Administrator Gina McCarthy, Remarks at GE Oil and Gas Annual Meeting, As Prepared
Hi, everybody. It’s great to be here. Let me thank Lorenzo and everyone at GE for the opportunity.
The energy world and the environmental world are in a period of unprecedented transition. I am not talking about recent short term oil prices, which I understand must be on your minds for many reasons.
The transition I am talking about is more wholesale—the way in which the oil and gas industry is front and center in using innovative methods to open up vast, previously inaccessible and untapped reserves; the way in which science and technology are allowing us to more readily understand the industry’s environmental impact; and the economic opportunity that the industry has if it continues the trend of using technology to ensure your place in what I believe is an essential and clear path forward towards a cleaner, lower carbon future.
You and I know that our energy and environmental challenges are two sides of the same coin—as are economic prosperity and public health protection. The time has come for us to stop flipping this coin to see which side wins in the short term, and instead recognize the need to focus on building a solid path for sustainable economic growth that depends on clean, reliable, and affordable energy for all.
That path in the US and across the world is exactly what President Obama is charting with the Climate Action Plan that he announced in July 2013. And it’s exactly what EPA and our sister agencies will deliver.
Because climate change is not just an environmental challenge; it’s a threat to public health, to our domestic and global economy, and to our national and international security. The US, through our strong and decisive domestic action, has already and will continue to mold the international debate on climate change—from one that focuses on mitigation costs to one that embraces new investment opportunities.
The success of these efforts will depend on how quickly you and the broader energy market deliver cleaner energy supplies using safe and responsible technologies and practices that all of us can take to the bank.
For decades, the US Environmental Protection Agency has set pollution standards for utilities, refineries, fuels, engines, vehicles, and more. Those standards have been built into the marketplace—captured in the cost of electricity, and in the way energy is dispatched and priced. They drive new tools and technologies that are now commonplace—everything from advanced monitoring systems to end-of-pipe pollution controls.
We have learned many times over that we don’t set standards to replace or limit a vibrant marketplace—we set standards to fortify it. We provide certainty not just to those who want to know that their kids have clean air to breathe and clean water to drink, but to the broader business community who need risks to be minimized and investment to be maximized.
President Obama recognizes that climate change is supercharging risks to our health and our economies—and at the same time it is fueling a tremendous transformation in the way we make and use energy. My message today is that we must embrace that transformation. We must seize the opportunity that lies ahead.
If we do, it will not only be the responsible thing to do, it will be the profitable thing to do. If done right, we can cut the carbon pollution that is fueling climate change; we can prepare for impacts that we can’t avoid; and we will position the business community, its entrepreneurs and its innovators, to lead the world in our global climate fight, while expanding the economy.
President Obama is confident, as am I, that innovation is the key to a stable climate and sustainable economic growth. The good news is that the transition to a low-carbon future is already being embraced by businesses in every sector, in every part of the world. The reasons are simple: no one likes risk, and today, the risk of standing still far outweighs the uncertainty of taking steps to transform to a clean, low carbon future.
EPA has taken a big step in that direction when last year we announced the Clean Power Plan, the key piece in the President’s effort to cut carbon pollution while offering certainty to markets and investors about what the future holds.
As proposed, the Clean Power Plan seeks to cut carbon pollution from existing power plants, our nation’s largest source, in a smart and pragmatic way. It was designed explicitly to give states the flexibility necessary to create individual, tailored plans to their situation. This includes expanded use of clean fuels like natural gas, expanded use of energy efficiency from plant to plug, and more use of renewable energies. Our hope is that this clarity, this certainty, will allow industry and business to invest accordingly, allowing for economic growth and continued job creation.
Simply put—more of that kind of certainty means less risk to business operations because it means less risk to public health. And those goals work in tandem—an investment that risks public health is a risky investment to make.
More and more companies are making their support for this effort clear. Just last week, trade groups representing more than more than 200,000 businesses and more than 325,000 individual business leaders, entrepreneurs, and investors wrote an open letter explaining both their strong support for EPA’s Clean Power Plan, and for action in general on climate change.
While it’s obvious that traditional energy companies, along with businesses in the clean tech sector, stand to benefit, other blue chip brands—such as Nike, Nestle, Disney, Unilever, Starbucks, and Sprint—have said, and I quote, “Tackling climate change is one of America’s greatest economic opportunities of the 21st century.”
There is that word—opportunity. And that’s exactly how we all must see this challenge ahead. As an economic growth opportunity.
But with opportunity comes challenges. As we seize new energy frontiers in a carbon-constrained world, an increasing number of energy markets will have the freedom to work the way they should—but only when we can demonstrate that development is safe and responsible.
If we can’t be certain of safe and responsible operations, then the freedom and certainty so essential to investment will be lost. The State of New York’s recent ban on fracking makes the point. New York’s decision-makers shut it all down, because they either lacked the confidence to ensure responsible development through regulation, or they lacked the confidence that industry was acting reliably to confront health risks.
Confidence in safe and responsible energy development is not a given. To create that confidence, it’s important to show, either through transparent cooperative action, or through commonsense regulation—that any energy development means safe and responsible development.
We have the technology to do it—what is lacking is the confidence that it’s being done—and without that confidence, investment and markets suffer.
