporting
KERAMIDA Inc.
Contact Becky at btwohey@keramida.com
