This post written by Tom Murray, originally appeared on the EDF + Business blog:
Last week, financial community leaders took a big step into the intersection of business and policy on the urgent need to curb methane emissions from the oil and gas sector. A group of investors managing more than $300 billion in market assets sent a letter to the U.S. Environmental Protection Administration and the White House, calling for the federal government to regulate methane emissions from the oil and gas sector. The letter urged covering new and existing oil and gas sites, including upstream and midstream sources, citing that strong methane policy can reduce business risk and create long-term value for investors and the economy.
Spearheaded by Trillium Asset Management, the cosigners of the letter to EPA Administrator Gina McCarthy included New York City Comptroller Scott M. Stringer, who oversees the $160 billion New York City Pension Funds, and a diverse set of firms and institutional investors. They spelled out in no uncertain terms that they regard methane as a serious climate and business problem – exposing the public and businesses alike to the growing costs of climate change associated with floods, storms, droughts, and other severe weather.
Study after scientific study shows just how damaging methane is to the climate. Meanwhile, the nation’s largest industrial source of this pollution – the oil and gas sector – is expanding rapidly. Consequently, methane is not only being acknowledged as one of the most pressing climate issues of our time, but as a substantial investment risk if left unaddressed.
The 18 signers make the point that proven, low-cost solutions already exist to cut methane emissions from the oil and gas sector by 40 percent. And while they support state-level action, including the steps taken in Colorado and California, and voluntary measures by industry to reduce emissions, they are clear that these efforts alone cannot address the problem at enough scale, nor as quickly as we need. They assert because the industry is spread across the country, “uniform rules are the only way to level the playing field and ensure high performance across the board.” Further, the letter stated that a national framework would “ensure simplicity, consistency and certainty.”
I wrote in this space a few weeks ago about how voluntary corporate efforts are important, even critical, but to meet the challenge that climate change presents, businesses have to lead on policy as well. We need more of the type of constructive industry engagement we saw in Colorado. Having three of Colorado’s largest energy companies sit down with state regulators and environmentalists to help craft smart methane policy, with rules that stand today as a national model, shows us what’s possible.
Working proactively with lawmakers to develop a rule on methane emissions is in the industry’s best interest, as federal regulation would provide much-needed market certainty for companies regarding emission standards and monitoring and repair requirements for new and existing projects. Goldman Sachs concluded in a 2014 report that a lack of certainty in potential federal environmental policy is a major risk factor limiting investment and job creation in natural gas projects.
By providing support and insight to shape the regulatory and policy changes we need, companies can help protect our communities, climate, and economy. Read the letter, and if you find it inspires you, add your voice to the growing group of businesses in support of federal action on methane emissions from the oil and gas sector.