The business case for minimizing methane emissions

Ben N. Ratner

I came to Environmental Defense Fund from the management consulting world, and was fortunate to bring a couple of lessons with me. A simple one is that successful companies keep a finger on the pulse of the returns and risks in their industry and core businesses. The oil and gas industry has a growing risk on its hands, and that risk is methane emissions.

Study after scientific study has shown that methane emissions from oil and gas are a leading source of that powerful greenhouse gas. At more than 100x the climate impact of carbon dioxide when it is first released, methane is a supercharged contributor to climate change. Methane escapes into the atmosphere from oil and gas production wells and associated equipment, gas compressors, and many other sources. Every ton of methane pollution is resources being wasted. Every ton contributes to an unstable climate in our lifetimes.

And because methane pollution sometimes escapes with gases like volatile organic compounds and hazardous pollutants, there can be risk to people’s health in nearby communities when oil and gas emissions are haphazardly released into the air.

Americans are taking note. Methane is becoming a pressing “above ground risk”, a threat to the reputation, license to operate, and long term viability of an entire industry. That’s a challenge that matters regardless of your affiliation or politics, because the natural gas industry is an economic driver for the country and has the potential to give America the exit ramp we need from dirty coal (since burned natural gas emits half the carbon content to coal). But only if it is done safely and responsibly all across industry, with a level playing field for the thousands of companies.

There are two things the industry should do to tackle this risk, and leading companies are starting to act on both.

  1. Acknowledge it openly and honestly. Ignoring a risk only makes it worse. 
  2. Address it head on, remembering that actions speak louder than words.

The good news is that there is a clear path forward to address this risk, and it makes straightforward business sense.

Consider that several weeks ago, three leading energy producers – Anadarko, Encana, and Noble Energy –worked with EDF and others, under Colorado Governor John Hickenlooper’s leadership, to craft commonsense recommendations that led to the nation’s first direct methane regulation of oil and gas. And just last week, a study we commissioned from the independent consulting firm ICF International showed that America can reduce its onshore methane emissions from oil and gas by 40% in the next five years, at an average annual cost of less than a penny per McF produced.

There is fresh precedent for industry engagement on smart policy. There is robust and current data to guide highly cost effective action. Now is the time for industry to step up to the plate and knock out this risk. Sound policy developed collaboratively is the way to go. Minimizing risk is just good business sense, and there’s no time to waste.