 Okay, we're back. We're live here on a given Wednesday with Energy in America and Lou Pulirisi who is now back from his travels, you know, in Dubai. He's back in Washington and he can speak to us now from the comfort of Washington, DC. Hi Lou, how are you? I'm good. I'm good. Thank you Jay. Good to be home. So we're going to talk today about methane. Methane in America. Methane in the energy mix, if you will, in America, how we got it and what we do with it and how it affects climate change. All those things right here on ThinkTech. Okay Lou, what is methane and how does it fit? So methane is actually another term for the chemical makeup of natural gas, right? So methane exists in the natural form. We'll see some tables on that in the United States. It is a very powerful greenhouse gas according to the folks that work on climate issues. So it has some leverage over CO2. On the other hand, it's much more short-lived than CO2. It doesn't remain in the atmosphere as long. What happens to it? It kind of breaks down into some form of CO2 and other components. So which one is a greater threat to climate change? I mean, people say that as bad as CO2 is, methane is worse. Is that true? Well, what do you think the total percentage of carbon dioxide is in the atmosphere? Do you have any idea? No, I don't, but I feel I'm going to know very soon. Within this half hour, I'm going to know. 0.04%. So the atmosphere only has 0.04% of carbon dioxide and has a much, much less percentage of methane. So I'm not saying that that is not enough to have an effect on the climate, but I'm just saying you need to put it kind of in perspective. And I don't think we want to talk about climate models today on this particular program. The basic assumption is we'll operate that man has contributed to change in the climate, that CO2 and methane are part of the phenomena of man's involvement, anthropogenic, or man-made emissions are contributing to the changing climate. And we'll should just leave it at that for now. We could have a longer discussion than it's at some point on what the debate is, but I usually find that's a kind of difficult discussion to have with people. People have sort of made up their minds. But I do think there is a very big issue on, okay, lots of people agree that man is affecting the climate, but there's widespread disagreement, even among scientists, on what is the magnitude of that damage function, if you like. Well, we look at Florida and tell you in a couple of days. So I just got a book from Mr. Professor Pelkey, which examines the history of weather and hurricanes over the last hundred years. And the Pelkey research, who is a member of the IPCC, a very prominent climatologist who says the data does not support that storms are more frequent or intense from climate change. Climate change can do lots of bad things, but it's not showing up in the dating intensity of storms or the frequency. Part of the problem with storms is that, and I used to fly with the hurricane hunters, I know a little bit about this. This was a long time ago, is that you need to adjust the damage calculations for the fact that many years ago, storms used to land in the U.S. and islands, but nobody was living there. Now, people are living in many of the places that are subject to storm damage, including more people on the coast. So it's not just a kind of anecdotal, oh, I saw this storm and it did a lot of damage. There must be a terrible climate catastrophe in the works. It just doesn't work that way. But because climate discussions are more emotional than fact-based or more emotional than kind of thought-based, I think there's not a lot you can do about how the public or some people in the public feel about this. A lot of people looking at these storms, and there's a lot of them lately, and they're really killer storms. You can say that. You can say all of that. We had the whole city of Galveston went underwater over 120 years ago. Yeah, we have a lot of storms. We always have a lot of storms. At some point, you have to look at the data. I'm most happy to do a whole program on this, if you would like, but the data does not report that the frequency or density of storms are more common now than they were over the last 200 years. It's not supported by the data. It's just like fires in California. It's the same thing. Well, let's talk about methane then. So I think the reason we're talking about this is there's been a lot of reports in the press that the Trump administration has now permitted large amounts of methane to go in the atmosphere because they won't regulate it. I think that's the kind of tagline from the press. I think it's more important to dig behind it and see what the real debate is. Part of the debate is the way we regulate pollutants in the United States or criteria pollutants of what methane is not one. In fact, the EPA under the Clean Air Act has a requirement to regulate volatile organic compounds, but not methane. Methane is not a criteria pollutant. However, under the endangerment finding of the Supreme Court, they're able to do that for new sources and some existing sources. Maybe we should just look and see how methane fits into our whole environmental loadings of climate gases and then talk a little bit about what we ought to do about it and what makes sense. I think that's the best way to get started. Okay, great. Yeah, very interested in that. Let's get a little fix on our first picture here on what's happening to power generation by fuel type. I think one of the issues, if we look at this particular chart, it shows you the makeup of the U.S. power sector in terms of the fuels. This is the power we get our electricity from. You can see in the blue line that coal is declining as a percentage of our power generation. The green line, so-called non-carbon generation, which includes nuclear, hydro, wind and solar, is growing. The other issue is the rapid growth in natural gas. Any discussion about methane has to also understand that methane leaks or methane. The general concern when you talk about methane is that when you produce and ship natural gas, some of it leaks into the atmosphere. Some of it leaks if you have bad, although there's a