Investors Welcome EPA’s Release of New Supplemental Regulations to Curb Dangerous Methane Emissions
Key features include a streamlined approval process for new methods of methane emissions detection and flexibility in effective technology.
NEW YORK, NY - MONDAY, NOVEMBER 14, 2022 - Investors welcomed the Biden Administration’s announcement at last week’s COP27 climate summit that it intended to strengthen its proposed standards to cut methane and other harmful air pollutants. The updates, which supplement proposed standards the EPA released in November 2021, include a groundbreaking “Super-Emitter Response Program” that would require oil and natural gas operators to respond to third-party reports of high-volume methane leaks. The proposed standards are also expected to significantly reduce levels of dangerous air pollutants, including smog-forming volatile organic compounds (VOCs), and benzene.
Members of the ICCR coalition see the Administration’s announcement as a critical step forward from the November 2021 proposal; the supplemental proposal is expected to deliver sharp cuts in methane emissions, which is among the most critical actions the U.S. can take in the short term to slow the rate of climate change.
Said Luan Jenifer of Miller/Howard Investments, Inc., “Whether emissions from routine flaring or smaller leak-prone wells, from pneumatic controllers or aging infrastructure, we applaud and support the EPA’s efforts to regulate methane emissions. A transparent, credible, and science-based methane emissions reporting framework will improve the accuracy and credibility of reported methane emissions data, and enable us, as investors, to clearly differentiate between leaders and laggards.”
The supplemental proposal is expected to:
- Ensure that all well sites are routinely monitored for leaks at a reduced cost until they are closed properly;
- Provide industry flexibility to use innovative and cost-effective methane detection technologies, and a streamlined process for approving new detection methods as they become available;
- Leverage data from remote sensing technology to quickly identify and fix large methane leaks;
- Require that flares are properly operated to reduce emissions, and revise requirements for associated gas flaring;
- Establish emission standards for dry seal compressors, which are currently unregulated;
- Set a zero-emissions standard for pneumatic controllers and pneumatic pumps at affected facilities in all segments of the industry; and,
- Increase recovery of natural gas that otherwise would go to waste – enough gas from 2023 to 2035 to heat an estimated 3.5 million homes for the winter.
Said Christina Herman, ICCR’s Sr. Program Director for Climate change and Environmental Justice, “Strong, effective regulation of methane emissions is essential to the low-carbon transition. Reducing this potent GHG is in the interests of companies, investors, and affected communities. By acting to curb methane emissions, eliminate routine flaring, and extending the regulations to the more than 500,000 “low-producing” wells across the U.S. that drive over half of all well-site methane pollution nationwide, the government can achieve valuable greenhouse gas reductions while helping American industry become cleaner and more competitive.”
Beyond methane’s role as a driver of climate change are its significant impacts on air quality and public health. Investors say these regulations will help protect communities living near oil and natural gas facilities.
Said Mary Minette of Mercy Investment Services, “The health, environmental and economic impacts of methane leaks are well-documented and substantial. Methane’s contribution to climate change and air pollution has significant health impacts for vulnerable people, particularly children and the elderly, among those whom we are most responsible to protect from harm.”
The supplemental proposal would also establish a super-emitter response program that would leverage data from regulatory agencies or approved third parties with expertise in remote methane detection technology to quickly identify large-scale emissions for prompt control. Studies show that large leaks from a small number of sources are responsible for as much as half of the methane emissions from the oil and natural gas industry.
Methane emissions also represent a significant lost product for the industry, and reducing them is perhaps the single most cost-effective way to slow the rate of warming today.
Investors are concerned about all aspects of sustainability for the energy sector but are especially concerned about methane as it is such a powerful climate change forcer. Methane emissions are a dangerous, short-lived greenhouse gas and a powerful contributor to climate change, with an impact on global temperature roughly 84 times that of carbon dioxide over a 20-year period.
Many oil & gas companies have shifted from opposition to methane regulations to a recognition of the importance of a regulatory floor, with many in the industry issuing public statements of support for regulations. Federal methane regulations provide consistency and certainty across the thousands of individual U.S. producers.
Investors also welcomed the announcement at the UN Climate Summit on November 10 of a joint agreement between the U.S. and EU to coordinate efforts to reduce methane emissions via policies to stop routine venting and flaring of natural gas, and require companies to fix leaks in their infrastructure. The declaration builds on a 2021 pledge to cut methane emissions by 30% by 2030 from 2020 levels.
The EPA will take comment on the supplemental proposal until February 13, 2023, and is expected to issue a final rule during 2023.
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn, and Facebook.