DGCC Load Growth Market Workshop

Thank you and good afternoon.

I want to thank Tom Hassenboehler and CO2EFFICIENT for organizing the discussion and for inviting me to participate.

It is good to join you again. During our first meeting two years ago, we were just beginning to explore what a market for natural gas that is differentiated on the basis of greenhouse gas intensity might look like and the steps needed to get there – from the need to reduce emissions across the natural gas value chain to the types of consistent and credible measurement and validation processes required for natural gas certification.  

Today, thanks to the efforts of the Differentiated Gas Coordinating Council and other stakeholders, we have made important strides toward these goals.  

And I want to thank you all for your commitment and efforts.

We at the Department of Energy have also devoted significant resources to these goals, and I appreciate the opportunity to highlight what we have been doing and where we are today.

I would like to kick things off by noting three things that we believe are central to the path forward toward sustainable natural gas: 
•    One, reducing methane emissions to near zero across the global oil and gas supply chain by 2030;
•    Two, rapidly deploying decarbonization technologies and infrastructure, especially carbon capture and storage; and
•    Three, laying the foundation for low-carbon ammonia and hydrogen produced from natural gas with carbon capture and other low- and zero-carbon resources.

First, as we look ahead, we see significantly rising demand for electricity. The AI-driven proliferation of data centers could consume up to 9% of U.S. electricity generation annually in the next five years, more than double the consumption from just last year. And expected increased electricity demand means we will need expanded natural gas power generation with carbon capture and storage.

The emergence of AI and growth in data centers and the resulting demand for electricity are growing so fast that the perceptions and posture of industry, policymakers and key stakeholders have shifted in a matter of months, even weeks. Exxon’s recent announcement of a major behind-the-meter natural gas power project with carbon capture to serve rapidly rising data center load is just one prominent example.

Still, we are years behind where we ought to be in the wider commercialization of post-combustion capture in power generation, as well as on combustion streams at liquefaction terminals, petroleum refineries, and other industrial facilities. And the natural gas industry risks missing a potentially once-in-a-generation opportunity to bring essential decarbonization solutions to market.

However, the role of hyper-scalers and tech companies willing to commit to off-take, and even directly invest in 24-7 dispatchable decarbonized power—coupled with the enhanced 45Q tax credit in the Inflation Reduction Act and CO2 transport and storage provisions in the Bipartisan Infrastructure Law—creates an unprecedented moment to drive deployment of carbon capture in natural gas power generation.

Toward that end, the Department of Energy is doing its part. DOE is supporting two commercial scale carbon capture demonstrations—potentially serial numbers one and two in the world—one at a combined-cycle natural gas power plant in California and the other at a cogeneration facility near Houston, as well as a number of industrial and power sector front-end engineering and design studies, or FEED studies, that developers must undertake to secure project financing.

And there will be a continued need for the federal government to provide funding for demonstrations projects beyond current infrastructure bill investments, to accelerate review and approval of EPA Class VI geologic storage permits and, ideally, to further enhance the 45Q tax credit.

However, we also candidly need more companies to make concrete commitments to deploy carbon capture and storage – in gas processing, liquefaction for export, power generation and the many other end uses of natural gas, as well as in the broader transition to clean hydrogen and ammonia.

Now, I will turn to the reduction of methane emissions, which is our most urgent and most solvable climate challenge confronting the industry.

At DOE, we have worked hard on research and development for new technologies to reduce methane emissions along the entire oil and gas value chain. We have been leveraging the Inflation Reduction Act and Bipartisan Infrastructure Law—all with the aim of helping to achieve the goal of near-zero methane emissions in the oil and gas sector by 2030, which much of the global industry committed to last year at COP 28 in Dubai. 

Using IRA funds, DOE and the Environmental Protection Agency have awarded up to $350 million to 14 states to help identify and mitigate emissions from marginally-producing, high methane-emitting wells. We have also announced another $850 million for projects that will help monitor, measure, quantify, and reduce methane emissions from the oil and gas sector. 

In addition, our Office of Fossil Energy and Carbon Management at DOE provides tens of millions of dollars annually for methane monitoring and mitigation technologies. This includes development of integrated networks of surface-based, aerial and satellite technologies for accurate and timely detection and monitoring of methane emissions and advanced technologies for reducing and, ultimately, eliminating routine natural gas flaring.

We have also looked at opportunities to reduce methane, as well as CO2 and other pollutants related to LNG exports. In fact, a top priority for us at the Department of Energy has been to bring transparency and best production practices to the U.S. and global natural gas supply chain – from upstream production and processing, through liquefaction and transport, to end uses, both domestically and internationally.

