Natural Gas in a Carbon-Constrained World: Examining the Role of Institutions in Curbing Methane and Other Fugitive Emissions

Abstract

This paper examines how misalignments in political and economic interests amongst the stakeholders in the gas supply industry impacts on the quality and effectiveness of regulation and policy initiatives aimed at proffering innovative solutions to the menace of energy-related greenhouse gas emissions (especially methane). The paper focuses on the US and discusses the relevant international contexts such as Nigeria and the UK. It considers the role of institutions such as the US Environmental Protection Agency and Bureau of Land Management in developing a coherent and effective framework of rules and regulations for curbing emissions from oil and gas systems. Such rules and regulations would be less effective as long as various stakeholders continue to view the relevant decision-making processes of such agencies as firstly a means of realizing personal political and economic interests rather than the broader energy policy objectives such as securing affordable access to energy resources (i.e. gas) in an environmentally sustainable and reliable manner. The paper argues that in the most ideal scenario, policy and regulatory frameworks should- (i) exemplify coherence rather than uncertainty; (ii) protect regulatory independence and accountability rather than susceptibility to the dictates of various interest groups in the energy spectrum as well as (iii) support clarity, reduce information asymmetry between the stakeholders and proper reporting to enhance the role of the institutions and agencies.

In a carbon-constrained world where environmental responsibility and accountability is crucial, the development of such high-quality regulatory frameworks should be a priority. The idea that natural gas is the ‘cleaner’ and ‘environmentally-friendly’ conventional hydrocarbon-based source of energy no longer depends solely on beating the emission(s) performance of other hydrocarbons like ‘coal’. Rather it is more likely to depend on the willingness of the relevant operators and institutions to work together to ensure the emissions attributable to the gas production and supply chain are as low as reasonably possible and/or able to compete favorably with the increasing array of net-zero carbon or low carbon sources.

Keywords: united states, greenhouse gas emissions, energy law, energy policy, energy regulation, electricity supply, gas production, climate change mitigation, gas commercialization, gas pipeline regulation, environmental regulation, methane emissions, carbon emissions, natural gas supply

JEL Classification: K23, L95, L98, K32, Q4, Q40, Q48, Q53, Q58