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Porter Ranch: SoCal Gas pushes back against state methane off-set plan

Following the massive, four-month natural gas leak near Porter Ranch, the CEO of Southern California Gas Company publicly vowed to offset the environmental damage from the estimated 100,000 metric tons of the potent greenhouse gas that escaped a ruptured well.

"We will develop and we will implement a plan to mitigate the leak's greenhouse gas emissions at our expense, not at the expense of our customers," Dennis Arriola told reporters on Feb. 18 during a press conference to announce the leak had been permanently capped.
But SoCal Gas now appears to be trying to lowball that pledge, fighting with state regulators over how to measure the environmental consequences of the leak — a move that could save the company tens of millions of dollars if successful.
Methane — the primary component of natural gas — absorbs exponentially more heat than carbon dioxide. Increased emissions of methane, both natural and industrial, are working in concert with other greenhouse gases to gradually increase average temperatures around the globe.
But methane lingers in the atmosphere over considerably less time than carbon dioxide — a difference of decades compared to a century or more.
In a draft of a greenhouse gas emissions reduction plan it wants the gas company to follow, the California Air Resources Board calls on the company to offset a volume of gas that approximates the heat-trapping potential of methane over 20 years. In a written response to that plan, SoCal Gas argues for a 100-year timeline — it essentially wants to be on the hook for capturing 30 percent of the amount ARB has proposed.
SoCal Gas spokesman Chris Gilbride responded to KPCC questions with a written statement that said the ARB plan has "many laudable goals" and that the company was committed to mitigating the effect of the methane that leaked. However, the company would not agree to an interview or discuss the expected cost of the mitigation program it preferred.
"We're not going to give a cost estimate since it is highly dependent on various assumptions," Gilbride wrote. "As for living up to our commitment, judge us on our actions, not on how we view a draft mitigation plan."
He declined further comment, referring to the company's response to the comments it has filed with ARB.
A final version of the ARB plan is expected to go to Gov. Jerry Brown's office on Friday for review, and could be made public later, said ARB spokesman Dave Clegern.
But regardless of the plan that emerges, SoCal Gas claims that it is not legally bound to follow it and that any compliance would be voluntary.
"Any proposed mitigation program from the ARB does not itself impose any legal obligations on SoCalGas," company vice president George Minter wrote to the air board. He said the draft plan "does however, provide ideas as to how the company might mitigate the actual greenhouse gas emissions that were released as a result of the leak."
ARB officials say they may seek to include provisions of the plan into a legally binding settlement of the agency's pending lawsuit against SoCal Gas over the gas leak.
"We were assigned by the governor to come up with a plan," Clegern said. "SoCal Gas has said that they will cover the cost of mitigation, and we are taking it at this point that they're going to do that, and not back out on any of that."
In its comments about the plan, the gas company rejects the ARB's proposal that the mitigation projects focus on California. SoCal Gas said greenhouse gases are a global problem, so it's irrelevant where the remedies are carried out. Los Angeles Mayor Eric Garcetti and other local politicians have asked that the mitigation plan — including any spending and jobs created — be focused on Porter Ranch, or at least the L.A. area.

The promise

One of the company's natural gas wells at the Aliso Canyon Natural Gas Storage Facility near Porter Ranch ruptured in late October and leaked nearly 100,000 metric tons of methane into the atmosphere before it was plugged in mid-February. Scientists have called it the nation's worst-ever methane leak. Some 6,000 families were relocated during the leak after many reported symptoms like headaches and nosebleeds.

Executives of SoCal Gas have promised to fund projects to offset the environmental damage from the natural gas.
In January, Gov. Brown issued an emergency proclamation about the gas leak that included an order for ARB to complete a plan by March 31 to "fully mitigate" the emissions with the costs borne by SoCal Gas.
"There's nothing that I can say that will change the past, but I do know that there are measures, that measurable actions actually speak louder than words," Arriola told reporters during his Feb. 18 news conference.

The Aliso Canyon natural gas leak near Porter Ranch accounted for a large portion of California's methane emissions over the four months the leak was active, adding about 20 percent to the state's total methane count.
California Air Resources Board
The Aliso Canyon natural gas leak near Porter Ranch accounted for a large portion of California's methane emissions over the four months the leak was active, adding about 20 percent to the state's total methane count.

