Climate Summit Raises Stakes for Methane, Carbon Pricing

Copyright © 2023 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.

President Joe Biden vowed that the US will slash its greenhouse gas (GHG) emissions by 50%-52% by 2030 versus 2005 levels at his long-awaited climate summit, a monumental task likely requiring big emissions cuts from gas-fired power plants and upstream operations to be achieved. The US pledge notably does not include a specific methane target, as some think tanks and environmental groups had sought. Rather, the target applies to all GHGs including methane emissions, and White House officials said they are counting on steep methane cuts to meet the 2030 goal. “Reducing methane emissions presents a tremendous opportunity to create good-paying jobs here in US,” a senior administration official said. "The target is an economy-wide target, there could be multiple pathways to get there and certainly reducing methane emissions presents a powerful opportunity.” The Biden administration is planning to revise methane standards for new and existing oil and gas wells, storage tanks, and other upstream and midstream equipment. Environmentalists say they will still urge the administration to aim for specific methane targets. The climate pledge is "going to necessitate strong US Environmental Protection Agency rules to address methane especially from the oil and gas sector, where solutions exist," says Sarah Smith, head of Clean Air Task Force's superpollutants program. "We're calling for 65% [methane cuts] by 2025." The revised White House target comes as the US Senate is readying a vote as early as this week to reverse the Trump administration's rollback of Obama-era methane standards for the oil and gas sector -- affecting gas transmission and midstream equipment most heavily. Carbon-Free Power A White House fact sheet outlining how the US pledge can be achieved places a strong emphasis on Biden's goal for carbon-free power generation by 2035. The Biden administration is writing its own GHG rules for power plants to replace the Trump administration’s rewrite of the 2016 Clean Power Plan. But it is also pushing Congress to pass a clean electricity standard (CES) that could make power-sector emissions cuts legally durable and prevent a future White House from reversing the GHG rules. Conceivably, this could mirror a renewable electricity standard while making room for gas with carbon capture or nuclear. Treasury Secretary Janet Yellen plugged a CES last week, noting similar policies have been adopted in several states and are “successfully helping to green the electricity sector," she told an Institute of International Finance event. Electricity sector emissions have fallen steadily in recent years and represented a quarter of US GHGs in 2019, according to the most recent federal data. That compares to transportation's 29% share, industry's 23%, commercial and residential sectors' 13% and agriculture's 10%. Biden administration officials argued that the revised target is feasible even if Congress doesn't pass a version of the administration’s sweeping infrastructure plan, which includes a hefty clean energy emphasis. White House climate envoy John Kerry told reporters last week that 50%-52% is “doable” and a senior administration official said “we see multiple pathways to reaching this goal." Carbon Price Urged Aside from a CES, carbon pricing was urged by many heads of state, US officials and financial players, placing pressure on Biden and Congress to enact an economy-wide carbon price. Canada Prime Minister Justin Trudeau touted the fact that his country's carbon price will hit a whopping $170 per ton by 2030. “Only bold policies lead to bold results," he told the summit. "If major economies in the room were to follow Canada’s lead and adopt a rising price on pollution and commit to phase out coal plants, we would accelerate our global path for a safe, prosperous net-zero future." Gas industry players have warmed up to carbon pricing over the last year or so, viewing it as a flexible and technology-neutral mechanism that's preferable to blunt regulations (NGW Mar.8'21). At the summit, many leaders warned that the benefits of pricing carbon could be undone without ending fossil fuel subsidies. This likely places pressure on the Biden administration to end a slew of tax deductions often claimed by gas producers, which the administration has characterized as subsidies (NGW Apr.12'21). International Monetary Fund Managing Director Kristalina Georgieva said carbon prices need to rise much higher -- from around $2 per ton on average globally today to $75/ton by 2030 -- and that this must happen more collaboratively. Georgieva suggested an “international carbon price floor” among large emitters with "differentiated pricing for countries at different levels of economic development." US carbon pricing is technically zero, but many argue that the country does have an implied carbon price because of various federal and state policies promoting a transition to clean energy. Lauren Craft and Bridget DiCosmo, Washington

Security Risk , Low-Carbon Policy, Fiscal Terms
Wanda Ad #2 (article footer)
The latest move to shore up the beleaguered pipeline's finances raises another key question developers face in building takeaway capacity out of Appalachia: Is it worth the cost?
Fri, Sep 22, 2023
Project developers are still looking for guidance on how they can take advantage of the “bonus rates” for clean energy tax credits enacted by the US Inflation Reduction Act.
Mon, Sep 25, 2023
The Mideast Gulf oil producers are forging new relationships with the West, just as migration, climate change and political instability reshape the wider region.
Thu, Sep 21, 2023