The European Union has taken a big step toward solidifying plans to become the first climate-neutral continent with the European Commission’s announcement that it is adopting a methane strategy as a part of the European Green Deal. This strategy is a leading effort for more accurate measurement and reporting, as well as effective mitigation measures for methane emissions, which are critical to meeting global climate targets.
While we know methane emissions are produced from both man-made and natural sources, the required abatement measures and associated costs indicate the fossil fuel sector is particularly poised to take early action. In fact, according to analysis conducted by the IEA, 25 percent of oil and gas value chain methane emissions can be avoided at no net cost, based on sale value of the captured emissions. Given this, the European Commission has placed focus on the energy sector as a critical path to reducing methane emissions in the near term, as it can be done quickly and at least cost.
What Does the Methane Strategy Entail?
In 2021, the Commission will deliver legislative proposals on compulsory measurement, reporting, and verification (MRV) for all energy-related methane emissions, building on the Oil and Gas Methane Partnership forthcoming reporting framework (OGMP2.0). The framework intends to improve the credibility of reported data by providing a pathway and technical guidance towards direct measurement. This more reliable data set can be used to prioritize reduction opportunities and benchmark performance.
The Commission will also propose legislation to improve leak detection and repair (LDAR) obligations on all fossil gas infrastructure. In addition, it will also consider legislation on eliminating routine venting and flaring in the energy sector covering the full supply chain, up to the point of production. Further, the Commission will work to extend the OGMP framework to more companies in the gas and oil upstream, midstream, and downstream sectors.
Importantly, the policy also outlined The Commission’s willingness to consider binding methane emission reduction targets, standards or other incentives for fossil energy consumed and imported to the EU, in the absence of significant commitments from international partners.
Why Is It Important?
Investors, regulators, and consumers are applying increasing pressure on the global gas industry to curb its methane emissions and to do so quickly. As part of this, we are seeing growing signals from financial institutions and customers interested in investing in, and purchasing, lower-carbon products. It is essential that we coordinate regulatory mechanisms with other instruments that enable products to satisfy those signals.
Unfortunately, in the world of global commodities, customer and investment signals flow across legislative and policy boundaries. As these signals grow in comparison to regulatory signals, we are rapidly coming to a time where policy that is uncoordinated or disharmonized could block progress globally by promoting short-term, local solutions. It’s important for this policy to be coupled with mechanisms that drive the market for low-methane gas.
And as the world’s largest net importer of natural gas, Europe’s unique market position gives it disproportionate sway in the global gas market, influencing major gas suppliers including Russia, Algeria, Qatar, and the United States. This new strategy provides a clear signal to the market that methane emissions management from the oil and gas sector will be a critical consideration in future transactions.
What More Is Needed?
While these commitments represent the foundations for transparent emissions reporting and best practice measures to reduce methane emissions, we still need more.
In light of the new EU strategy, natural gas suppliers will need to ensure the legitimacy of their claims with respect to methane emissions. The EU’s satellite program and support for the creation of an international methane emissions observatory will aid international transparency and validation of these claims.
Ultimately, two things are essential to curbing methane emissions from the oil and gas industry. The first is global adoption of a methane emissions standard for gas that clearly defines the rules industry must comply with during this transition. Defining a standard for gas is key to being able to compare the emissions from different oil and gas operations in a transparent and replicable way. A standard will also enable climate-conscious producers, regulators, and end users to credibly demonstrate methane abatement to consumers and investors.
Second, in order to drive meaningful change at the scale needed over the next decade, we need to be able to understand both “how much” and “why” emissions are happening, so we can stop emissions at their source. We need is a trusted source of transparent and accessible data, coupled with creative analytical approaches, that can translate data into methane abatement action by operators, investors, consumers, and regulators.
As a Climate and Clean Air Coalition actor, we are working to scale transparent reporting, measurement and abatement of methane emissions. Specifically, RMI is working on a voluntary Methane Emissions Standard for Natural Gas. This global standard will serve as a performance metric for a validated and verified apples-to-apples comparison of a natural gas producer’s methane emissions management.
And as members of the Climate Trace coalition, RMI is encouraged by the EU Strategy and is ready to work with the EC to bring trustworthy data to achieve the aims of the Green Deal. Our work in developing the Climate Action Engine will serve all stakeholders by providing a platform which brings together multiple sources of measured, modelled, and calculated emissions data with asset information to enable decision-making aligned with the EU’s strategy
Natural gas must eventually be phased out for the world to align with a 1.5°C pathway. But while the world still consumes gas, the natural gas supply chain can and must curb its methane emissions in order to substantiate its role in the industrial energy transition. The EU’s methane strategy is an important first step to making this happen.
This blog post was first published on RMI’s website.