The company can't capture the escaped gas, so mitigation would take the form of reducing future emissions of methane or an equal volume of what's known as "carbon dioxide equivalent." That's where SoCal Gas and the state Air Resources Board have conflicting views of what measurable actions would fully mitigate the environmental damage done by the leak.

The $64 million difference

SoCal Gas objects to ARB's estimate of just how much methane, or the carbon equivalent of methane, that company-funded projects should capture to offset the Porter Ranch leak. SoCal Gas' version of the mitigation plan would allow it to spend tens of mllions of dollars less and capture far less emissions.
People who deal with greenhouse gases describe their potency, or "global warming potential," by comparing their heat-trapping ability to that of carbon dioxide.  For carbon dioxide, the relationship is, of course one to one.
But a molecule of methane is far worse for the environment than one of carbon dioxide, about 84 times worse over 20 years, so it's said to have a global warming potential or "GWP-20" of 84.
SoGal Gas leaked nearly 100,000 metric tons of methane, which ARB — using the GWP-20 calculation — translates into 7.8 million metric tons of carbon dioxide equivalent. The ARB wants SoCal Gas to fund projects that would capture the carbon equivalent.
SoCal Gas wants to use a different, lower standard, one that looks at the damage methane does over 100 years.  Over a century, methane is only about 28 times worse than carbon dioxide because methane does its worst damage in the first dozen years. ARB says that translates into a much lower carbon dioxide equivalent, just 2.4 million metric tons.
Those 20-year and 100-year GWP values are at the heart of the argument over how much SoCal Gas is going to have to fund in a mitigation plan.  

Gary Gero is a senior advisor for the Climate Action Reserve, the largest certifier of carbon emission reduction projects in the United States.
He said if SoCal Gas is funding only programs that remove methane emissions, there is no functional difference between the 20-year and 100-year standards because the amount to be reduced is the same, ton for ton.
But, Gero said, "If one of the things the gas company ends up doing is wholesale conversion of diesel fleets to either electricity or even natural gas, that reduction will be measured in carbon dioxide and there the difference between a 20-year GWP and a 100 year GWP is tremendous."
SoCal Gas said the 100-year standard should be used because it's used most often by regulators to measure the impact of pollutants. Gero agreed with that.
"Nowhere else in ARB programs do we have a 20-year (GWP)," he said. "In fact I'm not aware of any regulatory program that relies on the 20-year global warming potential."
However, the fact that methane is a short-lived climate pollutant that does most of its damage in its first 20 years could be justification for the 20-year standard being used.
"If you're really thinking about what is the global warming impact of the leak at Aliso Canyon, looking at a 20-year global warming potential rather than 100 year may make more sense," Gero said.

File: Residents arrive at the SoCal Gas Community Resource Center in Porter Ranch on Jan. 8, 2016.
Frederic J. Brown/AFP/Getty Images
File: Residents arrive at the SoCal Gas Community Resource Center in Porter Ranch on Jan. 8, 2016.

To estimate how much less SoCal Gas could spend using the 20-year GWP standard, look to the ARB's auction of carbon equivalents known as the cap-and-trade market. Refineries and other polluters buy the right to emit pollutants in California in exchange for money that funds emission-reducing programs within the state and elsewhere. On that market, a ton of carbon equivalents is going for about $12 a ton.
At that price, SoCal Gas would pay nearly $29 million for the 2.4 million metric tons of carbon equivalents to offset damage as calculated over 100 years.  The Air Resources Board's competing plan for the 20-year GWP would cost SoCal Gas $93.6 million.
Thus, if it could mitigate the pollution by buying credits on the cap-and-trade market and use the 100-year GWP standard, SoCal Gas would save $64.6 million, and capture 5.4 million fewer metric tons of carbon equivalent.
Some question whether the ARB's more expensive proposal would be enough to zero out the damage the leak did.
"The leak was a tremendous disaster," said Anna Moritz, staff attorney with the Center for Biological Diversity, an environmental advocacy group.  "It was a methane bomb that released so much methane into the atmosphere that it will be incredibly difficult to mitigate those effects not only on local communities, and the ecology of the area, and the climate that it may be impossible, in fact, to get us back to prior to the leak."

