Green finance, methane, and the clean energy transition

Investors and methane emissions – the missing part of the puzzle?

On Wed 5 May, we hosted a webinar looking at the role the investment community has to play in reducing methane emissions from the oil and gas sector as part of the clean energy transition.

We were delighted to be joined by leading sustainable finance experts, including Deborah Gordon, Senior Principal at RMI. Hosting the event was Vanessa Dezem, Bloomberg’s Power, Gas and Renewables reporter in Europe.

This was a very timely conversation as according to the UN’s recently published Global Methane Assessment, cutting methane emissions is the “strongest lever we have to slow climate change over the next 25 years.”

Until relatively recently, methane emissions have been the missing piece of the climate change puzzle with reducing CO2 and fossil fuel reliance the main focus. When it comes to the reduction of methane emissions from the oil and gas sector, institutional investors have a significant role to play. Our webinar looked at the influence investors can have over how producers act on environmental considerations.

Deborah highlighted we are in a decisive decade for climate change. The reduction of methane emissions is something that can happen today. According to the IEA, 75% of methane gas emissions can be technologically reduced by 2030, with 40% of this activity being cost-effective, with increased returns to the producer as more methane reaches the end buyer instead of leaking during the production process.

Deborah was clear that we must re-think how to triangulate the economics of the situation to transform the energy system, to move us all towards a cleaner, greener way of delivering energy.

At MiQ, we believe that our emissions standard holds the key to bringing the potential for near term methane emissions abatement ever closer. Investors have a key role to play, putting upstream pressure to ensure that methane is a part of the ESG conversations from which it has previously been excluded.

And this focus was reiterated by John Bromley from Legal and General Capital, who highlighted that investors are taking a very real interest in the focus that fund managers have on environmental impacts. He also highlighted the need to hold fund managers to account on their environmental impacts.

Zoe Knight, HSBC Centre for Sustainable Finance discussed the role that global financing institutions play in bringing transparency to financial flows. She highlighted initiatives within the market to improve the environmental performance of hard to abate sectors such as oil and gas. This include the linking of products to emission reduction KPIs, which are gradually starting to provide transparency for investors.

Zoe stressed that the deployment of capital determines the future route of the economy, a critical point that runs throughout MiQ’s thinking. With methane often overlooked in ESG discussions, it’s critical that the investment community seeks to leverage its influence to encourage producers to address methane emissions.

Thomas Kansy, from Vivid Economics pointed back to the lessons we can take from global markets to drive improvements across the board. He noted that what gets measured gets fixed – a key focus for MiQ – and that measurement, and in effect transparency, currently needs boosting within the market.

For producers, pressure from investors means that they will be keen to demonstrate that their energy is clean and safe.

We were encouraged to see so many questions from the audience on this important issue.

Without a joined-up approach to addressing the catastrophic effects of climate change, the ambition of a green future will remain a dream.  The webinar follows the news that both EQT Corporation and Northeast Natural Energy have signed up for MiQ Certification under the existing standards developed by MiQ, with more expected to follow as we shift the needle on reducing greenhouse gas emissions through methane abatement.

We would like to extend a big thank you to our panellists, host and everyone who took the time to attend our event. Investors play a crucial role in channelling financial flows towards addressing the methane emissions problem, and it is critical that we raise awareness of the importance of acting now so we can reach out climate goals.

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