ALI Director Richard Revesz has written an article published in The Hill about the controversy around the Obama administration’s efforts to address climate change and the Environmental Protection Agency’s (EPA) new regulations to limit methane emissions from the oil and gas sector.
Director Revesz states, “Methane regulation is necessary precisely because energy companies don't face the right incentive to reduce the adverse social consequences of their activities. The new EPA rule seeks to address this distortion. Unfortunately, though, the rule does not go far enough to properly tackle a problem that seems to be larger than previously thought.
Director Revesz calls methane emissions a “classic economic externality” because the costs of these emissions are borne by outside parties rather than by the emitters.
“While the EPA rule solves one economic issue by addressing an externality, it might create another by exempting existing emissions sources from regulation. The methane rule focuses only on new and modified sources, meaning that many existing wells, pipelines and storage tanks that leak methane will be able to continue doing so indefinitely.”
Revesz believes that the Obama administration’s goal of reducing methane emissions from the oil and gas sector 40 to 45 percent from 2012 levels by 2025 is a good start; however, he emphasizes that new policies including governing methane capture on federal lands are needed to reach the goal.