Photographer: Daniel Acker/Bloomberg

Obama Gas Rules Set Table For Wide Emissions Cut, If Trump Loses

Clinton or Sanders would likely build on the new limits to regulate existing plants.

Oil-and-gas producers have a financial incentive to make sure methane isn't leaking from wells and pipelines. Yet methane has become a well-documented problem--and once it joins the atmosphere, scientists will tell you, it becomes a potent greenhouse gas, responsible for a quarter of the Earth's extra heat. 

Today the Obama administration issued rules requiring the industry to tighten up any new and renovated infrastructure. The move is a first step in realizing a goal the president first articulated in January 2015, when he pledged to cut U.S. methane emissions over a decade to 45 percent below 2012 levels. In addition to being good for the planet, the gas saved may be worth $100 million.

1. It's like closing 11 coal-burning plants. 

The oil-and-gas industry is the largest emitter of methane, and the U.S. is the world's largest oil-and-gas producer. It's responsible for about 10 percent of global methane emissions from the oil and gas sector, according to Mark Brownstein, vice president for the climate and energy program at the Environmental Defense Fund. His group says the new rules will have the same effect as closing 11 coal-burning power plants.

The industry opposes the new rules because of their expected cost, suggesting they "could put [the] shale energy revolution at risk," according to an American Petroleum Institute statement. Shale oil and gas gave Americans an extra $1,337 to spend in 2015, according to the trade group. Cleaner than coal, natural gas has already helped reduce U.S. emissions significantly over the past decade, as power generators shifted fuels. 

An EPA analysis of the new methane regulations suggests the environmental benefits outweigh compliance costs by as much as $690 million. 

The new rules also set up what could be the next phase of fossil fuel regulation. The Environmental Protection Agency included an "information collection request," which asks the public what technology and practices would best cut emissions from existing facilities, which are currently exempt from the new rules. The next phase may or may not happen ... 

2. … Depending on who wins in November.

A Hillary Clinton or Bernie Sanders administration would likely try to protect Obama's climate-and-energy legacy, including these new rules. The EPA would take in the public comments prompted by today's information request and possibly use them to retrofit the existing system with more rule-making. 

Once rules are finalized, it's harder for a new president to uproot them. A Donald Trump administration, for example, would need to initiate a regulatory process to undo Obama's finalized regulations. That's not true of proposals that are still in the pipeline, which can be frozen and dropped.

Clinton and Trump have clashed most vividly over the plight of the coal industry, bankrupted by inexpensive natural gas and governments cutting back on carbon-heavy fuels. This may be the next battle.

3. Could it be a trend?

When Canada's Prime Minister Justin Trudeau visited Washington in March, he and Obama locked arms on this issue. Trudeau, leader of the world's fourth-largest oil-and-gas producer, vowed to make the same cuts in methane pollution that Obama's EPA was already finalizing. 

A U.S.-Canadian agreement has a distinct neighborly feel. But on a larger scale, diplomacy matters when it comes to controlling climate pollution. There's no way for nations to enforce climate pollution cuts on each other. The 195-nation climate agreement reached in Paris may never have happened without a bombshell U.S.-China pact the year before. The world won't begin to reach its climate goals without a sense that "everybody's doing it." 

"This is a big deal," said Brownstein of the Environmental Defense Fund, "It now also sets a precedent for global action." 

4. Thank the military.

Americans sat frozen in front of their television sets in 2010, watching 60,000 barrels of oil shoot daily from an underwater well into the Gulf of Mexico. Methane is different from oil: You can't see it—especially if there isn't international news coverage. The largest gas leak in U.S. history, in California's Aliso Canyon between October and February, likely dwarfed the BP Plc spill in terms of global warming.

Thanks to advanced infrared sensors—technology developed initially for military use—scientists and engineers (and environmentalists) can now see methane leak from oil-and-gas infrastructure in real time. Brownstein's group, for example, has worked with industry and scientists in recent years to map out the extent of leaking methane, from wells to city streets. He says affordable sensors could be installed at production facilities as a kind of smoke alarm. 

The new government rules will require technology that's largely already available. For example, pressurized natural gas powers all sorts of pneumatic devices throughout the oil-and-gas industry. Many of these "high-bleed" instruments can be replaced with new "low-" or "no-bleed" alternatives. 

5. We're not out of the woods.

Climate change has advanced to a point where diplomacy and incremental government regulation fail to close the enormous gap between current emissions and what's scientifically desirable. 

Royal Dutch Shell Plc yesterday issued a cheery-sounding report, "A Better Life With a Healthy Planet," that nonetheless shows how far the world is from a safe emissions pathway: 

This graph shows how unconstrained CO2 projections (light blue) match up with two Shell CO2-reduction scenarios (dark blue and green), and also the targets built into the 2015 UN Paris Agreement.
This graph shows how unconstrained CO2 projections (light blue) match up with two Shell CO2-reduction scenarios (dark blue and green), and also the targets built into the 2015 UN Paris Agreement.
SOURCE: Royal Dutch/Shell report, "A Better Life With A Healthy Planet"

This graph is a picture of the global climate challenge. The light blue line is what unchecked emissions look like—bad scene. Shell has produced two simulations. It's "Oceans" scenario (dark blue) projects late adoption of clean-technology, keeping carbon dioxide emissions relatively high through the middle of the century. Its "Mountains" scenario (green) sees natural gas supplant coal and the eventual success of technology to catch CO2 from power plants and bury it; that emissions pathway is consequently lower. Neither approaches the more aggressive goal of limiting global temperature rise to 1.5 centigrade, as recommended  in the Paris Agreement. 

If world leaders are serious about what climate scientists are telling them, rules like these may become more commonplace. If they're not—the results over time may be hard to watch.

Before it's here, it's on the Bloomberg Terminal.