By Kristen Walker, American Consumer Institute
The Environmental Protection Agency (EPA) used COP28 to announce and officially roll out sweeping new regulations targeting methane emissions from the oil and gas sector. The rule promises to sharply reduce emissions of methane which it considers a climate “super pollutant” that is responsible for nearly one third of warming.
Leaders from both parties in Congressional offices have voiced opposition to the regulation.
Joe Manchin, Democratic Senator from West Virginia and chair of the Energy and Natural Resources Committee, drafted a letter to the EPA expressing concerns over the timeframes and methodologies that will be employed and which will not competently measure emissions. Manchin accuses the administration of targeting oil and gas, “despite its substantial progress in reducing methane emissions, irrespective of how it might impact American energy security, reliability, and consumer cost.”
House Energy and Commerce Chair Cathy McMorris Rodgers, Republican from Washington, released a statement expressing concern that these “burdensome regulations for methane would dramatically expand the agency’s regulatory reach in a manner that will stifle innovation, increase operational costs, and increase the price of energy.” She rightly pointed out that such burdens will fall on American families and businesses.
Nowhere does the EPA rule indicate the amount of temperature “saved” after its implementation. However, using a climate carbon cycle model some analysts have suggested that by the year 2100, only a mere fraction of a fraction of a percent would be gained.
The American Petroleum Institute, which represents all segments of America’s oil and natural gas, notes that the industry has been able to reduce methane emissions through its own actions by nearly 70 percent within a decade. And has done so while simultaneously increasing energy output.
Demand for oil and natural gas continues to climb, and according to the International Energy Agency, it is set to peak in 2030 and will remain high well beyond mid-century. Oil and gas still constitute the majority of our energy use and will continue to do so in the foreseeable future.
Anne Bradbury, President and CEO of the American Exploration & Production Council, testified before members of the House Energy and Commerce Committee on December 5th. She stated that as it stands now, the rule stringently precludes using current (and more effective) methods for measuring methane emissions in place of antiquated and less efficient models used by third parties, therefore disincentivizing the industry from continuing to innovate and improve upon the techniques and practices they have been successfully employing. According to Bradbury, the provisions EPA has proposed will lead to overestimates and double counting, which will therefore lead to misleading and inflated quantities of emissions.
Many companies will be unfairly hit with the new punitive methane tax, further reducing funds they could otherwise utilize to invest in advanced technologies that curb emissions. Where America has been a leader on the global stage in its capacity to track and reduce methane emissions, our competitive advantage will be undermined.
Even the Congressional Budget Office determined that a tax on methane emissions will increase operational costs, reduce energy production, and increase the price of natural gas.
No amount of regulation is going to suppress energy demand, but it will certainly stifle supply. Even though this EPA rule’s primary stated objective is not to necessarily squash output, that is a likely consequence, and perhaps by design. If supply is cut, others will come along and fill the gap. And those others could very well be Venezuela, China, Iran, or some other producer that does not adhere to environmentally sound practices. Since America is one of the world’s cleanest fossil fuel producers, any other source would be pollutant-heavy, which will just further harm global emissions reductions.
This new rule is likely to face legal challenges, especially in light of last year’s Supreme Court ruling in West Virginia v EPA which limits the agency’s regulatory powers. Michigan v EPA also ruled in 2015 that imposing billions of dollars in compliance costs for trivial environmental benefits is not reasonable. Will this be another one for the Supreme Court?
Bradbury further stated in her arguments, “We are already leading the way, globally, in the development and deployment of new emissions reduction technologies and innovative approaches—not because Washington instructed us to, but because it is the right thing and the smart thing to do.”
The government needs to get out of the way and let industry do its job. The new EPA rule is regulatory overreach that will hamper industry progress and do more harm than good. The biggest losers are consumers, families, and businesses who will experience less energy supply and higher prices.
Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.