Leading oil and gas companies and investors have rallied around EPA’s new methane rules. Their ongoing support will be crucial for implementation.

The EPA’s new standards to reduce methane emissions from the nation’s oil and gas industry could be a climate game changer. That’s because methane – the main component of natural gas – has more than 80 times the heat-trapping power of carbon dioxide in the short term and is responsible for more than 25% of the warming we’re experiencing today. Reducing emissions from the oil and gas industry is the quickest, simplest and most affordable way to reduce warming in our lifetimes.

Methane has also emerged as a concern for the oil and gas companies and investors whose assets emit it. Today, climate risk is financial risk, and unchecked, unlimited methane emissions are among the most powerful climate risks on the planet. That’s why many companies and investors alike lined up to support EPA’s rulemaking process. Clear, fair and reasonable standards provide the certainty, predictability and level playing field that businesses need to develop and implement their individual methane mitigation programs. They will also help create high quality, well-paying jobs and keep sellable product in pipelines. 

EPA’s standards are a big step in the right direction, but we haven’t crossed the finish line yet. To get there, we’re going to need some help from companies and investors that are committed to industry-wide emissions reduction.

Restating their call for protective, durable standards

EPA’s momentum on methane has galvanized leading companies to reaffirm their support for reducing emissions and the important role that standards can play. But don’t take our word for it, here is what the producers themselves are saying:

bp–  “bp welcomes the finalization of a federal methane rule for new, modified and – for the first time – existing sources. A well-designed rule will help drive material methane emission reductions this decade and beyond. We appreciate the collaborative way EPA, NGOs and industry worked together on this rulemaking. In the spirit of COP28, input from a broad range of stakeholders makes for more durable and effective policies. We congratulate the Administration on this important milestone and look forward to working together on the next phases of implementation.”

Equinor– “Equinor has supported the direct federal regulation of methane in the US. Good to see continued progress announced…by the US Environmental Protection Agency (EPA) to put a framework in place for the regulation of new, modified, and existing sources of methane. Continuing to cut methane emissions is one of the most effective and important ways to address climate change. It is important stakeholders continue to work together as the rule is finalized and implemented.”

Oxy– “We are committed to working with environmental groups and regulators to advocate for environmentally sound state and federal regulations that achieve methane reductions, incentivize early action, and support flexibility and innovation. Oxy used the same approach for EPA’s proposed methane rules and commented in support of EPA’s expanded framework for federal methane regulations. We are reviewing the final rule to evaluate how the EPA incorporated feedback on the proposal. Oxy is committed to responsible environmental performance to proactively reduce methane emissions.”

PureWest Energy– “Looking ahead to 2024, it’s because of these historic investments and partnerships that PureWest is well positioned to comply with the new EPA methane rule. Further, we are encouraged by EPA’s pathway for adoption of advanced methane detection methodologies and believe adoption of this approach for empirical data collection in forthcoming EPA rules, including the methane fee rule and greenhouse gas reporting rule, will encourage and enable these best-in-class investments into the future. We believe the EPA methane rule could play an important role in the clean energy transition by helping to reduce emissions across the energy value chain, without sacrificing reliable energy access.”

With their unique insights into company best practices and the financial imperative for reducing emissions, investor voices are crucial, too, and several have made clear their support for EPA’s standards:  

BMO– “BMO Global Asset Management commends the US Environmental Protection Agency (EPA) for integrating investor feedback into its new methane standards for the oil and gas industry. As a portfolio manager with investments in U.S. and Canadian oil and gas companies, we look to thoughtful policy to create a level playing field and help companies meet their climate commitments. Methane abatement remains one of the lowest cost and highest impact opportunities to keep global warming limited to 1.5 degrees C, and we support ambitious and consistent regulations north and south of the border.”

LGIM– “One of LGIM’s core expectations of the oil and gas sector is centered around tackling methane emissions. We believe the EPA’s new rules are a necessary first step to deliver against the global methane commitment made by the US, and they will set a viable baseline for performance across the industry.”

Nordea Asset Management– Congratulations to the US Environmental Protection Agency for finalizing their groundbreaking rules to significantly reduce methane emissions from the US oil and gas industry – the country’s largest source of industrial methane emissions. These comprehensive standards will set a baseline for performance across the industry, which should provide long-term regulatory certainty and help to mitigate climate-related risks for our clients. While Nordea Asset Management celebrates this important milestone, we look forward to continuing our engagements with portfolio companies to ensure that these rules are successfully implemented. 

While this support is encouraging and will hopefully translate into an effective implementation process, it is crucial to acknowledge that some in the industry have yet to fully embrace EPA’s approach. For any company that is a member of the Oil and Gas Methane Partnership 2.0 or tracking movement in major importing markets to drive down emissions, EPA’s standards will help them comply.

Standards are important. Implementing them is critical.

The EPA standards set the standards and limits for oil and gas industry methane emissions, but they must be implemented swiftly to realize the full scale of pollution reductions. Though the EPA directly regulates new facilities, individual states and tribes that choose to adopt plans for already existing sources will have the opportunity over the next 24 months to develop state implementation plans that meet or exceed EPA’s standards.  

For states that decline to adopt a plan, EPA has the responsibility to implement a federal plan to ensure pollution reductions. Companies and their investors can help keep things simple and clear.

Just as companies and investors lent their voices to support EPA’s rulemaking process, they can urge leaders in the states where they operate to implement the standards swiftly and in good faith, and adopt common-sense and cost-effective efforts to address this solvable climate and financial risk.

States like California, Colorado and New Mexico have demonstrated early leadership on methane and are well positioned to move quickly and adopt more protective requirements. 

Other states, like Oklahoma, North Dakota, and Texas, have lagged in developing individual methane standards but now have an opportunity to implement their own state plans. It’s here where industry’s vocal support for EPA’s standards can have the most impact. 

Industry leaders restating their support for methane standards and engaging constructively in the implementation process will further demonstrate their commitment to the climate and the communities where they operate, and will help ensure these standards are successful.

Today we can celebrate the strong framework for methane regulation that EPA, in partnership with key stakeholders, has established. Important, complicated work lies ahead of us, and oil and gas companies and their investors need to remain key contributors to this process.