The American Petroleum Institute boasted Tuesday of helping create “energy abundance” in the U.S. while contributing to reductions in greenhouse gas emissions.
“Today we are increasing energy development as we’re contributing to lower greenhouse gas emissions, a reality many believed was implausible, if not impossible,” said Jack Gerard, president and CEO of the the main trade group representing the oil and natural gas industry, at its 2018 State of American Energy event in Washington.
“I think we’re at the point where we need to get over the conversation of who believes and who doesn’t, and move to a conversation about solutions,” Gerard added, referring to climate change.
Over the past decade, an influx of cheap natural gas and the rise of renewable energy have transformed the nation’s power grid, reducing wholesale electricity prices and forcing unprofitable coal and nuclear plants to retire.
The U.S. is now the world's biggest natural gas producer, with an increase of more than 30 percent in production since 2008, thanks to drilling technologies such as fracking and horizontal drilling.
The Energy Department forecasts that between now and 2040, consumption of natural gas will increase more than that of any other fuel source, as demand from big industrial users rises and power plants rapidly replace coal-fired facilities.
“We are powering positive change in reliability, safety and environmental performance every day through technology and innovation,” Gerard said. “Industry innovation and technological breakthroughs are why the U.S. is the world’s largest producer of natural gas, oil and refined products.”
Gerard, however, acknowledged the challenges of limiting emissions of methane, the main component in natural gas. Methane is more potent than carbon dioxide, although its emissions are relatively short-lived. The Trump administration is trying to repeal Obama-era methane emissions, but many companies have pledged to take more limited action on their own.
API late last year announced a new program aimed at reducing emissions of methane from oil and natural gas production. Participants include Chevron, BP, Royal Dutch Shell and Exxon Mobil. Many climate scientists blame greenhouse gas emissions from fossil fuels for driving manmade climate change.
“Methane emissions have declined even as natural gas production has soared, and the industry is leading to further that progress,” Gerard said.
Gerard credited the Trump administration for pushing policies that API says will help natural gas, such as streamlining regulations for building infrastructure such as pipelines, and signing major tax legislation that reduces costs for corporations. The group is encouraging President Trump to include energy in its infrastructure plan expected to be announced this year.
“We welcome the administration’s focus on building infrastructure to keep pace with America’s energy and manufacturing resurgence,” Gerard said. He later said the industry wants predictability in issues such as permitting, which would encourage private investment in energy infrastructure.
Gerard highlighted the recent cold snap, which increased the cost of natural gas, to showcase why the Trump administration should encourage spending on energy infrastructure.
In energy-constrained areas such as New England, electricity prices rose above $210, compared to Dec. 1 prices of $32.
“The recent cold snap highlighted the difference between policymakers and regions that embrace American energy abundance and those that do not,” Gerard said. “New Englanders have been subject to some of the highest electricity costs in the nation because of resistance to infrastructure development.”
But Gerard prodded the Trump administration on policies the group disagrees with, such as Energy Secretary Rick Perry’s effort to prop up ailing coal and nuclear plants, and its push to renegotiate the North Atlantic Free Trade Agreement.
API had partnered with renewable groups to form a coalition opposing Perry’s plan, worried it would upend competitive electricity markets that have defined recent decades.
The Federal Energy Regulatory Commission, an independent agency governing regional electricity markets, on Monday rejected Perry’s proposal to subsidize coal and nuclear plants that can carry 90 days of fuel on-site. Natural gas plants typically rely on pipelines and would not qualify.
“We support FERC’s decision yesterday and urge policymakers and regulators at the state level to resist the temptation to intervene in a marketplace that ensures reliability and affordability,” Gerard said.
Gerard said NAFTA has been critical to the success of natural gas by making energy more affordable for U.S. companies operating in Mexico and Canada.
“Global trade flows have played a critical role in America’s energy renaissance, spurring economic growth and investment and creating American jobs,” Gerard said. “North America provides a great example of integrated and interdependent energy markets that benefit all three trade partners. As the administration continues negotiations with Canada and Mexico, we urge them to seek modernization in ways that maintain these benefits.”
He said Trump should keep NAFTA as it is, if it can’t “modernize” it.