lot of incentives to not leak because it's worth money, some of it can leak into the atmosphere. That's a natural consequence of a rapid expansion of natural gas production. But a rapid expansion of natural gas production means we are using much less coal. Let me ask a footnote point. What is methane used for in industry, in energy? Methane is don't confuse it with methanol. Methane is another name for natural gas, uncombusted natural gas. It is the chemical makeup of natural gas. When someone says methane, they're just talking about uncombusted natural gas. It would appear in the same place on the periodic table of elements and all that. Absolutely. It's made up of elements of the periodic table. So the question is, how has the industry done generally in containing these leaks of uncombusted methane or natural gas? And keep in mind, when you see these big operations, which they are flaring natural gas, that's not methane. That's CO2. If you ignite the methane or the natural gas, it turns into CO2 and lots of other things. That's the important thing. So if we go to the next table here, the next figure, I think it's important to take a look here. What's been happening to changes in U.S. energy related carbon dioxide over the last 10 years, you see. And you can see here by this chart, if you look at it, you can see the pink is cold, the somewhat darker, the red, sort of like the reddish pink is natural gas. And petroleum or crude oil, I would like would be the dark figure. And I think what this shows is that U.S. energy related carbon dioxide emissions have been going up and down, but largely they have been going down. So they have been declining. Looks get a little better. They do vary from year to year. But as more natural gas enters the energy stream or the energy complex at less coal, the U.S., on net, is reducing its CO2 emissions. And let's go to the next chart. You mean emissions from vehicles, emissions from power plants? Oh, no, no. There's very little, in this case here, yes. So this, of course, the petroleum would be the emissions from vehicles. So this particular chart was a whole economy-wide estimate. But emissions of carbon dioxide from the U.S. economy, from the energy portion of the U.S. economy, I'm not talking about the cows and the people eating hamburgers and all this other stuff or the people breathing, is that is shown a reduction largely in the U.S. because natural gas is replacing coal. That's the kind of net number that a lot of people don't appreciate. That is why the U.S. is one of the, even though our per capita emissions are high, we're a wealthy country. We use a lot of energy. Our reductions over the last 10 years are better than any other industrial country and better than any other country. U.S. is the leader in reducing its emissions over the last 10 to 12 years. And let's go to the next chart. And you can see that in a little more, in a more clearer sort of view. So this shows you U.S. energy-related carbon dioxide emissions in the U.S. from 1998 to 2018. And I would presume most people in the U.S., probably most people in the Hawaiian islands, would find this chart kind of surprising. I mean, if you look at this chart, going back to 1998, the U.S. has actually been reducing its carbon dioxide emissions. We have a little bump in 2018, but I believe the early data from 2019 show a decline. So I think that that is a kind of remarkable achievement in many ways. And that achievement is much more related to the fracking revolution than any policies good for the climate or bad for the climate implemented by either President Obama or President Trump. This is just a matter of better technology and fracking. Yeah, just a matter of gas backing out coal. That's what it's all about. It's not dominated by wind and solar. We're not producing enough wind and solar to really move the meter substantially on emissions. It's really, when you back out coal, you back out a lot of carbon dioxide, even though you're replacing it with another fossil fuel. So within that part of this, can we go back to that chart for a minute? Within the blue part, or make that the green part, the natural gas part, do we know how much of that natural gas is methane or should be considered methane? All of that natural gas is methane. Do we know how much of that natural gas is leaking into the environment? And we do have a series of studies. Yes, so we do have a series of studies by EPA. There's some debate over how accurate those studies are, but we're talking anywhere from one to one and a half percent of the total production of natural gas leaking into the environment. Although the remarkable thing is even though natural gas production has expanded by an enormous amount, I think the methane emission levels from say, from gas venting and flaring have declined about 17 percent from 2013 to 2016, even as domestic productions increased by over 20 percent. So they're getting better at it. And I think if you look at methane emissions from hydraulic fractured well completions, they declined 82 percent between 2013 and 2016. With all of that, why did the president, why is he trying to loosen the rules? So the question is there are two kinds of regulation effects, something called new sources and existing sources. And there's several reasons for this. One is the states do their own programs for controlling like Texas, Pennsylvania, Ohio, California. They have programs for controlling methane. And under EPA's rules or the federal guidelines or rules, we have two sets of standards. We have a set of standards for new sources, right? New source performance standards. And then we had a set of standards for existing sources. And here I think the thinking there's a lot of different views on this, but thinking is that the new regs are not affecting new source performance standards. The president did not roll back those standards at all. This is all about existing sources. And within, and there are two reasons for this. One is in most cases, the states are already controlling their own set of rules for existing sources. And second, under the way regulation for pollutants that you like or criteria pollutants are used in the United States, there is concern