Robert Cohen/St. Louis Post-Dispatch via AP
When natural gas leaks at the wellhead, or in the pipeline, or in the distribution network, or inside homes and businesses, much of its climate advantage is lost.
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
The natural gas industry has long branded itself as good for the climate because when burned to generate electric power, gas produces far less carbon dioxide and other pollutants than coal. But natural gas is mostly methane, which traps heat over 80 times more effectively than carbon dioxide over a 20-year period. So when the gas leaks at the wellhead, or in the pipeline, or in the distribution network, or inside homes and businesses, much of that climate advantage is lost. Sure enough, some studies measuring methane leakage have concluded that natural gas is actually worse than coal for the climate.
Hence “certified,” “responsibly produced,” or “differentiated” methane gas, which purportedly meets some threshold of low-emissions production under scoring systems developed by certification companies. Companies have been charging customers a premium for “greener” gas since 2018.
But certified gas could become even more lucrative as the Biden administration seeks to update its standards for gas production. Scenting advantage, back in July 2022 11 companies—five gas producers, four methane monitoring and certification companies, one emissions trading company, and one consulting firm—came together to form a new lobbying group: the Differentiated Gas Coordinating Council (DGCC).
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This move turned out to be prescient. Just weeks after the passage of the Inflation Reduction Act (IRA) in August, it was clear that several parallel rulemakings on methane would be coming out before the end of Biden’s term. The Environmental Protection Agency (EPA) had already been working on changes to its greenhouse gas reporting rule, and to the performance standards and emissions guidelines for crude oil and gas facilities. Now the EPA would be doling out significant sums of IRA money for methane emissions reduction, while adjusting how facilities measured and reported their emissions, and charging new fees for emissions over a certain threshold.
The DGCC, of course, hopes to expand the market for differentiated gas. But what that means is another question. The new coalition includes both gas producers and their private-sector third-party certifiers; a rather brazen conflict of interest that the coalition couches as an “ad hoc” alignment on policy goals. Worse, the member companies’ interests are not merely aligned—many of them are already financially entangled, linked together in a pre-existing web of partnerships. As we’ll see, with the gas companies’ profits dependent on the monitoring companies certifying their gas as low-polluting, and the monitoring companies’ profits dependent on willing industry customers, the accuracy of those emissions measurements is hardly the top priority.
The DGCC counts five oil and gas companies among its members: Baker Hughes, PureWest Energy, Sempra Energy, Williams Companies, and Xcel Energy. The coalition also involves multiple technology companies that make emissions monitoring, accounting, and certification products. That includes CleanConnect, whose AI-based emissions monitoring systems and publicly traded low-methane energy certificates (a mutation of the carbon offset idea) allow their oil and gas company customers to charge their customers a premium; Kuva Systems, whose CEO claims that “natural gas is the only viable option for the foreseeable future” and sells a patented infrared camera and cloud-based system for monitoring emissions; EarnDLT, whose blockchain-based emissions accounting system allows customers to certify and buy and sell the certification of “differentiated” fossil fuel products; and Project Canary, an environmental data and software company, and one of the three major gas certifiers.
One of the world’s largest emissions trading platforms, Xpansiv, is also a member of the coalition. And the council’s 11th member, D.C.-based strategic consulting firm COEFFICIENT, is retained as a lobbyist for both the DGCC and DGCC member Project Canary. That’s far from the only overlap between the coalition’s members.
Member companies’ interests are not merely aligned—many of them are already financially entangled, linked together in a pre-existing web of partnerships.
Project Canary certifies the emissions data of mutual customers of EarnDLT’s blockchain-based accounting system, and partners with both EarnDLT and Xpansiv on blockchain-based registries for certifying “responsibly sourced gas.” PureWest Energy has a partnership with Project Canary and EarnDLT to “mint” the company’s low-emissions data into transactable Certified Environmental Tokens™. Xcel Energy has a partnership with Project Canary to purchase certified “low carbon” gas for its electric utilities. Williams and Project Canary both provided financial support for a new emissions registry designed to solve the “lack of trust” in “environmental commodities.”
Emissions technology company CleanConnect, along with oil and gas companies Baker Hughes and Williams, joined the Denver Petroleum Club in opposing Colorado’s 2,000-foot setback rule for oil and gas drilling in proximity to people’s homes. And as the Prospect previously reported, Sempra Energy has been advocating for expanding gas exports through a group called Western States and Tribal Nations, whose leadership has suggested working with Project Canary to get methane data from gas companies.
If Project Canary seems like it’s involved in a lot of the partnerships among DGCC members, you’d be right. It’s also at the center of a damning recent report from Earthworks and Oil Change International: “Certified Disaster: How Project Canary and Gas Certification Are Misleading Markets and Governments.”
Earthworks and Oil Change International wanted to verify Project Canary’s claims that their certifications were the “most rigorous” and brought “radical transparency” to the gas industry. So their surveyors went to Project Canary–certified well sites in Colorado with thermographic cameras to see whether Project Canary’s continuous emissions monitors (CEMs) were picking up and reporting the same emissions that the surveyor’s cameras found.
