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Industry Credibility and the Methane Rule Rollback

September 5, 2019

When you’re explaining, you’re losing. And we’re explaining. Worse, our lawyers are explaining.

The Administration’s roll back of the deeply unpopular (among industry) oil and gas methane rules may look like a gift from above. Instead, it has oil and gas spokespeople are playing defense. And sounding like lawyers. And who doesn’t trust a lawyer?

“We support the EPA’s regulations and our industry has a great story to tell on our reduction of methane,” I heard on a radio interview the day after the announcement. “But…the question is whether or not the EPA has the authority to regulate methane.”

I know first-hand that the industry has been robustly debating its response to the potential for this rollback. And the we-support-the-regulations-but-don’t-think-EPA-has-the-authority strategy probably sounded good around a conference room table.

But… in my car along with tens of thousands of other listeners that morning, what I heard was trite, embarrassing, and a huge step back from our traditional position of entrepreneurial, energy leadership.

If we support the rules, why are we engaging in this absurd dance? At a time we need more public support, confidence and trust — not less?

We’re talking like lawyers. We’re talking like people trying to get away with something, hiding behind questions of jurisdiction. That makes us look complicit and retrograde at a time when we need to be leaders. Methane reduction is not a question of jurisdiction. It is a question of present social risk and positioning ourselves for the future.

Both of these things are true:

  • The rollback of EPA’s methane rules looks like a gift to the oil and gas industry, reducing regulatory burden and increasing certainty.
  • States, stakeholders, investors, and communities are shaking their head, thinking to themselves, We knew it: the industry is not serious about addressing climate and decarbonization.

The problem:

The public’s concern about climate and their belief in a carbon-free energy future creates enormous and growing social risk for your company. Addressing methane leakage today is the price of admission to the energy future game. Your investors, communities, employees, and stakeholders expect you to radically reduce your methane leakage. And soon, they are going to expect a lot more.

Shell, BP, and Exxon have spoken out against the rule. That’s important, but it’s not enough to win the public’s confidence.

The critical mistake companies are making:

Letting the trades fight this one. They sound like they are trying to get off on a technicality. (Are they? I honestly can’t tell.) Did you think no one was going to notice?

Seize the day. As I’ve argued for some time, oil and gas companies need to proactively assess and mitigate their social risk. Addressing methane pollution is a given and companies don’t get a gold star for it – they get to keep operating.  

  • Assess the risk of this move internally. Your investors, communities, and stakeholders are going to wonder if your company will loosen their methane management controls as a result of this regulatory move. How will you communicate to them that reducing methane emissions has and will be a safety and environmental priority?
  • Watch how this plays out. I’m afraid that this roll back is going to accelerate opposition to the industry and put more scrutiny on practices such as flaring. Keep an eye on what the methane rollback does to public support and opposition for the oil and gas industry.
  • Make a statement. The best thing your company can do is make a public commitment to your shareholders to continue to reduce your methane emission and support sensible regulation to that effect. Nine gas utilities did so earlier this week.

Is your company taking a stand? Do you think the voluntary efforts led by the majors and the large independents are enough to mitigate social risk? Hit reply and let me know.

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