By Paul Driessen
June 12, 2016
Social cost of methane regulations will further constrain energy production, for no benefit
Having already done yeoman’s work stifling economic growth and job creation, President Obama’s Environmental Protection Agency is doubling down again.
The United States created a paltry 38,000 new jobs in May: one for every 8,000 Americans. Its labor force participation rate is a miserable 63% – meaning 93 million Americans are not working, while 6.4 million more are trying to feed their families on involuntary part-time positions and a fraction of their previous salaries. Manufacturing lost another 20,000 jobs in May, as the economy grew at an almost stagnant 0.8% the first quarter of 2016. Middle class family incomes and net worth continue to slide.
Meanwhile, well-paid federal bureaucrats increasingly regulate our lives, livelihoods and living standards, hand down fines and jail terms for some 5,000 federal crimes and 300,000 criminal offenses, and inflict $1.9 trillion in annual regulatory compliance costs on families and businesses.
EPA’s war on coal has already cost thousands of jobs in mines, power plants and dependent businesses. Low oil prices amid a tepid, over-regulated, climate-fixated, crony-corporatist American, European and international economy have already killed thousands of US oil patch jobs.
On June 3 EPA issued more rules: methane emission standards for new and modified oil and natural gas drilling, fracking, pipeline and other operations. Under steady environmentalist pressure, it may be only a matter of time before the agency covers existing operations – and maybe even livestock, rice growing, landfills, sewage treatment plants and other methane-emitting activities.
The agency justifies these new job-killing rules by citing something it calls the “social cost of methane,” which is patterned after its equally arbitrary, speculative, infinitely malleable “social cost of carbon.” (Carbon, of course, actually means carbon dioxide – the miracle molecule that enables plant growth and makes all life on Earth possible.) Both the SCM and SCC are needed, EPA insists, to prevent dangerous manmade global warming and climate change, which it claims are driven by these two trace gases.
EPA’s methane claims are absurd. Methane emissions from US hydraulic fracturing operations have plummeted 79% and from the overall US natural gas sector by 11% since 2005.
Moreover, methane is a tiny 0.00017% of the atmosphere, the equivalent of $1.70 out of $1 million. According to the Intergovernmental Panel on Climate Change, 17% of that is from energy production and use; 26% comes from agriculture, landfills and sewage; and the remaining 57% is from natural sources. (Carbon dioxide, the other climate bogeyman, is 0.04% of the atmosphere – 400 ppm.)
The United States accounts for a mere 9% of the world’s total manmade methane – and just 29% of that is from oil and gas operations that provide 63% of all the energy that powers America. That means US oil and gas account for less than 3% of global manmade methane emissions – and thus just 0.000004% of all the methane in Earth’s atmosphere. That’s equivalent to 4 cents out of $1 million!
EPA insists that this undetectable amount will cause a global climate catastrophe, and forcing the oil industry to spend billions of dollars to reduce its already minimal methane emissions will bring billions in health and environmental benefits via climate change prevention. It says methane is 23 (or 28 or 35) times more potent than carbon dioxide as a greenhouse gas, and the USA must lead the way. What nonsense.
The atmosphere contains 235 times more carbon dioxide than methane – so this “ultra-potent” greenhouse gas will have only 10-15% of CO2’s supposed global warming power. The US petroleum industry’s contribution is utterly meaningless, especially compared to the solar, oceanic, cosmic and other powerful natural forces that have driven climate change throughout Earth and human history.
Of course, EPA’s shenanigans don’t end there.
The agency’s “social cost of methane” calculations rely on arbitrary 2.5, 3 and 5 percent “discount rates” that supposedly quantify the present value of future regulatory benefits, derived from preventing climate chaos 20, 50 or 100 years from now. The rates yield miraculous compounded benefits up to $1,700 per ton of methane emissions prevented by 2020 to $3,300 per ton by 2050. They could bring up to $550 million in alleged health benefits by 2025 – for “only” $330 million in oil industry costs.
But if EPA had used the 7% discount rate required under Office of Management and Budget guidelines, the supposed benefits would plummet to only $259 per ton by 2020. Naturally, EPA didn’t use that rate.
Even more dishonest, as it did for its “social cost of carbon,” EPA’s analysis incorporates virtually every conceivable “cost” of methane emissions and thus alleged “dangerous climate change” – to agriculture, forestry, water resources, “forced migration” of people and wildlife, human health and disease, rising sea levels, flooded coastal cities, ecosystems and wetlands harmed by too much or too little rain, et cetera.
But it completely ignores every obvious and enormous benefit of using oil and natural gas: generating reliable, affordable electricity for lights, heat, air conditioning, computers, electric vehicles and countless other applications; manufacturing fertilizers, plastics, paints and pharmaceuticals; and even reducing CO2 emissions by replacing coal in electricity generation. EPA also ignores the real, obvious and enormous health impairment from millions more people rendered unemployed, poor and unable to heat their homes.
That is the critical point. But almost as important, the alleged, exaggerated, computer-conjured and illusory benefits from these SCM regulations accrue to the world as a whole – while the very real costs are incurred solely by American companies, consumers and taxpayers. EPA doesn’t mention that.
And to top it off, the mandated reductions in US methane emissions will be imperceptible amid the world’s enormous and rapidly increasing oil, natural gas and coal production and use. In fact, 59 nations are already planning to build more than 1,200 new coal-fired power plants – on top of what they and developed nations are already building.
China, India, Russia and Europe together emit more than five times the methane that the USA does, and the world just set new oil and natural gas consumption records. In fact, the net increase in petroleum consumption was 2.6 times the overall increase in renewable energy use.
Indeed, fossil fuels now account for 79% of total global energy consumption – compared to 0.7% for wind and solar energy combined. The much-touted figure of 19% global renewable energy cleverly hides the fact that 68% of that consumption total is wood, animal dung and hydroelectric energy. Even more astounding, wood and dung account for 13 times more energy worldwide than wind and solar combined!
India has said it will not ratify the Paris treaty anytime soon, and will continue using fossil fuels to bring electricity to people and businesses and improve living standards. Meanwhile, renewable energy spending fell 46% in Germany and 21% overall in Europe in 2015 from the previous year.
EPA’s SCC and SCM scam underscores the religious dogma that drives the Obama Administration’s climate change agenda and ideological determination to end hydrocarbon use in America. Perhaps worse, presidential candidate Hillary Clinton has bragged about putting still more coal miners out of work. She has also said she would ban drilling on all onshore and offshore public lands, and regulate fracking into oblivion on state and private lands. Senator Bernie Sanders will almost assuredly push her and the Democratic Party even further to the Left on energy policies.
These policies would put even more Americans out of work, landing them on welfare rolls and forcing them to depend on unsustainable government handouts that rely on taking more money from an ever-shrinking workforce. Americans would have to get used to the idea of having lights, AC and computers when increasingly expensive electricity is available – instead of when we need it. What a depressing future that would be for our children and grandchildren.