Senators Take Aim at 'Certified' Gas, Calling It the 'Wild West'

“You first have to have a standard against which you’re measuring yourself. And I’m not even sure we have that right now in this country,” Gary Kruse, managing director of research for consultancy Arbo, told Energy Intelligence. “And then you have to come up with a way to prove that you’re differentiated. That is to me what people are bemoaning in this thing, the measurers, the certifiers. They’re at least trying to do that. Is it better to have no data?”

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A group of progressive US senators this week called gas producers’ efforts to have their production certified as responsibly produced “another dangerous greenwashing scheme,” the foundation of which they charge is a massive conflict of interest. But proponents argue the effort is an above-board, legitimate way to helping the US and world achieve their greenhouse gas (GHG) reduction goals.

The senators sent a letter to Federal Trade Commission (FTC) Chair Lina Khan, urging the agency “to investigate and crack down on unfair and deceptive environmental claims" made by gas companies and by third-party certifiers, such as Project Canary and MiQ. “Gas producers sometimes publicly describe their product as ‘certified,’ ‘responsible’ or ‘differentiated’ and market it as a climate-friendly fossil fuel.

But too often these green claims are false or misleading due to opaque methodology, unreliable technology and unacknowledged downstream climate effects of gas combustion,” the senators wrote. “The gas companies’ profits depend on the monitoring companies certifying their gas, and the monitoring companies’ profits depend on willing industry customers. Thus, there is no incentive to ensure the accuracy of emissions efforts.” Independent research "casts substantial doubt on the effectiveness of gas certification technology, the soundness of its methodologies, and the accuracy of certification claims — none of which are standardized across certification companies,” the senators said, charging the certification organizations operate in a “Wild West environment.”

The letter comes amid producer efforts to win over investors and secure customers by demonstrating the low emissions intensity of their operations. Producers and certifiers alike have said they are seeing buyers willing to pay more for the differentiated gas. That led the senators to charge that “profit motives are at the heart of their effort," and that certification schemes undermine the transition away from fossil fuels by allowing “the oil and gas industry to justify the continued expansion of methane gas use." They cited a report by the International Energy Agency that concluded achieving net-zero GHG emissions by 2050 would require an 80% reduction in the use of natural gas. The letter was signed by Sens. Ed Markey (D-Massachusetts), Jeff Merkley (D-Oregon), Sheldon Whitehouse (D-Rhode Island), Elizabeth Warren (D-Massachusetts), Richard Blumenthal (DConnecticut), Bernie Sanders (I-Vermont) and Cory Booker (D-New Jersey).

'Emissions-Reducing Benefits'

Producers and pipeline companies argue that efforts to reduce the carbon intensity of their gas — some of which could be shipped abroad as LNG — helps the world wean off more carbon-intensive fuels that contribute to GHG emissions.

EQT CEO Toby Rice said having US gas certified as responsibly sourced helps the industry take emissions from its own operations off the table in conversations about global GHG cuts. EQT, the largest US gas producer, is among the founding members of the Appalachian Methane Initiative, a sector-agnostic effort to address methane emissions in Appalachia. “We have got to stop talking about the emissions associated with making our product and start talking about emissions-reducing benefits when people use our product,” Rice said Tuesday at Williams’ Clean Energy Expo in Washington. When US gas with 350,000 tons per year of emissions annually “is put on the world stage to replace foreign coal, it has the potential to replace 150 million tons of CO2 per year,” he said.

Lack of Standards

Both proponents and advocates of the certification effort say a lack of standards is a problem. The senators pointed to a study by the Environmental Defense Fund that demonstrates operators "cherry- pick which sites to certify within their portfolio." But for proponents, the lack of standards is more reflective of the monitoring and certification industry's evolution.

“You first have to have a standard against which you’re measuring yourself. And I’m not even sure we have that right now in this country,” Gary Kruse, managing director of research for consultancy Arbo, told Energy Intelligence. “And then you have to come up with a way to prove that you’re differentiated. That is to me what people are bemoaning in this thing, the measurers, the certifiers. They’re at least trying to do that. Is it better to have no data?”

Cheniere Energy COO Cory Grindal said at the Clean Energy Expo that “data-driven transparency should and would lead regulators to come up with a standard. It’s not so much about a premium for that gas, it’s really that regulation should penalize those who are not willing to participate, who are not willing to be part of the solution.”

Who Should Regulate?

It's unclear why the senators chose to direct their concerns to the FTC, and representatives from their offices did not answer requests for comment. But Kruse told Energy Intelligence that the FTC isn’t among the agencies with the power to weigh in on standards for certified gas — and those that likely do hold that power appear to be waiting to see how standards and measurement technologies evolve.

For instance, the US Department of Energy has been exploring developing a standard for gas that would help US production compete globally against other lower-carbon sources, but opinions differ within the industry on how that should look. Kruse said one challenge for federal regulators is that state commissions generally decide whether a utility can charge a premium for gas with a particular label, such as certified or renewable.

“So I don’t see how the FTC can countermand the decision of a local state regulator of that question." Suppliers also may run into conflicting standards for buyers abroad, Kruse explained." In Europe, they have things like border adjustment mechanisms. You would probably be trying to prove [the emissions intensity] of your LNG is lower than others to meet some standard. But again, it would be up to the European government to say whether you met that standard and whether you would be entitled to a lower tariff.”

Meanwhile, the power of one US agency to regulate certified gas is tied up in litigation as shippers on Kinder Morgan’s Tennessee Gas Pipeline (TGP) are asking a court to make the Federal Energy Regulatory Commission (FERC) weigh in on the question. FERC attempted to avoid the thorny issue of defining gas as "certified” when TGP launched its responsibly sourced gas (RSG) pooling service by only requiring TGP to post the RSG criteria on its website, but not in its tariff. FERC argued that it only has statutory oversight of gas transportation, not how gas is produced.

“FERC just didn’t want to be in the business of setting the standards for what is certified natural gas," Kruse said,"because I don’t think they think they have the expertise to set the standards for that.”