May 17, 2016 at 5:00 am ET
Last Thursday, the Environmental Protection Agency issued the first set of Clean Air Act regulations limiting methane emissions from power plants. The rules address new and heavily modified equipment and operations in the oil and gas industry.
According to E&E, the rules will “increase how often companies must check and repair leaks at compressor stations,” and remove a proposed provision allowing companies to reduce the frequency of site inspections, if no previous leaks are found. It is estimated this rule will affect almost 22,000 owners and operators in the industry.
The EPA methane rules were first proposed in August 2015. In March, President Obama renewed the commitment of the United States, during the State visit of the Canadian PM Justin Trudeau, to cut methane emissions by 40 to 45 percent.
These rules have been heavily criticized by the oil and gas industry for many shortcomings, including inconsistency in data used to create the rule. Further adding to the controversy, Bloomberg reports the regulations will now cost an additional $530 million, 25 percent higher than projected last August.
The foremost issue with these rules lies within the emission reduction goals announced by the President, which appear to be indiscriminately selected without accurate knowledge of total Methane emissions in the U.S. The EPA first set 2013 Methane emissions at 7.3 million metric tons, but a more recent update by the agency pegs emissions 27 percent higher at 9.3 million metric tons. The Environmental Defense Fund (EDF) has criticized the EPA estimates, calling them drastically low based on a series of sixteen studies.
Meanwhile, the American Petroleum Institute (API) has called out the EPA for “dramatically overstating” methane emission levels, based on a 2011 HIS CERA report. It is revealed the EPA methane estimates were made by “applying average rates to various parts of the production cycle, rather than constantly measuring and re-measuring actual emissions.” As a result, it is expected implementation of this goal will now be harder and cost much more than anticipated.
Though embraced by environmental activists and special interest groups, the energy industry has come out hard against the rule already contemplating legal action. API in a statement said the rule “put the shale revolution at risk” by increasing costs and reducing incentives.
This isn’t the first time the EPA has made such controversial decisions. In 2014, the Supreme Court halted the EPA Mercury rule until the agency accurately evaluated the actual costs of the program. Furthermore, in 2016, the Supreme Court issued a stay on the Clean Power Plan while litigation continued to look into the merits of the rule. These are just some of the recent initiatives by the administration, which have drawn wide criticism and litigation from many industries and States.
Protecting the environment is definitely a top priority. It is imperative, however, the right balance is struck, ensuring the integrity of both the rule making process and government agencies are upheld. The government should focus on working with industry partners, versus unilaterally, to develop effective and innovative solutions to address issues such as environmental protection in order to maximize utility and ensure practical steps are put in place.
Chanil de Silva serves as Director of Public Policy at Nouveau Inc., an energy & infrastructure consulting firm based in Washington, D.C. The opinions expressed in this article are solely those of the author and do not necessarily reflect the opinion of Nouveau Inc. or any of its subsidiaries.