American Council for Capital Formation Reviews EPA’s Proposed Rule to Reduce Methane Emissions

On December 3, 2015, the American Council for Capital Formation (ACCF) released a report entitled “Technical Comments on the Social Cost of Methane as Used in the Regulatory Impact Analysis for the Proposed Emissions Standards for new and Modified Sources in the Oil and Natural Gas Sector.” The report analyzed the climate benefits of EPA’s proposed actions to reduce methane emissions.

In August 2015, EPA published a series of proposed regulatory actions to reduce methane and volatile organic compound (VOC) emissions from the oil and natural industry, which are part of the U.S. efforts to halt climate change. Those proposed regulatory actions would amend the 2012 New Source Performance Standards (NSPS) for the Oil and Natural Gas Industry by setting new standards for methane and VOC emissions from new and modified oil and gas sources.

Along with the proposed actions, EPA issued a Regulatory Impact Analysis (RIA) providing estimations of the potential impacts of the rulemaking. The RIA’s results estimate monetized climate benefits around $460 million to $550 million in 2025 using the social cost of methane method (SC-CH4).

According to the ACCF report, “EPA’s estimates of the benefits are: 1) highly uncertain and very likely overstated; and 2) lack the appropriate peer review that is necessary for use in supporting regulatory policy.” The center contended that EPA did not properly estimate the climate benefits and that “the SC-CH4 estimates could be 90% to 94% lower than the EPA’s SC-CH4” based on ACCF’s own calculations. ACCF also argued that the absence of peer review seriously challenge the “reliability” of the RIA’s climate benefits estimate. Therefore, the report concluded that “EPA’s SC-CH4 estimates are too premature and are inappropriate for use in making major national policy decisions.”

Click here for more information on the proposed regulatory actions.

Written by Chloe Marie - Research Fellow

12/10/2015