that if you were to use, go after existing sources for which we don't have a very traditional way of controlling methane when we usually go after something called volatile organic compounds. And what happens is that it can be a stalking horse to shut down fossil fuels if a next administration comes along because they can say, look, you don't really have to use the traditional criteria. We can go after existing sources and say, well, if you violate this rule under existing sources, even though it's kind of problematic whether we have the authority, you're going to have to shut down because a large volume of US production, maybe, there are over a million wells in the US, but there's a lots and lots of wells run by small MAMPA operations that just produce a few barrels a day or a little bit of gas. And putting a very strict set of regulations on those would shut down that production. But I think there is a kind of fear here that those in the new green deal and want to shut down fossil production that this particular regulation could be used to shut down fossil fuel production in the US. Probably that's a bit overdone, but it is a genuine concern that a lot of people have. And the other part of it is you will see a lot of big companies are not against these new rules. But I think here the concern is, well, it's kind of a competitive issue, right? One way to kind of give the bigger companies a competitive advantage, because they have very large operations that can amortize over a big set of production centers, that if you put those same rules on very small operators, they would put them out of business. So are the operators big or small behind these rule changes? And have they come to the administration asking for these rule changes? I would say that the small operators were very much against, these are regs that were proposed during the Obama administration. They saw it as a sort of a duplicative of what their regulations were at the state level. And a set of regs put them at a high disadvantage because they could not, they didn't have the big kind of operations and economies of scale of the very large companies. And over time, these small guys are getting bought out and incorporated into the bigger companies. Is it that the bigger companies have the technology to? Absolutely, they have the technology, they have the resources, and they have consolidated operations. And there were also a lot of other concerns which have, for example, a lot of the operators want to use drones and satellite imagery to detect leaks. And the EPA and the regulations did not permit that, they only required, they required that leaks be detected through handheld devices, visits by inspectors or visits by, this is a very costly way to do it. So part of it is how you determine where the leaks are. And I think in many of the states, the operators are much more comfortable in working out with the state regulators who are much closer to the operations and they feel do a better job. In debate about this, is this really a federal, a federal responsibility or not? No, it's climate, it's a global issue. Okay, so let's go to the next chart and see what's going on with the performance here. So I think this is an interesting chart and you can see it's a gross domestic product and CO2 emissions for a seven-year period between 2009 and 2016. And you can see here that even though the economy and natural gas grew from, actually quite remarkably, like 20, 24 TCF a year to 28 TCF, big massive increase in GDP, a massive increase in natural gas, CO2 emissions declined. And this is really based on the technology, getting better controlling leaks, and that's adjusted for the impact of methane. And then finally, let's go to the next picture. I think this shows, most people might think that methane comes from only natural gas or only from petroleum. And this chart here is very interesting. It divides the sources of methane from those produced by man and from natural sources, right? And look here, fossil fuels is about 20% quarter of that coal. So if you look at all the sources of methane in the US, only about 15% comes from fossil fuels. 30% come from wetlands, 24% from agriculture, right? This is getting people to eat less hamburgers, things like that, biofuel. So it's quite, you sort of wonder, well, why is everybody focused on just this 15%? Why are not these other areas just as important? But I think the politics of those other areas are much more difficult. Well, you mentioned before that the methane dissolves more quickly. It doesn't stay here as long, right? But why would it stay in the atmosphere? Does it have a more profound effect than CO2? Yeah, it has a greater effect on kind of as a green, it's a more potent greenhouse gas. You know, I don't know if you saw this Lou, but it was about, I'd say, three weeks ago. And I think it was on 60 minutes. It was a story of a Russian scientist who had been spending a good part of his life. It's very interesting. With his son, it was also a scientist in above the Arctic Circle and in the permafrost area there, which has a history that can be identified by drilling into the permafrost. Anyway, he has found that the permafrost is melting. And as it melts, it releases the gases that have been trapped in it for many, many millennia. And those gases include primarily methane. So what's happening is, according to this scientist, is that as the permafrost melts, there's large areas of permafrost. I mean, this is a lot of territory. Gradually, right now, happening, the methane's coming up and joining the atmosphere, a big concern. And then I heard not too long after that, that the same process actually exists in other natural formations around the world, where we have methane being released, released above the Arctic and also below the Arctic, from natural processes. And it kind of spins up. It's a cyclical spinning. The release of methane causes more release of methane and so forth. And given that methane is, you know, as bad or worse than CO2, at least in the short term, this actually accelerates climate change. Have you seen or heard any of this? No, no, that's a very common story. I mean, as I said, the climate, I guess I'm a luke warmer. If