Independently Certified Gas in Legislation
Demand for independent third-party certification of responsibly sourced hydrocarbons continues to grow due to several drivers: public and private investor pressure, the demand for a differentiated product by the users and consumers of gas and light oil, and the potential for producers to receive a premium to index for their product.
Given this backdrop, we are starting to see independently certified responsibly sourced gas make its way into proposed state legislation.
In Virginia, bi-partisan Senate Bill 565/House Bill 558 would permit natural gas utilities to include in their fuel portfolios, supplemental or substitute forms of gas sources that meet certain standards and that reduce emissions intensity. One of the gas sources would be “low-emission natural gas” which is defined as:
“…natural gas produced from a geologic source that has a methane intensity of 0.20 or less (i) as reported under a protocol approved by the federal Environmental Protection Agency’s Gas STAR Methane Challenge, (ii) as certified by the United Nations Environment Programme’s Oil and Gas Methane Partnership 2.0, or (iii) as validated under a Qualified Attribute Commodities Platform, which is defined as natural gas attributes that are nonfinancial intangible commodities that represents, packages, and certifies the qualifying attributes of an amount of low-emission natural gas. A “Qualified Attribute Commodities Platform” provides validation by an independent third-party, provides natural gas or natural gas attributes capable of bilateral or exchange contract trading pursuant to standardized contracts for physical delivery that reasonably eliminate validation risk, and provides transparency for audit and reporting purposes.”
In New Mexico, The Hydrogen Hub Development Act, HB4, would require that blue hydrogen be produced with “responsibly sourced gas” to be qualified for infrastructure funds, tax credits, and other incentives, defined as gas used or purchased to produce hydrogen that either:
“…meets the standard for methane gas allowed to be used in hydrogen hub projects as promulgated by the federal government pursuant to Title 8 of the federal Energy Policy Act of 2005; or (2) in the absence of a federal standard, is certified as a responsibly sourced gas by an independent organization with the nationally recognized expertise to provide such certification and such independent organization and certification are approved by the department of environment.”
Requiring independently certified gas in hydrogen projects ensures that the hydrogen supply chain is environmentally responsible and sourced from producers who are going above and beyond legal minimums in reducing their emissions.
Gas certified under the EO100™ Standard could meet the requirements of both bills as a standard that is independently assessed by a third-party auditor. The EO100™ Standard is fast becoming widely recognized and accepted in the marketplace as a leading mechanism to demonstrate a full spectrum of responsible ESG practices. Whether or not the legislation passes, independent, third-party certification is becoming an integral component in the energy transition pathway.
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