Changes to Impact the Industrial Sector
The administration set a target of achieving zero emissions from the power sector by 2035. The biggest emitter of CO2 in the United States is the transportation sector and a large-scale transition to carbon-free transportation will be needed to reduce its emissions. Other sectors with considerable emissions are agriculture and construction.
President Biden took some actions to improve the environmental reviews of large-scale projects before approval, according to the National Environmental Policy Act, improving the function of the Environment Protection Agency. He ordered a stop to the oil and gas drilling in the Arctic National Wildlife Refuge and has begun the process of installing standards for methane emissions.1 The new administration is preparing a review of the entire oil and gas leasing program of the United States, including ordering an end to all fossil fuel subsidies.2, 3
Biden also halted further development of the Keystone Pipeline through executive order, additionally directing agencies to review and reverse over 100 Trump administration actions on the environment.4 In February 2021, Biden raised the social cost of carbon in U.S. to USD $51 per ton.
How will the Industry be Impacted
The COVID-19 pandemic has had the predominant impact on the world as a whole, from reduction in energy demand to changing the way we work, namely more people working from home. Many business functions that can continue to work from home will likely do so, reducing the demand for office space, commutes, etc. This has also reduced the amount of fuel needing to be produced which has created a strain on petroleum side of the business.
Changes in the EHS (Environmental Health & Safety) area are always expected with changes in presidential administrations. The new administration is strategically re-focusing on climate change. With this re-focusing, we should expect a lot of coming changes, and new opportunities for environmental consultants and their clients. The Refining and Chemicals portion of the U.S. Energy Sector have been and continue to be the areas subjected to the most enforcement from the regulatory agencies.
The environmental problems and challenges, particularly those dealing with air quality in this industry, demand some of the most sophisticated and brightest minds in the business. This demand is expected to grow with the new presidential administration. For example, American Fuel and Petrochemical Manufacturers (AFPM) has convened a special committee of its members, both operating companies and consultants, to help them evaluate and prepare for negotiating an anticipated New Source Performance Standards (NSPS) for greenhouse gases (GHG) from petroleum refineries.
If this new standard comes to fruition, one for the chemical sector is very likely to follow. Activities like this will lead to the need for more compliance support for operating companies.
Also, in anticipation of the administration’s new climate change initiatives, many operating companies are repositioning their long-term plans towards producing more renewable and cleaner fuels. All of the majors made this shift during the Obama administration, largely due to the then initiated EPA’s
Renewal Fuels Standards and California’s Low Carbon Fuels Standards (LCFS). Though these standards were initiated over five years ago, many of the obligations for fuel producers are just now coming to pass and will now only grow with this administration’s climate change focus. Regardless of the desire many have to wean ourselves off of fossil fuels to produce energy, the fact still stands that, as of current, more than 80% of the world’s energy is produced by fossil fuels.
Based on the U.S. Energy Information Association (EIA) just released annual report, which provides a forecast for the Energy Market, U.S. demand for natural gas, petroleum and other liquids is expected to grow modestly over the next 30 years. Renewable energy is also expected to grow, while coal and nuclear will continue to decline. Natural Gas and oil are essential for heating our homes and are critical in the production of petrochemicals and plastics. Oil makes up nearly 90% of our transportation needs.
Global energy demand, driven by developing countries, such as China and India, will continue to grow. With the expected emphasis from the new presidential administration, the following are specific areas that are expected to expanded beyond their respective current regulatory requirements:
• Fenceline Monitoring – Pilot Studies and Fenceline Program Development for Chemical Plants with consent decrees (CD);
• New tools for source identification — optical gas imaging;
• LDAR Technologies – Advising on Low-e Fugitive Emission Equipment; Studies for Advanced leak detection and repair (LDAR) monitoring approaches;
• Optical gas imaging — we could see an increase in the use of optical gas imaging;
• Fuels Compliance – Low Carbon Fuel Standard (LCFS) Compliance and Reporting, Life Cycle Analysis; Carbon Capture and Sequestration project advising; and Voluntary Carbon Offset Programs.
Based on President Biden’s Executive Order 13990, the EPA has a new priority of September 21st to review its actions over the prior four years, including the category of Reducing Methane Emissions in the Oil and Gas Sector. The upstream sector of the petroleum industry will face more regulatory burden. The downstream faced this increased scrutiny already, but the consolidation of refining was driven more by business economics, global energy supply/demand rationalization, and not solely from the increased costs of compliance. The upstream business will have to learn how to operate under new and more onerous rules. It will add work and cost, but after initial implementation, the innovators will figure out how to comply in the most efficient manner.
It is also important to remember, methane has seven times the greenhouse potential of carbon dioxide, so reduction of methane emissions will provide more benefit in the climate change efforts, and methane is a valuable, useful product.
1. Rosenberg, Andrew (25 January 2021). “Consequential Biden Actions Nobody Is Talking About”. Ecowatch.
2. Friedman, Lisa (2 March 2020). “Reversing Trump, Interior Department Moves Swiftly on Climate Change”. The New York Times.
3. Dlouhy, Jennifer; Natter, Ari (4 March 2021). “Biden Climate Plan Includes Oil-Lease Pause, Subsidy Review”.
4. Bradner, Eric (January 20, 2021). “Biden targets Trump’s legacy with first-day executive actions”. CNN.
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