Differentiated gas: Nothing but hot air without these five criteria

By Dan Grossman and Maureen Lackner

Getting a comprehensive and accurate picture of the extent of methane emissions from the oil and gas industry is hard.

Our scientists have spent much of the last decade detailing deficiencies and inaccuracies in the way companies — and even regulators — estimate emissions, which result in dangerous understatements of the methane problem.

And that is precisely why efforts by oil and gas companies and their consultants to differentiate some natural gas as “responsibly sourced” or “low emission” is problematic.

It is understandable that operators desire a way to differentiate their product. As the climate crisis intensifies, buyers (utilities and their end users both in the U.S. and abroad) are more frequently demanding that their energy suppliers reduce their climate impacts. These operators see a market opportunity and want to capitalize on it.

As a result, we have also seen the emergence of third-party certifiers, who are basically consultants hired by operators to assess their facilities and give a green stamp of approval to their gas. These certifiers use different methods, technologies and standards to support their conclusions that a clients’ gas is “responsibly sourced.”

EDF is frequently asked by these operators and their consultants to support this differentiated gas approach as a way to drive reductions in emissions from the oil and gas supply chain.

Unfortunately, as stated above, accurately quantifying a company’s methane emissions is tricky. And none of the oil and gas companies or their consultants have devised a way to do it that creates sufficient confidence that these certifications are meaningful.

That is a huge problem for the buyers and customers relying on these representations in making energy decisions.

Nonetheless, differentiated gas efforts are playing out across utilities, state legislatures and even the Federal Energy Regulatory Commission as we speak. So, we thought it necessary to set out in clear terms the basic safeguards that should be put in place to minimize the environmental concerns about differentiated gas schemes, which you can explore in depth in our latest white paper.

Our general concerns around differentiated gas revolve around three main problems:

  • Lack of robust measurement, reporting and verification standards. Without strong and uniform standards on the measurement and verification of emissions from any particular supply chain, it is impossible to reach reliable conclusions about the climate impact of gas. This creates ample opportunity for customer confusion or misinformation.
  • Limited coverage across firms. Voluntary certifications lack in scope or breadth to capture sufficient swaths of industry in order to achieve meaningful emissions reductions at the national or global scale.
  • The potential for firms to cherry-pick which sites to certify within their portfolio. When companies are allowed to seek certification of portions of their fleets (leaving older, leakier facilities outside of the analysis), the certification certainly doesn’t drive emissions reductions and says little about the practices of the operator.
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To address the pitfalls described above, here are five criteria that certification programs must incorporate in their design:

  • Certification programs should require and verify that best practice work practice standards are met. Certification must never be viewed as an alternative to rigorous work practice regulatory standards, measurement and reporting requirements, or any other comprehensive and stringent measurement-based methane emission policy.
  • Measurement-based emissions quantification is essential. Certification must be based on high-integrity monitoring and reporting consistent with the Oil and Gas Methane Partnership 2.0 Level 5 reporting tier.
  • Certification is not complete without verification. Certification must be accompanied by verification from a credible and independent third party.
  • The emissions intensity target should ensure reductions. A producer’s methane intensity is defined as the total volume of methane emissions divided by total volume of marketed gas. Certification must be based on an intensity standard that is no greater than the Oil and Gas Climate Initiative’s metric of 0.20% and declines over time.
  • Limit cherry-picking. Companies seeking certification must specify which of their assets they are certifying, the share these assets represent relative to their entire portfolio, and the emissions intensity of participating assets. In addition, companies seeking certification must report a company-wide emissions intensity.

Without question, technologies are improving and the science of methane measurement and quantification is advancing. Trucks, towers, drones, airplanes and even satellites have been enlisted in the effort to better discern the methane problem. This is good news for governments seeking to get a better handle on the scope of emissions and craft policy solutions to eliminate them, as well as for companies looking to make good on commitments to limit methane pollution.

In the meantime, efforts to differentiate natural gas, a climate-harming fossil fuel, as responsibly sourced or low-emissions should be viewed with healthy skepticism.

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