With natural gas projected to play a major role in the global energy mix for decades to come, the incoming Biden Administration would need to mitigate the fuel’s environmental impacts as much as possible in order to fulfill his climate agenda, the most ambitious of any U.S. president in history.
As a result, the industry likely faces more pressure than ever, especially with a Democrat-controlled Senate, to prove gas can be a bridge fuel to a low-carbon economy.
Over the short term, this would require clamping down on methane leakage throughout the gas value chain, and on carbon-dioxide (CO2) emissions from combustion of the molecule. Methane, the main component of natural gas, is about 84 times more potent as a greenhouse gas during the first two decades after its release than CO2, according to the Environmental Defense Fund (EDF).
The gas industry, including national oil companies, supermajors, independents, midstreamers and utilities, has stepped up voluntary efforts to plug methane leaks and reduce routine gas flaring and venting amid growing calls from investors to take meaningful action on climate.
However, as techniques for measuring greenhouse gas (GHG) pollution have improved, the challenge appears increasingly daunting.
A recent EDF study, for example, found that annual oil and gas methane emissions in New Mexico stand at an estimated 1.1 million metric tons, about five times higher than what current Environmental Protection Agency (EPA) data suggest.
Venting and flaring, meanwhile, reached record high levels in the United States during 2019. So far, only Alaska and Colorado have banned routine flaring and venting in the upstream segment.
Venting contributes to methane emissions, as does incomplete combustion during the flaring process, while flaring converts methane to CO2.
New World Order
More broadly, climate change — practically an afterthought during the 2016 presidential campaign — has taken on a more prominent role in political discourse, as seen during the debates between Biden and President Trump.
And while natural gas is the cleanest fossil fuel, it increasingly has been under the microscope as its share of the energy mix grows.
“The world has changed a lot in four years,” Erin Blanton, senior research scholar at Columbia University’s Center on Global Energy Policy, told NGI. “I think the industry is starting to really wake up to the fact that they have to deal with this black eye, which is methane…if they want to survive.”
The good news, she said, is that there are numerous policy options to reduce emissions in ways that are technically and economically feasible for the industry.
One example she cited is the EPA’s 2016 Oil and Natural Gas New Source Performance Standards (NSPS) for methane and volatile organic compound pollution. The methane portion was rescinded in August by the Trump administration.
Beyond simply reinstating the standards, Biden’s EPA could modify the rules to make them less prescriptive in terms of the methods for achieving compliance, Blanton said.
The American Petroleum Institute’s (API) Lynn Granger, who directs the group’s Colorado division, issued a similar plea recently to Gov. Jared Polis, whose government is due to finalize its GHG Pollution Reduction Roadmap this month.
Granger said that while API supports efforts to reduce emissions, “policies should be supportive and flexible,” adding that prescribing specific technologies to curb emissions “may inhibit the development of alternative technologies that could accomplish those same goals at lower costs or improved timetables.”
API CEO Mike Sommers struck a similar tone in December, saying, “We stand ready to work with the President-elect’s nominees once confirmed to tackle the challenge of climate change by building on America’s progress in delivering affordable and reliable energy while reducing greenhouse gas emissions to generational lows.”
He added, “In the year ahead, we will continue to advocate for policies that promote technological innovation, advance modern energy infrastructure and support access to natural gas and oil resources—both on federal and private lands—which will be critical to rebuilding our economy and maintaining America’s status as a global energy leader.”
Biden has pledged to end new drilling permits on federal property, but has acknowledged that hydraulic fracturing and fossil fuels generally would be necessary for years to come.
All Hands on Deck
The Climate 21 project, a group of more than 150 former government officials working to promote “a rapid-start, whole-of-government” response to the climate crisis, also is urging the Biden White House to move quickly on curbing GHG emissions from throughout the natural gas lifecycle.
In a transition memo to the EPA, the group’s authors urged the agency to reinstate and update the NSPS, “and take all other steps necessary to establish comprehensive methane regulation for the oil and gas sector.”
The group also noted that, “as the electricity sector transitions away from coal generation, growing emissions from the use of natural gas (both carbon dioxide and methane) represent a significant climate challenge for the next decade and beyond.”
The liquefied natural gas (LNG) industry also is facing increasing scrutiny over GHG emissions.
The Department of Energy’s (DOE) “LNG export program will garner significant attention early in the next administration,” the Climate 21 team said in its transition memo to DOE. “An early action by the next Secretary can start…the process to update the analysis of lifecycle global GHG emissions impacts of LNG exports including associated methane emissions and incorporate that into future LNG permitting decisions.”
France’s government made headlines recently by scuttling an LNG offtake agreement between Engie SA and Houston-based NextDecade Corp., reportedly because of concerns about the environmental impact of exploration and production (E&P) in Texas. The LNG would have come from NextDecade’s proposed Rio Grande export terminal in South Texas.
Over the longer term, widespread incorporation of tools such as hydrogen, carbon capture, utilization and storage (CCUS), and renewable natural gas would likely be needed for gas to fulfill its promise as a transition fuel.
Blanton said the progress of CCUS depends on the expansion of incentives, such as the Internal Revenue Service Section 45Q tax credit for sequestering carbon.
The oil and gas industry also has expressed support for these technologies. API praised legislators for including provisions to encourage development of CCUS in the recently passed Omnibus spending bill.
Alan Armstrong, CEO of pipeline giant Williams, said in November the company is pursuing the deployment of solar energy, hydrogen and carbon capture “across our entire footprint.”
Blanton expressed optimism about cleaning up natural gas.
“We’re going to have to have natural gas in the system for at least the next couple decades,” she said. “Knowing that, how do we make it as clean as possible?”
The good news, Blanton said, is that, “It’s pretty low-hanging fruit to do it.”
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