As a first step toward curbing methane emissions from existing sources, EPA has released a proposed framework for the Natural Gas Star Methane Challenge Program. EPA is scheduled to propose regulations this summer to reduce methane emissions from new and modified sources. Therefore, any sources that exist before the date EPA proposes those regulations would not be required to reduce their methane emissions until EPA adopts methane regulations for existing sources. In order to try to reduce methane emissions from existing sources in the interim, EPA will be looking to industry to voluntarily reduce methane emissions by participating in the Natural Gas Star Methane Challenge Program.

Proposed Options

In 2014, EPA proposed the Natural Gas Star Gold Program, which proposed measures to reduce methane emissions from existing sources on a facility-specific basis. EPA received negative feedback regarding the lack of flexibility in this plan and has since abandoned that program in favor of reducing emissions on a company-wide basis. The options EPA has proposed for the Natural Gas Star Methane Challenge Program are as follows:

  • A Best Management Practice (BMP) commitment option
    • Companies would commit to a company-wide implementation of best practices to reduce methane from specific types of existing sources by a future date.
    • EPA will provide sector-specific lists of sources and corresponding BMPs.
    • Companies will be allowed to set different timelines for each type of source, but commitments cannot exceed five years from the commitment date and must include interim milestones.
  • Participation in the One Future organization
    • One Future is an industry led coalition committed to achieving a specified average rate of emissions intensity across all facilities within a specific segment by 2025. The specific target is to achieve an average rate of methane emissions across the entire natural gas value chain that is 1% or less of total natural gas production. Industry’s current rate is equal to approximately 1.3% of total natural gas production.
    • Each individual company that joins the coalition would be allowed to determine the most cost-effective way to achieve that goal.
    • Members are required to demonstrate progress using specific reporting protocols and would engage directly with One Future to establish specific commitments.
  • Emission reduction commitments
    • Various companies suggested to EPA that they would prefer to reduce their methane emissions by a certain percentage from a company-wide baseline by a date selected by the company.
    • EPA has not developed this idea as extensively as the other two options; therefore, EPA requested comments from companies with a strong interest in this option.

Timing

EPA is accepting comments on the proposed framework through September 1, 2015 and has posed various questions for industry to consider. These questions address topics such as establishing incentives to encourage industry to participate and timing of the program. EPA plans to finalize the program in October 2015. The first year of the program would begin January 1, 2016.

Significance of Industry Participation

Various environmental groups have expressed concerned about delaying the adoption of regulations that reduce methane emissions from existing sources. Depending on industry’s willingness to participate in the program, these environmental groups may file a lawsuit sooner rather than later to try to force EPA to issue methane regulations for existing sources.

As companies review the proposed framework and consider whether or how to participate, there are various factors (beyond the questions presented by EPA) that they should weigh. The Bracewell team is available to help facilitate such discussions so that clients can make informed choices regarding participation in the program.