The Non-Abatement of Methane Leaks

• Departmental Seminar
• Environmental and Energy Economics Workshop

Date and Location

Wednesday, October 12, 2016, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

We provide a novel approach to estimate how much money natural gas utilities spend to abate product leaks. We show that firms exert less effort than what is theoretically optimal for a typical private rm; expenditure on abatement is below the cost of lost gas. This is consistent with the fact that many of these price-regulated natural monopolies are allowed to pass the cost of lost gas on to their customers. Importantly, natural gas, primarily composed of methane, is both explosive and a potent greenhouse gas. As such, abatement incentives are far lower than safety and climate costs warrant.