Making Economic Arguments to Reduce GHG Releases: Senator Markey Releases a Report on Methane Leaks From Gas Distribution Lines

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Two years ago, when I participated in a D.C. fly-in with a renewable energy group, we were instructed not to use the words “climate change.”  Instead, we were told to focus on “growing the clean energy economy.”  The push to frame the climate debate in economic terms continues.  This week, Senator Markey released a report asserting that, in Massachusetts alone in 2011, 69 billion cubic feet of natural gas was released from gas distribution lines.  The economic cost to consumers of this “lost gas” was put at between $650 million and $1.5 billion from 2000-2011.

Senator Markey is not one unwilling to use the words climate change and the report does note the climate impacts from the releases.  However, the focus of the report is clearly on the cost to consumers, as well as the safety risks posed by leaky pipelines.

The report also focuses on economic incentives to replace leaky pipelines.  While acknowledging that gas distribution companies are replacing old pipes, the report emphasizes that companies do not have significant economic incentives to do so as quickly as the situation warrants.  Both carrots and sticks are available.  The stick would be to limit charges to consumers for lost gas.  The report states that, after Texas imposed such limits, Texas gas companies reduced leak-prone lines by 55%.  The carrot would be improved cost recovery mechanisms, allowing distribution companies more quickly to recover the cost of replacing old lines.

All of this makes sense and environmental groups and legislators are increasingly latching onto this issue.  It is likely that the increased focus should result in fairly rapid results.  The question is what other climate issues can be reframed in such stark and simple economic terms.

 

Topics:  Climate Change, Greenhouse Gas Emissions, Oil & Gas, Pipelines, Renewable Energy

Published In: Energy & Utilities Updates, Environmental Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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