Between May and November 2022, Earthworks’ thermographers conducted 77 surveys at 30 different sites and recorded 22 pollution events. Not a single one of the 22 pollution events the thermographers witnessed was detected by Project Canary’s onsite CEMs. While the thermographers captured footage of pollution events in 29 percent of their surveys, Project Canary’s devices conducted 177,120 hourly readings and only detected 11 pollution events between March 1, 2021, and February 1, 2022, leading to the false conclusion that these sites had vanishingly low emissions.
“This comparison covered a range of operators, emission sources, and emission sizes, yet all returned the same results: monitors consistently failed to capture pollution events detected by OGI cameras. Furthermore, CEMs rarely captured pollution at all,” Earthworks and Oil Change International researchers wrote. “Our findings suggest that there is a considerable gap between Project Canary’s rhetoric and reality, and if this is true, it would have significant implications.”
Their findings make clear that even the companies whose business model embraces the goal of methane detection and leak reduction are susceptible to, and appear to share, their clients’ primary motivation: preserving and expanding the market for their product.
Earthworks and Oil Change International argued that if the Department of Energy was to endorse gas certification, its requirements “must include an independently accredited transition pathway away from gas to support the managed decline of fossil fuels required to address the climate crisis.” It’s likely that if faced with such a requirement, the certified gas industry would prefer no federal standard at all. After all, they do not lack for private certifiers willing to join them at their table, on their terms.
EVEN MORE THAN A FORMAL LICENSING REGIME on their own terms, these companies want trust. Above all, what they’re seeking is a social license to operate. They want the Energy Department to “ensure buyer confidence” in their product, to “help preserve the voluntary market for differentiated natural gas” and facilitate “long-term viability for the LNG market.” They want the EPA to strengthen the market for their preferred (and patented) emissions monitoring technologies. And despite their recent formation and low profile, it’s clear that they know how to wage a successful influence campaign at the level of the federal executive branch.
The day before the EPA published its 647-page proposal on updating the greenhouse gas reporting requirements for oil and gas facilities—with the biggest proposed changes pertaining to direct measurement of emissions, particularly large atypical releases of methane that have long gone undercounted—the DGCC met with several EPA officials, as well as officials from the Office of Information and Regulatory Affairs and the Council on Environmental Quality. The group proposed several questions that they wanted the EPA to solicit comments on, including: “Should third parties be authorized to certify the accuracy of calculations?” And: “How might EPA expedite the deployment of new, innovative direct measurement methods for methane emissions?”
The questions read as more innocuous than the oil and gas industry’s usual fare, diverging from the typical industry formula of questioning whether an agency has the authority to do what it’s doing, and then arguing that the agency should do less, and slower. But these questions also pertain directly to the companies’ bottom lines. And the answers that EPA provides as it finalizes its proposed changes will be paramount to the accuracy and verifiability of oil and gas companies’ reported methane emissions.
Meanwhile, over at the Department of Energy, fossil fuel–friendly Biden appointee Brad Crabtree hosted a workshop last October with gas industry representatives, including the DGCC, to discuss standards for certified gas, followed by a private meeting in March on certified gas at the CERAWeek energy conference. Reuters reported that the Biden administration was holding talks with gas companies and foreign officials to discuss setting a standard for certified gas, which would be a boon to certified gas industry players seeking to expand their market.
It’s shocking that the Biden administration would even consider input from such a conflicted organization when considering certification standards. Indeed, climate scientists are firm that the committed emissions from existing oil and gas infrastructure alone imperil the international goal to prevent planetary warming beyond 1.5 degrees Celsius.
On July 19, a coalition of 148 environmental groups led by Earthworks, Oil Change International, and Gas Leaks wrote to the Department of Energy urging the DOE not to develop or endorse a certified gas standard. (The Revolving Door Project was one of the letter’s signatories.) “While we strongly support robust and well-enforced regulations to cut methane leaks from the oil and gas sector, we oppose efforts that aim to provide ‘extra credit’ which the gas industry uses to promote growth in the production, trade and consumption of methane gas,” the groups wrote.
Days later, the Department of Energy backed off of creating a certified gas standard, telling S&P Global Commodity Insights that “DOE is not introducing or endorsing any natural gas certification measures or standards, but instead is working with natural gas importing and exporting countries to develop an agreed approach to MMRV [measurement, monitoring, reporting, and verification] that provides consistency and accountability in the marketplace.”
This represents a significant about-face for the Department of Energy, and likely a loss for the DGCC. But as noted above, there are plenty of other ongoing deliberations where the lobbying group could get a leg up from the federal government.
As EPA and DOE endeavor to standardize a novel, more direct approach to monitoring methane emissions from oil and gas infrastructure, they must bake in rigorous, multi-layer, transparent, and verifiable steps to measuring the planet-warming gas. And as certified gas proponents work to carve out a reputation as the “good guys” within the gas industry, let’s not forget that the real and unequivocally necessary good would be industry players committing to phase out fossil fuels—not seeking to expand the market for the kind of gas that fetches them the highest price.
