March 28, 2021: Petroleum Industry Wakes Up

We had an expression in the NE, “Wake up and smell New Jersey.” It meant, simply, recognize the obvious and that’s just what the lobbying group, the American Petroleum Industry, did on Wednesday. While announcing their Climate Action Framework, API President Mike Sommers said that climate change was real. To be fair some industry companies ceased being deniers long ago. Still, I can only muster one hand to clap over API’s extremely late admission of truth.

Frameworks can lay out which side of an ongoing argument they intend to follow. Market-based solutions versus regulation, for instance, is favored by API. Of their five focus areas—technology and innovation, operational emissions mitigation, carbon pricing, cleaner fuels, and better climate reporting—carbon pricing seems to have captured the media’s eye.

So begins the tussle over the best way to get this done. I don’t know, but I do think carbon pricing that discourages consumption is the way to go. API quite rightly notes that a patchwork of state solutions won’t work and so advocates for a national policy. Natural gas is trumpeted and, well, ok, guess that is not surprising.

Innovation section includes the usual suspects: carbon capture, utilization and storage as well as hydrogen technology. Let’s hope there are not a bunch of crash and burn companies but rather there is a sharing and building together. (Dare I say that is the way to build back better.)

Pleased to see a section that addresses site emissions. As President Biden observed in his press conference this week, let’s put people to work capping wells. In API’s framework they address the practice of gas flaring. Good!

Cleaner fuels could turn out to less than bold, but let’s see.

Transparent industry reporting seems a big of a pipe dream but calling for transparency and consistency is good.

All in all, API’s market-driven approach will move the needle but, in this writer’s opinion, not without the overseer role of regulation.

The next few weeks should be interesting to see the cap and trade between competing visions.