The oil and gas industry has a flatulence problem.

While any gas that is allowed to escape from an oil or gas operation is theoretically money lost, most projects have some gas that cannot be safely and properly captured and is instead allowed to escape. Methane is the primary gas in natural gas and is 25 times more potent greenhouse gas than carbon dioxide, CO2. To reduce the impact of methane leaks, many operations flare the gas, burning it to convert methane into CO2 and water. The International Energy Agency estimated that 143 bcm of natural gas was flared in 2021, equivalent to about a sixth of all the gas that the US produced that year. Natural gas accounts for as much US electricity production as renewables and nuclear combined. While the large majority of gas is flared in the US, in some countries substantial portions are not. Even with flaring, uncaptured gas represents a substantial source of emissions, prompting the Biden administration’s EPA to act.

When the EPA announced in November 2021 that it would create a rule to heavily regulate methane emissions from the oil and natural gas industry it was not a surprise and will effectively create a stronger version of a rule that the Obama administration created in 2016. The EPA estimated that the Obama-era rule would have reduced methane emissions by half a million tons annually, but the Trump administration weakened the rule to practically nothing in 2020, falsely claiming that oil and gas operation leaks had not increased. In June 2021 President Biden signed legislation that used a little-known law to reverse the Trump-era rule, reinstating the Obama-era rule. Biden’s EPA plans a much stronger rule that would reduce roughly seven times more methane annually, or the CO2 equivalent of all US passenger cars and commercial flights in 2019, per the EPA.

While the $370 plus billion dollars for clean energy projects, writ large, received the lion’s share of attention in the 2022 Inflation Reduction Act, IRA, the Biden administration recently proposed a rule based on a little-discussed IRA provision. The IRA amended the Clean Air Act to define CO2 explicitly as an air pollutant, giving the EPA full authority to regulate CO2 the way that it does lead or particulate matter, for example. The provision effectively overturned a Supreme Court ruling made two months before the IRA’s passage that limited the EPA’s ability to regulate CO2, arguing that Congress had never explicitly defined CO2 as a pollutant. Armed with the new definition, in May this year the EPA proposed CO2 limits on existing power plants, which will disproportionately affect coal plants. The EPA estimates that the power plant rule will reduce CO2-equivalent emissions less than the methane rule, the combined rules will increase the costs of existing coal, oil, and gas projects and further reduce the fiscal returns of any future such project. The proposed rule would mostly exempt plants that are scheduled to close by 2032 – a not-so-subtle suggestion to coal plant owners that they should shutter those plants within a decade. About a quarter of US coal-generated electricity capacity is due to retire by 2029.

The nuclear industry is poised to benefit from these two rules. Despite the advantages of nuclear energy, the high upfront cost of massive nuclear plants, like the $30+ billion Vogtle plant in Georgia, and the uncertain pricing of small modular reactors, SMRs, continues to limit the number of reactor construction commitments in the US. Besides cost supports like the substantial production tax credit in the IRA, the nuclear industry will benefit from more regulatory clarity on nuclear, due from the Nuclear Regulatory Commission in 2025, and more regulatory pressure on fossil fuels. The power plant rule effectively gives coal plant owners a 2032 deadline after which generating profits will be challenging, especially in states that are undertaking their own clean energy legislation. The methane rule targets leaks, but given how much the natural gas industry pushed against the Obama-era methane leak and how much stronger the Biden-era rule is, the net compliance costs of the methane rule, $14 billion, may be occluded by further EPA regulations that target other aspects of the oil and gas industry, or by measures aimed at reducing future oil demand. Those measures, from the US and elsewhere, increase the risk that gas plants built several years from now will become stranded assets within a couple of decades. In contrast the US and other nations are extending the legally-permitted life of nuclear power plants, while engineers continue to extend their estimates of the physically-permitted life of nuclear plants as new technology and better data show that many plants can operate safely far longer than when they were originally designed.

Whether the power plant rule succeeds or fails, however, will almost certainly rest upon the Supreme Court and the 2024 election. Despite the IRA’s provision on CO2 as a pollutant, the court could still limit the scope of the rule. The court could also repeat what it did with the rule’s de facto predecessor, the Obama administration’s Clean Power Plan, which would have required each state to reduce greenhouse gas emissions by a certain amount. The EPA released that rule in 2015 but, in an unprecedented move the Supreme Court preemptively blocked the rule in 2016 before the case had worked its way through the courts or came into effect. Only in last year’s pre-IRA Supreme Court decision did the court finally close the book on a rule released in 2015. If the court were to repeat the move and timeline it could delay the rule until 2031. Alternatively, if a Republican wins the White House next year, that administration would likely weaken or abolish the rule. That means that the nuclear industry is unlikely to benefit from the power plant rule until 2025, after the election and by which time the Supreme Court is likely to have acted on the rule.

If the power plant rule survives the Supreme Court and President Biden wins reelection, the nuclear industry may benefit further, as the EPA will likely use the CO2 pollutant provision to justify other rules that target large sources of CO2 emissions, such as concrete production or commercial transportation. American industry accounts for slightly less greenhouse gas emissions than electricity generation, which in turn accounts for slightly less than transportation. 

Whatever happens with the power plant rule, coal’s salience in American politics is likely to decline, just as nuclear’s appeal with policymakers and the public continues to rise, and wind and solar further entrench themselves. Despite the reverence with which many politicians speak of coal workers, America has so few of them. Using the Department of Energy’s broad definition of coal workers – including the accountants and lawyers at coal companies, for instance – the industry only has about 70,000 workers, of whom 41,000 are coal miners, less than a quarter of the number in 1985. The wind industry has over 115,000 workers, and the solar industry has over 325,000 workers. The US has over seven times more fitness instructors than coal miners, a number expected to grow sharply over the next decade, yet politicians do not worry about offending trainers. As the number of fossil fuel workers nationwide declines and the number of emissions-free energy workers rises, new politicians who enter Congress may be more supportive of clean energy, but the biggest beneficiary thereof may well be nuclear, which already has more support among Congressional Republicans than wind or solar. Just as a rising clean energy tide lifts all solar, wind, and nuclear boats, whatever weakens the fossil fuel industry is likely to prove a boon to all clean energy industries.