As you know, an important piece of our national Climate Action Plan is mitigating methane emissions contributing to climate change.
So a few weeks ago, the Obama administration announced a strategy to cut methane emissions from the oil and gas sector—by up to 45 percent from 2012 levels by 2025. That means saving up to 180 billion cubic feet of wasted natural gas in 2025 — enough to heat more than 2 million homes for a year.
Our efforts build on our 2012 standards to reduce volatile organic compounds from the oil and natural gas industry. These standards will reduce up to 290 thousand tons of VOCs—and as a bonus, they’ll cut methane emissions equal to 33 million tons of carbon pollution per year.
As part of the strategy, this summer, EPA will propose commonsense standards to cut methane emissions from new and modified oil and gas wells. We’re starting with new sources, because that’s where the growth is happening, and that’s where we can get the most bang for our buck right away. New oil and gas sources being developed have the ability to take advantage of innovative technology already available to the industry.
But it’s also about sending signals to existing infrastructure beyond the wellhead. There are opportunities to reduce emissions along the entire delivery and extraction system—compressors, pneumatics, and pipelines—and for new remote monitoring technology that can provide a greater degree of certainty. We need to look at the system in a holistic way that maintains growth and vibrancy for the industry.
When it comes to incentives, the oil and gas industry has an edge—because leaking methane isn’t a wasted byproduct. It’s product that’s wasted. Lost methane is lost profits. You all understand that, and it’s why you’re leaders in the industry.
Recognizing that reducing costs and reducing carbon pollution go hand in hand, GE and Statoil are launching a research and development partnership called the Last Mile to work on ways to cut greenhouse gas emissions. The two companies are seeking technologies that can reduce emissions and cut costs, for example, by reducing the wasteful flaring of associated gas released during oil production.
They are not alone. Other companies, including Pemex, BG Group and Southwestern Energy—all members of the Climate and Clean Air Coalition’s Global Methane Initiative—have demonstrated leadership roles in the industry, taking common sense steps to reduce emissions in smart ways.
In the US, the recent trend in resource development has been an economic boon—adding jobs, lowering energy prices, strengthening national security, and enabling cheaper manufacturing. For the first time in decades, we produce more oil than we consume. And we are currently the largest natural gas producer in the world. The natural gas industry alone created more than 150,000 US jobs between 2007 and 2012, while the manufacturing sector added 800,000 jobs since 2009.
The gas boom has changed electricity markets so dramatically that coal is non-competitive in some areas. Does that mean no coal? Not at all. But it does mean that an “all of the above” energy strategy is truly “all of the above.” It means we have a market shift that allows us to cost effectively address toxic air pollution and now carbon pollution in ways that align with market trends.
When industry uses best practices to prevent a problem, we are safer, our energy is cleaner, and our global economy is stronger. You don’t have to take my word for it: at EPA, we’re getting strong signals from top US oil and gas industry leaders who want to work with us, to take their own concrete, cooperative action to reduce emissions.
They are coming together, for example, to launch initiatives like One Future. And even before last month’s announcement of the administration’s methane blueprint, some companies were exploring with us cooperative strategies to replace high-emitting equipment.
Their reason is simple: it makes business sense to spend money building market certainty by building confidence with the public—rather than spending it to wage regulatory battles that undermine, rather than reinforce, confidence in safe and responsible development.
That interest rings true up and down the value chain—there’s demand for responsible production from distribution companies, too—so they’ve launched a downstream initiative to look at emissions reduction opportunities at different points in the value chain.
EPA has programs that facilitate that interest across a wide range of practices and actions, including our Natural Gas STAR program, a voluntary program which certifies improvements in operating efficiency and emissions reductions. Since 1993, the program has helped reduce over 1 trillion cubic feet of methane emissions; that’s equivalent to the space in 10 million hot air balloons. We plan to expand the program with Gas STAR Gold.
While we regulate to reduce pollution and protect public health and the environment, we have to recognize that public health needs double as energy needs, and regulations don’t just drive down pollution. They drive markets, and they shift investments.
When we do it well—when we work together—smart regulation levels the playing field, signals certainty, creates markets, and drives new technology, new tools, and new products and services. It sets the parameters for progress.
Simply put, in the US free market economy, our job is not to produce regulations; our job is to reduce pollution. Regulation is just one of many tools, not an end in itself. Smart regulation internalizes costs of pollution into the cost of doing business—with standards rooted in science and guided by the law.
Success is judged by how well we send clear market signals for you to clearly see and follow—that’s how we ignite progress. EPA’s long history of success in meeting our mission proves that a healthy economy and a healthy environment go hand in hand. We don’t act despite the economy; we act because of it.
Over 40-plus years, EPA has cut US air pollution by 70 percent, while our GDP has tripled in size. From acid rain to lead in our gasoline, EPA has been a standard bearer in the dance between reducing pollution, protecting public health, and growing industries and economies. We’re proud of our work.
Smart climate and environmental policy has to hit the sweet spot: aligning cooperative action with regulation. We set up the ground rules, and get out of the way and let the market do the rest. Success means building a resilient marketplace where businesses thrive and investments are responsive to the risks of environmental hazards and a changing climate.
Let’s not wait to act. We have the tools and the know-how today to seize a low-carbon energy future; a future that’s safer, more prosperous—and more profitable—for businesses and people all over the world.