The Environmental Protection Agency’s estimates on the environmental cost of emitting methane into the atmosphere is based on just one study conducted by the agency itself that went through a shoddy peer-review process, according to a regulatory filing by economists.
NERA Consulting argues EPA’s newly proposed regulations on methane emissions from oil and gas fields are based on a flawed economic measurement called the “social cost of methane” (SCM). One of NERA’s main objections to the SCM is that it’s based on just one study that didn’t go through independent scientific review.
“The EPA’s SC-CH4 estimates are based upon a single study whose estimates are significantly greater than, and inconsistent with, available estimates in other published papers,” NERA economists wrote in their regulatory comments filed on behalf of the oil and gas American Council for Capital Formation.
“EPA conducted an internal peer review process and the paper upon which it has relied has been published in a peer-reviewed journal,” NERA economists noted. “However, those two types of reviews do not replace the need for a more rigorous independent scientific review in light of the types of changes described above.”
“Additionally, EPA’s internal reviewers lacked consensus on the use of the paper’s [SCM] estimates for evaluation of major regulations,” the economists argued.
EPA’s SCM estimates the economic damages resulting from emitting methane into the atmosphere. EPA argues methane is a potent greenhouse gas that drives global warming — the agency says methane is 25 times more potent than carbon dioxide over a 100-year period.
The SCM is an estimate of the damage from potential global warming, much like the controversial “social cost of carbon” estimate put out by the government in 2013. Republicans and some economists have criticized the number for having “little science” behind it.
“The ‘social cost of carbon’ is a very malleable concept that can be inflated or deflated by turning certain wheels,” Institute for Energy Research senior fellow Robert Murphy told The Daily Caller News Foundation in 2013. NERA’s filing criticizes the SCM along much of the same lines.
Methane only makes up 10 percent of U.S. greenhouse gas emissions, most of the rest comes from CO2, and methane emissions have been falling dramatically despite a huge spike in natural gas production. That hasn’t stopped the government from imposing more regulations on the industry.
In August, EPA put out regulations to cut 340,000 to 400,000 short tons of methane emissions from oil and gas well by 2025, building on already existing voluntary standards drillers could opt into. The EPA also proposed methane rules for hydraulically fractured, or fracked, wells along with gas “transmission” equipment in the downstream sector of the energy industry.
“Today, through our cost-effective proposed standards, we are underscoring our commitment to reducing the pollution fueling climate change and protecting public health while supporting responsible energy development, transparency and accountability,” EPA Administrator Gina McCarthy said in August.
EPA uses the SCM to help justify its rule, but NERA says the study the agency relies on — a study conducted by EPA itself — came out with an estimate that’s “highly uncertain and very likely overstated” and lacks “the appropriate peer review that is necessary for use in supporting regulatory policy.”
EPA’s overestimated SCM allows them to claim regulations on oil and gas production will yield net economic benefits of more than $100 million, but NERA argues a more realistic SCM brings the benefits of oil and gas regulations into the negative range — they’ll end up costing $150 million in 2020 and up to $400 million in 2025.
But even if EPA’s SCM estimate wasn’t problematic, the fact is that U.S. methane emissions have been sharply declining despite a huge increase in natural gas production. EPA’s own data states methane emissions have fallen “by almost 15% between 1990 and 2013.” EPA data shows that emissions from hydraulic fracturing, or fracking, fell 81 percent from 2012 to 2014.
Natural gas production over that time massively increased, all while methane emissions from drilling has decreased.
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