Natural gas is officially labeled “green” in Ohio after Gov. Mike DeWine last month signed House Bill (HB) 507 into law, though the green stamp may not carry much legislative weight for funding or regulations, according to the governor’s office. 

HB 507 passed the Ohio Senate in December, with the primary goal of ensuring state agencies would lease land for oil and gas exploration and production (E&P) activities

After some holdups at the state’s Department of Natural Resources Oil and Gas Land Management Commission (OGLMC) to fully adopt a state code from September 2021 to establish a standard lease form by which state agencies could enter contract with E&Ps, the Ohio Senate rolled in an amendment to HB507 that would expedite the standard lease form. 

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No longer “may” state agencies lease land, but “shall lease, in good faith, a formation within a parcel of land” for oil and gas development, the legislation reads. 

The bill contains a qualifier that “‘Green energy’ includes energy generated by using natural gas as a resource,” as well as an energy source that emits reduced air pollutants, and thus reduces cumulative air emissions and “is more sustainable and reliable relative to some fossil fuels,” according to HB507. 

The green label for natural gas is unseen in the United States, but in Europe, regulators this summer voted to accept a proposal from the European Commission to classify new natural gas and nuclear power projects as green

The European Union, facing what the International Energy Agency has called an “energy crisis,” would allow subsidies and low-cost loans for natural gas and nuclear projects deemed sustainable. 

But in Ohio, the green label may not do much. 

As of December, permitting in the Utica Shale has declined by 43%, down by 19 permits, according to the latest data from Evercore ISI. Moving forward, it may be possible that the OGLMC’s issuance of permits rises as a result of other language in HB507, but not necessarily as a result of the green label.

“Our legal team reviewed the ‘green energy’ provision, and the legislative language did not affect any funding or regulations,” said Dewine’s Press Secretary Dan Tierney. “It was more of an opinion statement by the General Assembly than anything. This was not administration language from our office.

“Natural Gas is an important component of Ohio’s energy mix for many reasons, but of relevance here is the fact that natural gas is cleaner than coal and other fossil fuels,” he told NGI. “Thus, when we move to natural gas, we are helping our country and the world. While wind and solar are cleaner energy sources, we cannot replace fossil fuel with wind and solar overnight, making natural gas all the more important to our energy mix.” 

Arguments For And Against HB507

The Empowerment Alliance (TEA), a nonprofit that advocates for natural gas’ use for U.S. energy independence, applauded the declaration that natural gas is now considered a clean source of energy under Ohio law. 

A spokesperson for TEA told NGI, “The label itself is an awareness thing, but it’s a first step toward letting people realize that natural gas has been around, in our estimation…, we feel it’s helped reduce emissions…”

According to the organization, switching from coal-fired electricity generation to natural gas-fired generation has “been the number one driver of lower emissions,” with carbon dioxide (C02) emissions from the power generation sector falling by about 32% since 2005. 

“America leads the world in CO2 reductions and natural gas is responsible for 61% of carbon dioxide reductions in U.S. electricity generation,” according to TEA. 

The organization’s spokesperson also told NGI that, “The bigger issue also is consumer choice and affordable energy for working Americans…That’s what we’ve been talking about, just fighting for affordable American-produced energy that is hopefully good for the environment and hopefully affordable to most people who are fighting inflation and all of the other things that are taking money out of your wallet.”

Meanwhile, the Ohio Environmental Council (OEC) voiced its disagreements with HB507. The OEC’s Law Center submitted a letter to DeWine noting the bill’s unconstitutionality, as under Article II, Section 15, subsection D, “No bill shall contain more than one subject, which shall be clearly expressed in its title…”

The OEC noted that HB507 was initially introduced as an act solely for the purpose of amending the number of poultry chicks that may be sold in lots. 

HB507, as passed, contains provisions related to agriculture law, definitions of green energy, natural gas’ exclusion from receiving renewable energy credits and other miscellaneous legal revisions, as noted in the title of the legislation. 

The OEC’s Chris Tavenor, associate general counsel, also told NGI that there are problems with labeling natural gas as green because when it’s “burned it produces the greenhouse gas” CO2. 

Natural gas “is…contributing to climate change,” Tavenor said. “When leaked from pipelines and wells as just methane, it is 80 times more powerful than CO2 as a greenhouse gas. Simply put, no fossil fuel can be considered green energy.”

More States To Follow?

In related news, a four-member group of Republican legislators in New Mexico attempted to push a similar bill that would qualify combined cycle gas turbines (CCGT), as a renewable energy resource available to rural electric cooperatives (coops). 

However, under the state’s Energy Transition Act (ETA), which passed in 2019, all New Mexico investor-owned utilities (IOU) and rural electric cooperatives are required to achieve a mix of renewable energy resources that comprises 80% of their portfolio by 2040, with IOUs then required to achieve 100% zero-carbon resource mixes by 2045, and rural coops by 2050. 

According to the New Mexico Political Report, a nonprofit news organization for the state, the bill died in its first committee in a 7-4, party line vote. 

A fiscal impact report released on the bill determined it conflicted with SB74, legislation also passed in 2019 related to public health. 

The New Mexico Attorney General wrote in its analysis that CCGTs “are not ‘zero carbon’ resources, the proposed amendments to the definition of renewable energy would not exempt these electricity generating resources from the ETA’s mandates.”

While New Mexico’s ETA may have blocked HB96, it’s possible other states may attempt to push through similar measures. 

“It could make sense to get those states,” the TEA spokesperson told NGI, referring to Pennsylvania, Texas and West Virginia. 

“We have gotten emails back from legislators and regular residents saying, ‘We support the message’ and ‘We support American energy independence and natural gas.’ So, where it goes from here, I’m not completely sure…”

TEA’s “Declaration of Energy Independence,” which states that signatories “are committed to achieving” goals that would bolster natural gas production and use, has garnered attention in natural gas and oil-rich states. 

In Pennsylvania, TEA’s declaration has received signatures from Sen. Pat Toomey (R), Treasurer Stacy Garrity (R) and five former and current Republican members of the state’s House. 

Texas also has a slew of current and former Republican members of government that have signed on, including Gov. Greg Abott (R), Sen. Ted Cruz (R) and Sen. John Cornyn (R).

In West Virginia, four Republican-elected officials also are signatories on the declaration, according to TEA.

“There’s oil and gas there, and we’re simply pointing out that those are states that could follow suit,” the TEA spokesperson noted. “As to our involvement in it, I’m not sure where that’s at or where that’s headed, but not saying that couldn’t happen down the road.”