There is growing concern that increasing levels of greenhouse gases in the atmosphere may affect the earth’s climate. Many in the international community and some states have taken regulatory action, which has resulted in a variety of local, state and regional responses, as well as increased policy debate at the national level.
Natural gas is the cleanest burning fossil fuel. When natural gas is burned, it produces far lower levels of greenhouse gases than such competing sources of energy as oil and coal. When the entire cycle of producing, processing, transporting and using energy is considered, natural gas is delivered with a "total energy efficiency" of about 90%. Given these characteristics, natural gas should be viewed as a bridge to a less carbon intensive economy.
The pipeline industry’s contribution to overall U.S. emissions is small. In 2005, natural gas producers, processors, pipelines and distributors, accounted for approximately 3.2% of overall U.S. emissions. Pipelines accounted for less than 1% of overall U.S. emissions. For business reasons, INGAA member companies strive for continuous improvements in efficiencies which typically result in reductions of greenhouse gas emissions.
INGAA supports a mandatory federal climate change program that would preempt redundant and potentially conflicting state or regional initiatives. As Congress considers legislation mandating greenhouse gas reductions, INGAA urges lawmakers to ensure that climate change legislation:
- Minimizes the burden on the economy and does not cause undue harm to the natural gas pipeline industry and its customers.
- Recognizes that the use of natural gas should be part of any climate change policy and does not discriminate against natural gas relative to other fossil fuels;
- Relies on market-based approaches that are simple to administer and provides clear price signals that permit industry to select the most efficient and cost-effective solutions;
- Recognizes that, if any carbon policy regime is developed, the point of regulation, and consequent responsibility for possession and surrender of any allowances should not be placed upon service providers such as transporting pipelines;
- Ensures that early efforts to reduce GHG emissions are recognized and rewarded;
- Supports research and development and appropriate funding for technology development to reduce greenhouse gas emissions, including those from our facilities;
- Recognizes and does not compromise the existing regulatory structure at the Federal Energy Regulatory Commission;
- Encourages the U.S. EPA and other agencies to adopt policies consistent with any such national approach.
INGAA cannot make an informed judgment about the relative merits of an upstream or a downstream program for regulating GHG emissions attributable to natural gas without a more fully developed analysis of the comparative economic and operational effects that would result from the alternative approaches In an upstream program, the point of regulation, and consequent responsibility for possession and surrender of any allowances should not be placed upon service providers such as transporting pipelines.
Attributes of GHG Program
To be workable and efficient, a GHG program must provide energy consumers with price signals that encourage them to use fuels more efficiently and to choose fuels with less severe GHG impacts. This means that energy consumers should see the full cost of allowances in the purchase price for energy.
Second, a workable and efficient GHG program should be comprehensive; that is, the greatest possible level of energy consumption should be encompassed within the scope of the program. This will achieve the greatest efficiency and the greatest equity, because it will focus efforts on finding the lowest-cost sources of emissions reductions and it will reduce the opportunities for gaming intended to escape the program.
Third, to achieve administrative efficiency, the program should minimize the number of points of regulation to the greatest extent possible, by employing a clean accounting mechanism. The accounting system should rely on information readily available through existing programs and avoid duplicative regulation of any energy or fuel delivered to consumers.
Fourth, the program should not create a severe hardship for any group of energy consumers or for any segment of the energy industry. Such exceptional hardship could signal the potential for unintended distortions in the market and within the industry and would reduce the political palatability of the GHG program.
Download the INGAA principles that should be applied to climate change policy here.