you're asking me, I'm not a climate denier. I'm a luke warmer. I think you're luke warmer. Yeah, luke warmer. I think we can, I don't think it's the most serious problem facing mankind. I worry that a billion people don't have any electricity at all. I worry about nuclear war. I worry about poverty and declining conditions in the inner city. But in the political debate that I live in, this seems to be the only problem people are worried about. And I guess I have a lot more confidence that through technology, through the resourcefulness of mankind, we'll be able to deal with this and that we have a lot of time to deal with it. I don't believe we're all going to die in a few years. Actually, we may not have a lot of time to deal with it on this show. So why don't we go to your remaining slides? Okay, let's go to, yeah, so let's just go to the last couple of slides here. So first, yes, methane's a problem, but there are lots of other. It's US oil and gas. If you could do all the sources of methane in the world, we're only 1.4%. Yeah, we should do our part. We can do more. And I think making a big deal out of the Trump rule, which is really a technical issue more than a political one. And then if you go to the next picture, let's kind of whip through these quickly, you can see here all the sources of methane in the US, landfills, natural gas, which we're talking about. Enteric fermentation, that's another name for agriculture. And then finally go to the very last slide here. We can see, yes, US greenhouse gas emissions. Methane's an issue. It's a problem. We need to get better at it, but it's not the only problem. And it's not the biggest issue. And so I guess from a public policy point of view, what I would say is you want to have a responsible way to control methane, but you want to produce as much natural gas as possible, because natural gas is relatively clean and it substitutes for coal. And allow this also to produce LNG, which can be shipped around the world, which also substitutes for coal and heavy fuel. So I'll leave it at that. We talked about the periodic table of elements and the combination of elements in methane and natural gas. And it's the same, you said. It's exactly. Methane is natural gas without lighting a match to it. Okay. But I'm just remembering, and there's one thing I just wanted to clarify. I'm going to send you some data on what, how to think about it in terms of its potency versus CO2. You know, we've had two dairy controversies here in Hawaii, right? Really? I'm on Kauai, yeah, where Pierre and Meteor try to establish a dairy. And we've lost most of our dairies from, you know, earlier days. And we have a dairy controversy on the Big Island as well. And one of the issues, I mean, there are many issues of people, you know, who oppose dairies. It's interesting that we live in a time where people, activist people, actually oppose dairies. But there you have it. One of the issues about the dairies is that cows, the cows generate methane. Their droppings generate methane and methane smells. So you have hotels nearby, for example, that they don't like to smell because it, you know, it affects the experience of their, their gas. I would imagine it would. You know, one of the big producers of methane are termites. Termite. Termites are huge. Maybe 10% of world methane emissions are termites. Well, we should, we should outlaw termites then, eh? Well, I just don't understand. I mean, I understand the smell for the, but are people against dairies because of the methane? And what do they want the children to drink? Soy milk? I'm not sure. You know, I don't know what to do about that. Yeah. I'm not sure there's an easy answer on that. And unfortunately, Pierre Omidyar closed his operation recently. So the dairy that was contemplated in Kauai is no more. Not too bad. Anyway, okay. Well, this is interesting. So what, what is your, your advice then on the subject? If we like LNG, then we shouldn't worry too much about methane. Is that what it is? Well, we have a responsible program to control natural gas leaks. They, we should always be thinking about costs and benefits. We should not panic about it. It's not the end of the world. We can. I think part of the problem is within the political world in the United States, there are lots of people who like natural gas when it was expensive and in very short supply. Now it's very inexpensive and in massive supply. And so certain elements of the environmental community don't like it anymore. And that reflects in what's happening here in the political debate. But it is, as I've said before, many times, and I think the data supports that, it is unrealistic to think that a complex of Canada, the US and Mexico, which is worth a trillion dollars, which provides enormous benefits and opportunities and comfort to the North American economies is going to go away in 10 years. It's not going to happen. So everyone needs to get very realistic and think about how do we move along the gradient in a responsible manner? Yeah. Well, yeah, yeah. And what I learned from you today is that methane is a very small percentage of the CO2 and it's against CO2 and a small percentage of LNG. And also that it's not only from the US and it's not only from as byproduct of the process, the gas process, it comes from other sources, including natural ones. I think it's important to keep those points in mind. We're never, we're not going to be big enough to affect global, have a remarkable or important effect on the global climate. We're just not big enough. Okay. And we need China and India, all the Asian countries, everybody else has to get on board. Maybe we are one of the best performers in reducing emissions in the world. Yeah, we are best performed. Yeah. Even with President Trump. We'll leave it there. Thank you so much. Appreciate it, as always. And I will remember that at some point along the way, we'll talk about climate in general. Yeah, yeah, I'll be happy to bring all these points together. I might have to bring an expert in with me to do that one. I'll bring somebody. Lou Poliarisi, E-Princk in Washington joining us. Thank you so much. We'll see you in two weeks, Lou. Bye-bye, Jim. Okay, bye.