Low hanging fruit: A market-based solution to climate change

Climate change is the single biggest threat to our global future. Our sea levels are rising, our droughts are becoming more severe, our forests are burning, and our storms are becoming more extreme.

This is not just an inconvenience: these impacts are happening in real time, and it is going to get much worse – unless we take action within the next decade.

Methane emissions from the oil and gas sector currently represent 10% of global GHG emissions. The good news is they are easily preventable: the International Energy Agency (IEA) estimates that around 75% of total oil and gas methane emissions could be avoided, with nearly half of those being done at zero cost to the producer.

To make a real difference before it is too late, we need to capitalise on these ‘quick wins’ and tackle the ‘low hanging fruit’ of the climate world. And that’s where methane, the market and market incentives come in.

Market-based solutions, such as certification, have played a pivotal role in driving action on climate change and other environmental issues. This approach uses market signalling to drive change outside of regulation, encouraging both businesses – and individuals – to make decisions that are both in their own interests and society at large.

Gas buyers rarely have any credible assessment of the methane emissions performance of a batch of gas they are buying, and regulators have no credible way to assess and compare the methane performance of any batch of natural gas that imported into their jurisdiction.

Working together with the energy and environment sector, MiQ has developed a universally applicable system to credibly certify and differentiate natural gas based on its methane emissions performance.

Our approach provides buyers with the transparency they have long sought to enable them to choose natural gas with lower methane emissions performance, therefore incentivising producers to improve their offering.

Market incentives have been used for decades to generate meaningful shifts in climate change. We can learn from these examples to demonstrate the potential our approach has to drive huge progress on our climate targets today.

Renewable Energy Certificates (RECs) are one clear example of where market incentives have driven change. When a renewable power source in the US – like a wind farm or solar power plant – generates a megawatt-hour of power, it receives a REC, a certificate which proves that it generated one MWh of electricity from ‘clean’ sources.

RECs provide a way for electricity buyers to show a preference for cleaner energy and the same can be done for natural gas. Providing buyers with a credible assessment of the environmental impact of an energy source drives change.

A cousin of RECs, I-RECs (International Renewable Energy Certificates) operate outside the US and are used particularly for renewable energy that crosses borders.

I-RECs have been become part of regulation in over 30 countries to guarantee that renewable energy entering their jurisdiction is of the right standard. This adoption into regulation has enabled governments to act much faster and more effectively on renewable energy, steps that drive higher standards in the industry and give consumers greater transparency

MiQ Certification aims do the same for methane emissions performance of natural gas and has been designed to make it easy for regulators around the world to adopt the standard.

Another parallel can be seen in the biomethane sector.

Biomethane – also called renewable natural gas (RNG) or green gas – is one of a few alternative sources of energy which are not only renewable but are also environmentally friendly, representing an effective way to reduce the climate change impact of gas as we transition to greener sources.

In the same way that MiQ brings transparency to methane emissions in the fossil gas business, biomethane certification schemes have brought transparency to biomethane – driving change in the sector.

Various certificate registries in Europe and North America track biomethane through the supply chain to provide certainty for the buyer and eliminate double counting of registered green gas.

In North America, M-RETS provides a similar role through its renewable thermal certificate offering, while the Green Gas Certification Scheme in the UK issues certificates for each MWh or biomethane unit produced by biogas producers – differentiated down to the type of material used to produce the biomethane, known as feedstock.

These unique identifiers enable suppliers to deliver high levels of traceability for biogas, ensuring it is as environmentally friendly as it claims to be. This creates market confidence and differentiation, providing a platform for buyers to measure and reduce the environmental impact of their purchases.

While every sector has unique issues in addressing climate change, certification has time and time again played a major role in bringing transparency, illuminating those doing the right things, and enabling effective regulation.

The success of biomethane and renewable energy certification RECs schemes demonstrates that certification can drive a rapid change in behaviour and that MiQ Certification can drive reduction in methane emissions in the oil and gas sector, something that we all welcome.

Building on these previous market lessons has enabled the experts at MiQ to create a functioning methane certification scheme, which delivers reductions, helps us meet our climate goals, and buttresses consumer and regulatory confidence.

This is why we need to act now, through certification, to provide the incentives for markets to play their part in this critically important issue and keep global warming to 1.5C.