Carbon Offsets Provide Unique Pairing of Environmental Gain and Investments in Innovation

21 Jul 2021, Posted in All Posts, Blog Posts

As individuals and organizations focus on ways to improve their environmental, social, and governance impacts, discussions often center around climate. Seemingly the most common approach is to simply avoid fossil fuels altogether, but in the energy industry, that is not always possible or desirable. Where developing fossil fuels is the industry objective, good stewardship and governance must focus on limiting emissions, improving transportation efficacy, and promoting efficiency.

While pipelines already move oil and natural gas at an incredible 99.999+ percent effectiveness, improvements are constantly being made. In the past 5 years, despite volumes transported increasing by 10 percent, liquid pipeline leaks fell by 20 percent. Natural gas pipelines feature a still higher safety record and during the last decade, despite a 42 percent increase in the number of large compressor stations, actually saw a 31 percent decline in methane emissions. Industry investments and continuous monitoring technology has helped make this safety record and environmental mitigation possible. The trend lines indicate that new pipelines and the technology added alongside existing infrastructure will continue to drive down methane, carbon dioxide, and liquid leaks.

Beyond technologies and practices aimed at improving safety and effectiveness, a newer trend is to ensure the overall environmental impact of the pipeline is mitigated or even neutralized. This is being done through the market for offsets. These may be through environmental conservation efforts – like preserving a forest in one region as a tradeoff with creating a limited right of way through another – or capturing greenhouse gas (GHG) emissions in another location to balance out those emitted locally.

Pipeline projects lead to emissions in three primary ways: construction, operation, and leaks. Carbon offsets offer a way for larger scale pipeline projects to achieve carbon neutrality through a diverse set of actions to mitigate both GHG emissions and environmental impact. A single carbon offset is equal to the removal of one metric ton (2,205 lbs.) of carbon dioxide emissions from the atmosphere. The types of carbon offsets available for purchase cover a wide range of GHG-reducing projects, ranging from landfill and farm methane capture to reforestation programs. Pipeline projects, due to their size and scale, can benefit immensely from building a broad portfolio of carbon offsets that could accomplish the task of making pipeline projects carbon neutral, while providing much needed resources to smaller or less established carbon capture projects.

Pipeline projects have only begun to utilize carbon offsets within the last decade. To date the only interstate pipeline to achieve carbon neutrality in both its construction and operation is El Paso Corp.’s Ruby Pipeline. Ruby is a 680-mile, 42-inch natural gas pipeline running between Wyoming and Oregon. At the outset of that project, Ruby’s plans included the purchase of emission offset credits, renewable energy credits, and similar options to mitigate the remaining emissions generated during the operation of the facilities. This included negotiations and agreements with future customers. Ruby has continued to be carbon neutral for the past decade, quietly supplying low-emission natural gas to the Pacific Northwest.

Joining the tiny cohort as the second interstate natural gas pipeline to offset its operational emissions is the Mountain Valley Pipeline (MVP), which recently announced a decade-long offset program. While still eight percent away from completion, MVP is a 42-inch natural gas line running from West Virginia to southern Virginia and has already invested in conservation projects, water quality protection and restoration, and vegetation planting in order to reduce its overall footprint. With the addition of newly announced offsets, MVP is set to account for all of its projected emissions from its operation throughout the decade.

In addition to its nearly $50 million already committed to conservation efforts and community investments, MVP is investing $150 million in offsets for its first decade. Those plans include a methane abatement program at a southwest Virginia coal mine expected to account for 90 percent of projected emissions and a West Virginia effort to address abandoned and orphaned gas wells, which will capture 10 percent or more of its emissions. Through these efforts, MVP may end up offsetting more than its actual operational emissions, given that projected emissions do not always fully account for the trends in pipeline safety and technology leading to fewer leaks and emissions in the future.

Following the lead of these American pipelines, the proposed 480-mile Gazoduq pipeline in Canada is seeking to attain carbon neutrality. This proposed 42-inch natural gas pipeline is aiming for a service date in 2025. It is unclear what offsets or engineering specifications to meet carbon neutrality the pipeline may take. In Canada, new rules indicate that pipelines and a host of other infrastructure will need to meet carbon neutrality by 2050. Without similar top-down mandates in the states, it is industry leaders making voluntary action toward this end.

Before its ultimate demise, the Keystone XL pipeline had pledged $1.7 billion to run the pipeline solely on renewable energy and eliminate all emissions from the pipeline by 2030, a goal that would have included the purchasing of carbon offsets to reach. With Keystone XL no longer in the picture, Ruby and MVP are the only large scale interstate pipeline projects in the U.S. to invest in conservation efforts and mitigate or eliminate their environmental footprint through offsets.

With these industry leaders providing a model, future energy projects seeking private investment or adherence to state or federal regulations can calculate the net emissions from construction equipment, vehicles, and transportation, work to reduce emissions during construction by utilizing renewable power or increasing their energy efficiency on site, and balance the remaining emissions out by purchasing carbon offsets. The offsets are important, because more than simply balancing out emissions, they often help improve fledgling technologies.

While reforestation and conservation efforts are highly effective, technological innovation continues to provide new ways to sequester emissions. In some cases, technology actually expands the efficacy of reforestation efforts. Beyond trees, carbon capture and storage (CCS) technology is one manmade mechanism to help sequester emissions. In addition to thermal oxidizers, direct air capture, and other means, CCS can seize emissions exhaust out of the combustion process, convert it to a liquid form, and transport it by pipeline to storage areas, many of which are underground.

Some of these technologies lack adequate funding or scalability, making investment by large projects ideal. In this way, carbon offsets not only reduce the impact of a given project, but help invest in the future development and deployment of industries solely devoted to capturing GHGs. While focusing on a commitment to environmental stewardship and community development in the boardroom, utilizing carbon offsets appears to be growing in popularity with the potential to give life to an entirely new industry.

To date, only the Ruby and MVP pipelines will be considered completely carbon neutral. However, as technology improves, the carbon offset industry is also likely to grow. Partnerships with the fossil fuel industry and the transportation sector will be mutually beneficial and globally impactful. Greater utilization of carbon offsets and flexible paths to mitigate emissions will ensure that pipeline projects of any scale have an affordable way to become carbon neutral. From there, investments made in offset projects may pay dividends for the local and global environments.


Written by Roy Mathews, Public Policy Associate and Benjamin Dierker, Director of Public Policy