Apart from the environmental benefits, those best practices and transparency will become ever more important commercially as natural gas buyers in the global market express clear preferences for natural gas with lower methane emissions and for broader decarbonization of the natural gas supply chain.

For example, in August the European Union put in place its first-ever methane regulations for the energy industry, setting ambitious monitoring and abatement criteria for domestically produced and imported natural gas, as well as oil and coal.

We subsequently secured Administration support for a request to the EU— made recently in a letter from EPA Assistant Administrator Joe Goffman and myself—that European Commission staff initiate a process for determining regulatory equivalence for U.S. natural gas exports to the EU market. Maintaining our now robust U.S. policy and regulatory framework for methane mitigation will be crucial to success in those future negotiations.

I would also note that in East Asia, LNG buyers in Japan and Korea created the Coalition for LNG Emission Abatement toward Net-zero – or CLEAN – initiative to better understand the emissions associated with their LNG imports, with the goal of driving emissions abatement.

And we are seeing important movement in other countries and regions, in Southeast Asia for instance. There, we recently saw the launch of the ASEAN Energy Sector Methane Leadership Program, and countries like Malaysia are leading efforts to advance methane management and mitigation in the region.

So, in addition to what we have been doing here in the United States, there has also been considerable activity underway among our global partners to address methane emissions and advance approaches to the measurement, reporting, and verification of emissions associated with natural gas.

Despite these various efforts and activities, there are still gaps and inconsistencies across platforms that hinder the ability to provide market participants with comparable and reliable information about greenhouse gas emissions and intensity.

The reality is that we lack broader agreement regarding what the expectations of purchasers, regulators, and other stakeholders should be for a company making a claim in the marketplace about the greenhouse gas intensity of its delivered or contracted gas. The absence of a global consensus framework for MMRV limits the ability of buyers to demand and suppliers to provide natural gas with an ever-lower greenhouse gas profile.

At the end of the day, we simply cannot solve a problem if we cannot agree on how to measure it.

So, since last year we have been supporting a Working Group of 19 natural gas importing and exporting countries, plus the European Commission and the East Mediterranean Gas Forum, to develop a shared approach to providing comparable and reliable information regarding supply chain greenhouse gas emissions from different suppliers across the global market – in short an agreed global framework for measurement, monitoring, reporting and verification, or MMRV.

This framework will have several key attributes: 
•    There will be flexibility in the choice of quantification approach.
•    Suppliers will be recognized for investments in enhanced data quality and reduced GHG emissions.
•    Buyers will know that emissions data is verified for trust and confidence.
•    The framework will have global application and acceptance.
•    The framework will have a long-term governance structure to ensure relevance, reliability and independence.
•    And finally, this framework will be voluntary, with no regulatory or policy commitments required to participate.

This last item is very important to understand. The MMRV Framework is not a regulatory process or a regulatory standard for natural gas, nor will the Department of Energy be certifying natural gas. And countries and regions participating in the development of the Framework are not committing to use it in a regulatory process.

To date, the Working Group has successfully developed a consensus design architecture to guide the current technical development of the various elements of a future MMRV system. It has also established multiple technical sub-groups of roughly 80 government officials and technical experts and a global stakeholder advisory group of private sector, scientific and technical, and environmental organizations to guide the development process.

The Working Group’s technical subgroups are on track to have important elements of this framework ready for implementation by the middle of next year for what we hope will become a voluntary global framework for MMRV in the 2025-2026 timeframe.

And I just want to note that Ryan Peay—our Deputy Assistant Secretary for Resource Sustainability—is with me here today. Ryan will be the DOE lead for the MMRV Framework during the transition process with the next administration.

So, to date, the Working Group has focused on:  
•    Leveraging internationally recognized principles and approaches for assessing the quality of data used to quantify the greenhouse gas intensity of delivered natural gas;
•    Building on existing technical protocols to establish a performance-based data quality approach to ensure consistent verification requirements;
•    Using accredited independent third-party verification bodies to provide reliability and confidence in measurements of supply chain greenhouse gas intensity; and
•    Defining requirements and expectations for long-term management of the MMRV Framework to enable trust and confidence in the marketplace.

In closing, I appreciate the Differentiated Gas Coordinating Council’s commitment and support for this effort. I also hope that you and other stakeholders will continue to actively engage and support this work as our FECM natural gas team transitions to a new administration.

Continuation of this critical work will allow the natural gas industry to monetize its investments in emissions reductions in the marketplace by demonstrating improved greenhouse gas performance accurately, consistently and credibly, and to do so on a level playing field with other suppliers. And it will help both domestic and international purchasers and users of gas to meet their emissions reduction goals by enabling them to act on their market preferences for lower greenhouse gas intensity gas.

So, thank you again for having me today, and I look forward to our discussion.