Obama Administration's Methane Emissions Reduction Strategy

April 18, 2014

The Legal Intelligencer

President Obama's special assistant for energy and climate change, Dan Utech, recently rolled out the administration's Strategy to Reduce Methane Emissions, a key component of the administration's ambitious Climate Action Plan. The Climate Action Plan, which was announced by the president June 25, 2013, calls for America to reduce carbon emissions by 17 percent below 2005 levels by 2020. The Methane Reduction Strategy is not law or regulation; it is a "policy document," but it will have wide-ranging impact on Americans and American businesses, especially the oil and gas sectors.

The Climate Action Plan took its cue from the U.S. Supreme Court's 2007Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007), decision, which held that greenhouse gases are air pollutants subject to regulation under the Clean Air Act. Because the 800-pound gorilla for carbon emissions is the power generating sector, the Climate Action Plan's call for emissions reductions starts there. The Supreme Court-mandated, EPA-proposed rule for emissions from new power plants under Clean Air Act Section 111(b) was issued in August 2013. The similarly mandated EPA rule for existing power plants, i.e., the "Section 111(d) rule," is drafted by the EPA in proposed form and is currently under review by the Office of Management and Budget. That highly anticipated draft rule is expected to give states the flexibility to implement emissions reduction plans for the power generating sector that reflect the degree of emissions reductions achievable through the application of the "best system of emissions reduction" (BSER) that has been adequately demonstrated.

The Section 111(d) rule could allow states to provide for emissions reductions across the electricity system as a whole, such as joining and participating in the Regional Greenhouse Gas Initiative (RGGI). The RGGI is a market-based carbon emissions trading program that has been up and running well since 2008 in the Mid-Atlantic and Northeastern states. Pennsylvania currently does not participate in the RGGI—it merely acts as an "observer"—but that may change as these EPA rules roll out further. Indeed, participation by Pennsylvania in the RGGI (or rejoining by New Jersey or joining as a new member by other states) may very well provide the most economical and efficient way for those states to comply with the new EPA rules—and raise much needed revenue for the state through the allowance auction process to boot.

The Methane Reduction Strategy deals with the part of the Climate Action Plan that states that curbing "emissions of methane is critical to our overall effort to address global climate change." If the electricity generating sector is the 800-pound gorilla, methane is, pound for pound, the most potent greenhouse gas. Methane's warming potency is more than 20 times greater than carbon dioxide.

The strategy focuses on cost-effective steps for what it labels as the four benefits of reducing methane emissions: economic, climate change, public health and safety. There are four key industry sector targets for reductions: (1) landfills; (2) coal mines; (3) agriculture; and (4) oil and gas.

The plan for the oil and gas sector is the most ambitious. In spring 2014, the EPA will assess potentially significant sources of emissions in this sector. Input from experts will be garnered through a series of technical white papers. In fall 2014, the EPA is set to decide how best to implement "further methane reductions" from these sources. Should the EPA decide to develop regulations, it must do so by the end of 2016. In the meantime, the EPA is to work with the industry to expand the already extant voluntary programs aimed at reducing emissions, such as the Natural Gas STAR program. Also, the Bureau of Land Management is to propose new standards for reducing venting and flaring from operations on public lands. Finally, the Department of Energy (DOE), through the Quadrennial Energy Review, will convene "roundtables" to identify downstream methane reduction opportunities, which refers to the natural gas distribution system.

For coal mines, the Bureau of Land Management will release in April an Advance Notice of Proposed Rulemaking to gather public input for the development of a program for the capture and sale, or disposal, of waste methane on federal lands. The EPA will also continue to partner with the industry on voluntary methane reduction measures.

In agriculture, the focus is on the dairy industry. In June, the U.S. Department of Agriculture (USDA), the EPA and the DOE will release a "biogas roadmap." The roadmap will outline voluntary strategies to speed up the implementation of methane digesters and other measures to reduce emissions.

