The headlines on climate change policy in the United States are currently focused on two important issues: 1) How far will the Environmental Protection Agency going in regulating greenhouse gas emissions from new and existing power plants under the Clean Air Act and 2) Will the Obama Administration approve or deny the Presidential Permit for the Keystone XL pipeline. No doubt these are crucial issues either substantively or symbolically in the effort to confront the climate disruption challenge. However, two other evolving matters also promise to gain momentum in 2013 and bear close monitoring: international climate finance and upstream emissions from shale gas production.
International Climate Change Finance
A “Climate Finance Summit” slated for the spring of 2013 was recently announced by State Department Special Envoy for Climate Todd Stern. The Summit is anticipated to be billed as one important step in President Obama’s promise to do more on climate change in his second term and will be an early stage for new Secretary of State Kerry. The Summit will seek the development of a clearer path forward towards realizing the international commitment of $100 billion annually of “public and private” investment in climate finance towards developing countries by 2020. Originally presented by Secretary of State Clinton at the 2010 UN Conference of the Parties meeting in Copenhagen, the Administration intends play its part to fulfill this $100 billion international commitment over the coming four years. Absent new revenue raising mechanisms, budget and political constraints of the “public” part of this commitment are a large stumbling block for the United States’s contribution to the commitment. As developing country greenhouse gas emissions continue to increase, there must however be an international partnership whereby finance is provided to emerging economies in exchange for their development of transparent and verifiable nationally appropriate mitigation strategies to reduce such emissions.
The challenge then becomes how can the Obama Administration and its international partners create mechanisms that crowd private sector finance deeper into climate change mitigation strategies. From a U.S. industry perspective, innovative mechanisms that de-risk climate change investments can open export markets for emerging clean energy and low carbon technologies. Furthermore, as developing countries reduce emissions a truly global climate deal becomes more politically feasible for ratification in the U.S. Senate. The creation of the Climate Green Fund through the UNFCC climate negotiations, for example, holds some promise but it will remain an “empty fund” unless innovative strategies to engage the private sector are a significant part of the equation.
Natural Gas Production and Upstream Greenhouse Gas Emissions
There is consensus that it is necessary to assess the full lifecycle of the sector’s technologies and systems, not just GHG emissions of end-users of the fuel to understand the total footprint. Such an assessment and mitigation strategy can ensure that fuel switching from coal to gas will provide real and meaningful GHG reductions in the United States. EPA has recently promulgated rules that mandate green completions that will likely serve to reduce a significant portion of some identified upstream GHG emissions, however it does not fully address these impacts. According to the Natural Resources Defense Council, “The industry lost an estimated 623 Bcf of methane to the atmosphere in 2009, a loss of 2.4 percent of the total U.S. gas produced. This amount of methane, 623 Bcf, is roughly 37 percent of total U.S. methane emissions. Natural gas systems contribute most of the O&G industry’s methane emissions, 547 Bcf/year (88 percent of the total)” although other figures are presented by other stakeholders as well.
A key missing piece is the development of objective, multi-stakeholder reviews of the full upstream GHG emissions footprint of shale production based on real-world operational data. There are a variety of emerging opinions and analysis on the precise nature and impact of upstream GHG emissions and scientifically sound studies are anticipated to emerge in the first quarter of 2013 to better inform the policy makers on this topic. Debate will continue in 2013 over the appropriate technologies and regulations that can be employed by industry or government to capture methane that is otherwise leaked or vented into the atmosphere.
It is imperative that international climate finance and natural gas upstream emissions challenges are both advanced in 2013. While not grabbing as many headlines right now, these two issues hold tremendous promise to deliver meaningful results in the climate change challenge.