Over the past year energy policy standards have been relaxed by the federal government, justified by supporters in the name of economic opportunity. In a podcast interview with Energy Policy Now Ford School Assistant Professor Catherine Hausman breaks down the often murky world of environmental regulations in regards to methane gas leaks with host Andy Stone and fellow guest Ben Ratner from the Environmental Defense Fund. Released on October 30, 2018, “The Battle Over Methane Leaks” was produced by the Kleinman Center for Energy Policy at the University of Pennsylvania.
The conversation defined the problem of natural gas leaks at 2.3 percent of total production. Hausman explained that “maybe 2% initially sounds small, but it’s actually 13 million metric tons of methane per year. That’s $2 billion in lost revenue if you take the commodity value of natural gas, and it’s nearly $20 billion in climate damages per year.”
The public health and environmental ramifications can be dire, especially as people are living closer to different sections of the supply chain. Combining that public safety concern with the risk factors of leaks, such as aging infrastructure or poorly maintained equipment, cutting regulations increases the risks. For production companies, there is little financial incentive to invest in technologies that will detect leaks sooner. Hausman gives this an example of the need for regulation: “You need regulation when industry incentives just aren’t there.”
“The policy recommendation I would give is not ‘ban natural gas,’ it’s clean up the leaks,” summarized Hausman.
Catherine H. Hausman is an Assistant Professor in the School of Public Policy and a Faculty Research Fellow at the National Bureau of Economics Research. Her work focuses on environmental and energy economics.