As for reducing methane emissions from landfills, the EPA will propose updated standards for reductions from new municipal solid-waste landfills in summer 2014. It will also take public comment on whether to issue updated standards for emissions from existing landfills. The EPA will also continue to work with the industry on voluntary reduction measures, recognizing that there are already many landfill gas power projects already under way. The Methane Reduction Strategy gives a specific "shout-out" of recognition to a Pennsylvania project: the IESI Blue Ridge Landfill, which is a PPL Renewable Energy landfill gas project in Chambersburg, Pa. In what the strategy calls "a true public-private partnership," the borough of Chambersburg is purchasing 6.4 megawatts of power from this landfill gas project. This provides 15 percent of the electricity needs of 11,000 customers and reduced power prices as well.

Methane emission measurement quality is also addressed in the Methane Reduction Strategy. It is recognized that better data collection and measurement will improve our understanding of sources and trends and enable better management of opportunities to make reductions.

Methane has been a hot topic with respect to natural gas development. Early on, professor Robert Howarth of Cornell University trotted out methane leakage rates that were very high, in the range of 7.9 percent. Howarth's work has been widely debunked. For example, a study underwritten by the Sierra Club from Carnegie Mellon University found that Howarth's study had not used credible data and was "biased" and "wrong." My (Krancer) predecessor as secretary of the Pennsylvania Department of Environmental Protection, John Hanger, went so far as to say that, "Bit by bit, the Howarth study is being consigned to the junk heap." The latest, most comprehensive study done by the University of Texas and the Environmental Defense Fund (UT-EDF) has shown much lower leakage emissions. In fact, the UT-EDF study showed that emissions during completion activities were about 50 times lower than previously estimated by the EPA and, overall, amount to about 1.5 percent, if not less.

The federal government may, once again, be behind the states on addressing the question of methane leakage in the natural gas extraction sector. Pennsylvania was out ahead on this issue, and its regulatory and permitting scheme, which is, perhaps, the most comprehensive in the nation, covers both the entire wellhead and associated equipment in extraction operations (which is broader than current applicable federal regulations), as well as midstream/gathering operations. At the well pad, green completions are required by Jan. 1, 2015. At both well pads and in midstream gathering operations, leak detection using an infrared FLIR camera and prompt repair of any leaks is also required. Colorado, Wyoming and now Ohio also have regulations on methane for natural gas operations.

The Methane Reduction Strategy outlines several key steps to further improve data quality. First, the strategy recommends developing new measurement technologies, including lower-cost detection equipment. Second, there is a focus on dealing with areas of higher uncertainty in bottom-up inventories through additional data collection, direct emission measurements, and research and analysis. Third, the strategy recommends enhancing top-down modeling and monitoring based on direct measurement of atmospheric concentrations. One would hope that these steps may allow for a fact-based approach to dealing with methane emissions rather than a hysterical reaction to overstated irresponsible estimates.

Unsurprisingly, there have been mixed reactions to the Methane Reduction Strategy. The American Petroleum Institute (API) has questioned the need for any new regulations and said they could have a chilling effect on the American energy renaissance. The API also noted that there are already built-in economic incentives to capturing methane since methane is the product and producers do not waste their inventory. The EDF's president, Fred Krupp, said that the strategy is a smart roadmap for taking on the biggest methane emissions sources. The Natural Resources Defense Council (NRDC) said that the strategy was a big step in the right direction, but more needs to be done. The Sierra Club does not believe the strategy goes far enough to stop the negative impacts of climate change.

The devil will be in the details in the implementation and execution of the Methane Reduction Strategy. This will also be a hot topic of discussion for states, non-governmental organizations, the industry and various community groups. We can expect robust participation by stakeholders in any regulatory initiatives that may flow from the strategy.

Reprinted with permission from the April 18, 2014 edition of The Legal Intelligencer © 2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit http://www.almreprints.com/