Natural gas is experiencing an identity crisis
‘Bridge fuel’ exports must get ready for global regulations
Long marketed to the public as both the bridge fuel to clean energy and the reliable backup to intermittent wind, natural gas is being questioned by environmentalists, end-users and grid operators alike. In the debate spurred by the near collapse of the Texas electricity grid, chicken and egg questions surfaced about sudden, near-simultaneous natural gas and electricity shortages. The reputation of natural gas for reliability took a stumble. To recover, the industry needs to do a full rethink of how it operates. Texas regulators should too.
The failure of natural gas facilities to fill out a two-page application that would have kept power companies from cutting off their electricity is astounding because it is easy to fix and the issue came up in a previous freeze. Weatherizing equipment is also a potential point of consensus though the matter who pays for added cost is not. Texas natural gas, however, was already facing other major challenges before the winter storm.
The slipshod practice of methane leaking from improperly maintained infrastructure, as well as routine venting and flaring as commonplace practices (technically illegal for over 100 years), is raising questions about whether communities want their homes and livelihoods tied to the fuel. These mounting problems for natural gas — from the supply problems during the storm to its role in climate change — share a basic solution. The answer is better performance.
Natural gas is having an identity crisis. It’s not the flashy new kid who gets a pass anymore. The industry needs to meet the high standards asked of it, not rebel against regulation.
Cheniere, a liquefied natural gas exporting firm, is leading the way with a new policy to certify the level of greenhouse gas emissions associated with the export cargoes departing its terminals. Earlier this month, Shell also announced it had delivered a carbon neutral cargo of LNG to Europe via a nature-based offset of sequestered or avoided emissions.
Texas Railroad Commissioner Jim Wright has said the commission would work to limit waivers and allow flaring and venting only as a last resort measure during operational emergencies. It is unclear how and when that policy will come into effect. It does not appear to be consistently applied yet. Moreover, ending extended flaring waivers does not solve the problem of direct methane leakage. Depending on the level of leakage in a particular natural gas production and transmission system, burning natural gas that comes from extremely leaky production facilities can be more environmentally damaging than burning coal.
As it readies itself for energy regulation reform, Texas needs to make a course change. Not only was the lifting of environmental regulations by the Trump administration completely ineffective in preventing American oil companies from losing money, it has left them ill-prepared for pressing climate standards coming in global trade.
The European Union’s “Methane Strategy,” aimed to come into effect by September 2023, introduced measures to “cut methane emissions in Europe and internationally” and will also apply to energy imports.
The EU will use satellites to detect “super-emitters” and is launching an international methane emissions observatory with the United Nations. The data collected will be applied toward the EU’s planned legislation on natural gas import standards.
To get that legislation off the ground, Europe is already asking for early consultation with the Biden administration on EU plans for a carbon border adjustment levy.
EU diplomats, armed with satellite methane monitoring capability, are seeking coordination with the United States and Canada, alongside the United Nations. Among the asks for the future might be an overall ban on venting as well as a ban on routine flaring, which would be a problem for U.S. companies that routinely practice both.
Congress is considering action on the issue. Colorado has already implemented new standards that prohibit oil companies from venting or flaring except to manage emergencies. Additionally, the New Mexico Oil Conservation Commission voted 3-0 on Thursday to require oil and gas operators to capture 98 percent of their natural gas by 2026, restricting flaring and venting for only unforeseen circumstances beginning on April 1, 2022. Now the question is whether Texas has the gumption to follow suit.
Instead of lobbying for waivers, American oil and gas companies might be advised to take an approach of better performance across the board. The industry clearly has work to do on reliability. Some fixes are as simple as filling an outage exemption form. Others involve building climate resilience into equipment and operations onshore in the same way offshore operators prepare for increased hurricane risk.
They should also take the European Methane Strategy seriously and end the practice of routine flaring and venting. Europe’s carbon border adjustments may affect other oil and gas importers. Singaporean, Japanese, South Korean and Thai buyers are already asking LNG suppliers to provide evidence of carbon offsets. Japan and South Korea, two of the largest long-term customers of U.S. LNG, are considering more ambitious national greenhouse gas commitments related to their own natural gas imports, now that they have formally embraced 2050 net zero climate goals.
Myers Jaffe is managing director of Climate Policy Lab and research professor at Tufts University Fletcher School. Kornfeind is a senior at Temple University in Philadelphia. He has previously held positions with the Council on Foreign Relations, Eurasia Group, and the Atlantic Council Global Energy Center.