A few weeks ago, while on vacation far from concerns of my energy and utility clients, I was pretty near Heaven… looking out over willows and prairie, enjoying a Snake River Lager, and taking in a gorgeous Teton sunset in Wyoming. It had just rained, and the air was sweet and fresh.

About the last on my mind was smog.

Ozone alerts? This is rural Wyoming, not Los Angeles. But as the sun set over Jackson Hole that evening, my host Matt told me about his recent experience working in the oil and gas business. "It's definitely getting better, as far as the environment goes."

He said there was hardly any regulation when he started twenty years ago. Now more and more operators he works for are using a "closed cycle" approach: reusing their drilling and fracking fluids. "But even then, we're seeing ozone alerts -- from all the trucks bringing in the water."

More than 25,000 new wells are fractured in the U.S. every year. A single well is serviced by 320-1,440 truck trips [PDF] over its lifetime to bring in fresh water and haul away waste. That's a recipe for a serious traffic jam.

As others (including my GreenOrder colleagues) have noted, traffic jams are just the tip of the iceberg when it comes to environmental risks from natural gas. It can take 7 million gallons of water to frack a single well and at least 30 percent of that water is lost forever, trapped deep in the shale.  During the well completion process, fracturing fluids, water, and reservoir gas come to the surface. This mixture includes a high volume of smog-causing volatile organic compounds (VOCs) as well as other air toxics. Newly fractured natural gas wells are the source of around 500,000 tons of VOC emissions [PDF] each year.

But the upside from gas, including from vast shale gas reserves, is potentially huge. There are 60.6 trillion cubic feet of shale gas reserves in the U.S. These reserves could reduce U.S. CO2 emissions by 2,363.4 million metric tons if it replaced fuel burned by coal-fired power plants*. Shale gas could also provide significant national security benefits if we use the gas for transportation, offsetting our dependence on imported oil.

For a utility CEO, either providing gas or using it as a fuel, the environmental risk is a business risk, plain and simple. Non-profits and the media are busy ensuring that utility customers understand the risks of fracking. Voices of concerns are echoing in the state capitols too.

Utility members of the American Gas Association (AGA) are exposed, especially given regulatory variation across states and vulnerability of the whole market to the sins of a few. While this may not be a big concern in oil patch states, it definitely is around the Marcellus. Add in the potential for other San Bruno-type disasters, given fragile gas distribution systems, and you have a fairly urgent situation from their perspective.

What's the answer? Both non-profits and AGA members would like consistent, strong federal regulation that requires sound practices of all gas producers, but that's not going to happen soon enough.

The time is right for a multi-stakeholder process to set up a strong a voluntary standard.

Good news: this system doesn't need to be cut from whole cloth. There's a very successful model that's already working in other energy markets. It's called Green-e, the system that guarantees a unit of renewable energy bought actually corresponds exactly to a unit generated. Let's call the natural gas version Green-T (for Green Therm).

What is Green-e? Green-e is the nation's leading independent consumer protection program for the sale of renewable energy and greenhouse gas reductions in the retail market. Green-e offers certification and verification of renewable energy and greenhouse gas mitigation products.

Next page: How would a "Green-T" system work?