Barred from the cap-and-trade market

SoCal Gas says it should be allowed to use the cap and trade market to offset  the greenhouse gas damage from the leak. In that market, the money to buy credits is spent funding emission-reduction programs elsewhere. The Air Resources Board opposes cap-and-trade credits as an option for SoCal Gas.
That's because of the cap. There is supposed to be a limit on the amount of pollution permitted from the refineries and other companies that buy the credits. The SoCal Gas leak was not permitted, and it occurred on top of all the other pollution in the L.A. Basin, so its mitigation must be in addition to all the mitigation plans that were already in process via the cap-and-trade market, ARB's Dave Clegern said.
ARB also argues that if SoCal Gas were allowed to buy up so many credits, other companies would have a hard time buying the credits they need to function in the L.A. Basin. The market could "tighten" causing the prices of those credits to rise and supply to fall. SoCal Gas says those fears are unfounded because their proposed buy of up to 2.4 million credits is a mere fraction of the credits available.
Gero said SoCal Gas could accomplish emission reductions more cheaply by directly funding projects (where they would get closer to a wholesale price) than buying pollution credits (akin to retail) on the open market.
SoCal Gas appears confident it will ultimately win its fight with ARB. The company recently told shareholders that the combined cost of its mitigation of the leak plus the value of all the natural gas that leaked would be just $33 million.

What projects can be funded?

The ARB plan says SoCal Gas should fund projects to reduce methane emissions or other greenhouse gases in California.
SoCal Gas responded by saying that global warming has global effects, so it's irrelevant where the projects are done. Parent company Sempra Energy is building new gas lines across Mexico, for example, so by that logic, SoCal Gas could mount a project to reduce gas emissions from pipelines there.
"From a scientific climate change perspective it doesn't," matter where the mitigation efforts are sited, Gero said. "The gas company is correct that global warming is a global problem and the emission of greenhouse gases anywhere on the planet are equally destructive."
However,  policy priorities could steer those projects to local areas, Gero said.
Per the governor's order, ARB envisions SoCal Gas spending its mitigation money in California. The ARB plan describes projects that reduce methane gas coming from livestock manure in the Central Valley. It might also create programs to capture methane from food and plant waste diverted from landfills. It could also capture methane from wastewater treatment plants. Or invest in reducing the emission of other greenhouse gases by making fleets of vehicles, buses, port trucks and appliances more energy efficient.

Dairy manure contributes about one-quarter of the methane emissions in California, non-dairy livestock another 10 percent.
California Air Resources Board
Dairy manure contributes about one-quarter of the methane emissions in California, non-dairy livestock another 10 percent.

Local offcials including Mayor Eric Garcetti and state Sen. Fran Pavley want the money spent closer to home. They envision SoCal Gas' mitigation spending could transform Porter Ranch into California's first "Net Zero Emissions Community."
That would mean spending millions of dollars to add household and community solar projects, subsidies for clean air vehicles, and more efficient appliances.
Councilman Mitchell Englander said spending the money to make Porter Ranch less dependent on fossil fuels would be an act of "social and restorative justice" to help the thousands of families who relocated to get away from the gas and its effects, many of whom reported being made ill by the smell and chemicals.
"I'd like to see the bulk of it, whether those are solar panels, solar water heaters, EV chargers, energy efficient and upgrade services, there is a lot that can be and should be done to the affected community," Englander said.
The fact that Porter Ranch and the other neighborhoods exposed to the gas are among  the wealthier sections of Los Angeles should not be a hindrance to spending on the community's energy independence, Englander said.
"At the end of the day it benefits all Angelenos and all of California, no matter where it's done," Englander said.

Other disagreements

The ARB plan envisions a five to 10-year timeline to accomplish the mitigation plans, that is, to capture all the methane or carbon equivalents to equal the nearly 100,000 metric tons of methane that leaked from the broken well.
SoCal Gas rejects that timeline in favor of an unspecified, but longer period.
"We were concerned about the lack of a strict timeline and also the lack of financial or other assurances that the mitigation would happen properly," said the Center for Biological Diversity's Mortiz. The Center has called on the mitigation programs to be accomplished in five years, and that ARB require SoCal Gas to put up much of the money up front or guarantee it with a bond.