CHICAGO, Feb. 28 (Xinhua) -- Natural gas distribution firms lack incentives to reduce methane leaks, which contribute to climate change, a new study by the University of Michigan (UM) showed Thursday.
The study used data from several government agencies that track natural gas-utility operations, covering a panel of about 1,500 utilities from 1995 to 2013. The bulk of the data came from SNL, a company providing proprietary energy data.
Methane accumulates in the atmosphere and represents 16 to 20 percent of total greenhouse gas emissions. Although methane's effects on the climate are not nearly as long lasting as carbon dioxide, it traps more than 80 times as much heat in the atmosphere as CO2 over a 20-year time frame.
Researchers said by plugging methane leaks, a company can save 5 U.S. dollars per 1,000 cubic feet (mcf). But the cost to society is much greater. By stopping methane leaks, societal benefits are more than 30 dollars mcf, they said.
The researchers found that most utilities are able to include the cost of the leaked gas directly in their retail rates and have little financial incentive to reduce leaks.
The utilities repair some leaks for safety reasons, but leaks that go unrepaired provide an opportunity for cost-effective climate policy. More rapid and comprehensive fixes of those leaks would mean reducing future climate damages, such as hurricanes and wildfire risk, according to the study.
The study has been published in the Journal of the Association of Environmental and Resource Economists.
