How Natural Gas Companies Could Make Money by Reducing Smog
Companies could capture methane that currently vents into the atmosphere and sell it for a profit. So why aren't they doing it?
For years, environmental groups and politicians declared that natural gas was a clean source of energy that could help turn back the tide of climate change. Then last year, Robert Howarth, a professor at Cornell University, contradicted that idea in no uncertain terms, concluding that over its life cycle, natural gas can do as much harm as coal, the bête noire of energy sources. Natural gas does produce lower greenhouse gas emission when burned, he acknowledged, but not all the gas that comes out of the ground is burned for energy—a significant portion leaks into the atmosphere as methane, a greenhouse gas 20 times more potent than carbon dioxide.
Today, the Environmental Protection Agency is scheduled to release the final version of rules governing air pollution coming out of wells—not only methane but smog-forming compounds that have put ozone levels in rural areas of the American West on par with those in Los Angeles. For wells drilled using hydraulic fracturing techniques, these rules could control 95 percent of the methane released when a well is first opened. And while many pollution-reducing measures cost companies money, these could allow gas companies to actually increase their profits.
Methane, after all, is a form of natural gas, the product that companies are drilling for anyway. Standard industry practice dictates that letting the gas vent into the atmosphere as waste often makes more sense than trying to collect it, though it’s possible to capture and sell it. In Colorado and Wyoming, state laws already require drillers to do exactly that. And the Natural Resources Defense Council has estimated that the industry could capture more than 80 percent of the methane that's currently dumped into the atmosphere and sell it for billions of dollars.
If any environmental regulation should appeal to an energy industry, this should be it. Yet even these rules have proved unwelcome: The profit margins on capturing leaking methane, it turns out, aren’t as wide as that on a slew of other activities that gas companies could spend money on. Industry groups—most notably the American Petroleum Institute—have pushed back against the rules proposed by the EPA, arguing they should apply to a smaller number of wells. Environmental groups like NRDC and WildEarth Guardians fear the final version of rules could reflect those organizations' requests.
Natural gas is caught between two opposing camps: For some politicians and environmentalists, it counts as clean energy, yet it’s also a fossil fuel extracted from the ground like oil. The Obama administration seems to want to count it in the clean energy camp, which isn't a terrible idea: Since Howarth published his study, other scientists have found that leaking methane doesn’t make gas quite as terrible as coal. But natural gas industry behaves enough like other dirty energy behemoths that it shouldn’t be trusted to take responsible, pollution-mitigating measures on its own, even when those measures make money.