Colorado is first in the U.S. to make rules tying pollution reduction to oil and gas production

The “emissions intensity” rule requires companies to closely monitor methane releases and limits allowed pollution based on how much oil and gas they produce

Mark Jaffe Jul 21, 2023 coloradosun.com

Colorado is set to try curbing oil and gas pollution with a first-in-the-nation program that aims to tie air emission reductions to the amount of oil and gas produced.

The framework for the rule was passed in late 2021 by the Air Quality Control Commission, but a core element — figuring out how to measure and monitor emissions — took another 18 months of negotiations to hammer out.

The AQCC approved the guidelines for the measurement and verification of emission levels Thursday. The rule was endorsed by both industry and environmental groups.

Initially, industry supported the so-called intensity rule’s aims to reduce the level of methane emitted for each unit of oil and gas produced. Environmental and community groups were wary or in opposition.

Commissioner Curtis Rueter said the rule was “delicately balanced, everyone has given a little bit.”

“Each preposition was heavily negotiated,” Commissioner Elise Jones said. “I don’t even want to mess with that.”  

The intensity program, which aims to curb releases of methane, will give oil and gas companies a free hand in how they reduce emissions, and will set the targeted cuts based on the amount of oil and gas produced.

Rule has ambitious goals

There is no comparable federal rule or program in any other state. The rule is part of an effort to meet statutory requirements for Colorado to cut its greenhouse gas emissions from 2005 levels by 26% by 2025; 50% by 2030; and 90% by 2050.

The oil and gas industry is the third-largest source of greenhouse gas emissions in Colorado after transportation and electricity generation. Emissions from industry have to be cut 20% over 2015 levels by 2030.

“The agreement reached today is rooted in technical expertise across academia, technology providers, and industry, and will provide Colorado with a sound regulatory framework to verify greenhouse gas emissions,” the state’s two major industry trade groups — the Colorado Oil and Gas Association and the American Petroleum Institute — said in a joint statement.

To reduce oil and gas emissions, the AQCC has passed a series of rules aimed at specific field equipment, such as tanks, engines and valves, as well as requiring enhanced inspections.

These “command-and-control” rules are of increasingly limited value, Rueter said. “We’ve picked all the low hanging fruit. We’ve taken care of all those easy ones.”

Supporters hope the carbon-intensive program will generate innovative ways to capture methane, the main greenhouse gas from oil and gas operations. Methane is 30 times more potent than carbon dioxide, the main greenhouse gas, but shorter-lived in the atmosphere. 

To meet the 2030 goal, the state Air Pollution Control Division calculates the industry must reduce methane emissions by 140,000 metric tons a year — the intensity program is supposed to come up with 39% of the cuts.

Oil and gas operators will be required to submit more detailed inventories of their emissions, calculate the greenhouse gas intensity for each 1,000 barrels of oil equivalent, or BOE (a measure of oil and gas), and a plan to meet carbon intensity goals.

In 2025, the first year the rule will be in effect, oil companies producing more than 10 million BOE a year can emit no more than the equivalent of 11 tons of carbon dioxide for each 1,000 BOE. 

Operators below that level could emit the equivalent of 34 tons of carbon dioxide per 1,000 BOE. The levels are lowered in 2027 and 2030. All new oil and gas operations will have even tighter emission limits.

The key to the rule is verified measurements of emissions to see if the reduction plans are really working. “The goal is to reduce real emissions, not just reported emissions,” David McCabe, a senior scientist with Clean Air Task Force, told the commission Thursday.  

Operator measurements will be verified

To do that, operators will be required to have some form of ground monitors or measurements, whose records will be verified by an independent author. At the same time state air regulators will do surface, fixed-wing air and satellite measurements.

What kinds of monitoring technologies will be allowed and what best management practices are identified as ways of cutting emissions still have to be negotiated among the parties for a protocol.

Putting these key elements in a protocol rather than directly into the rule can work, Nini Gu, regulatory and legislative manager at the Environmental Defense Fund, said in an interview.

“A rule that really makes sense has really strong guardrails but allows for flexibility and enables the next tranche of technologies,” Gu said.

Stephanie Rucker, manager of the APCD’s Office of Innovations in Planning and Air Quality and the principal architect of the intensity rule, told the commission that the goal is to have the first version of the protocol by the end of the year.

“While we are pleased with today’s result, the real test will be in how the rules are implemented,” Rumela Roy, senior associate attorney with environmental law group Earthjustice, said in a statement. 

“It’s imperative for the state to move as quickly as possible to set clear, detailed guidance on implementation; protect impact communities from oil and gas pollution; and hold our worst polluters accountable,” Roy said.