Easing fugitive emissions

Although the moniker carries a certain outlaw panache, fugitive emissions in the oil and gas sector are simply leaks and other irregular releases of volatile organic compounds (VOCs), including the much-maligned methane. Methane emissions are the second-largest contributor to global warming after carbon dioxide, and 80 times more warming. The amount of methane that leaks from industrial sites into the environment is enormous. The Environmental Protection Agency estimates that 2 - 3% of gas in the gas supply chain is lost to leaks – but industry sources and studies suggest that actual leak rates are far higher.

The fact is that fugitive emissions are so common in the gas sector that, until recently, stakeholders simply accepted them as a ‘cost of doing business’. But now, US and EU legislation, market conditions and companies looking to achieve their environmental, social and governance (ESG) goals are upending the industry’s ‘laissez-faire’ attitude to fugitive emissions. Today, gas infrastructure players are far more concerned about the costs of fugitive emissions. Here’s why and what’s being done.

A changing market and regulatory environment

Passed in August 2022, the landmark Inflation Reduction Act (IRA) has as much to do with energy as it does with inflation. The legislation contains a long list of provisions that will reduce US greenhouse gas (GHG) emissions and speed the transition to renewable energy.

The IRA aims to lower GHG emissions by around 1 Gt by 2030, and to dramatically reduce particle pollution from fossil fuels. It accomplishes this reduction through a combined ‘stick and carrot’ approach.

On one hand, the Act offers industries new or enhanced tax credits for decreased emission or emission-free technologies. On the other hand, the IRA introduces a significant fee on methane emissions. These fines will start at US$900/t and will grow to US$1500/t by 2028. The Congressional Budget Office (CBO) estimates that this fee will raise some US$6.35 billion over the next decade – which should give an indication of both the prevalence of the problem, and the relative importance from the US government’s perspective.

What’s more, the IRA contains very specific enforcement provisions – requiring the EPA and producers to calculate emissions baselines …

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