Relying on empty pledges has proven ineffective in accelerating methane emissions reductions in the oil and gas sector. According to the International Energy Agency (IEA), methane emissions from oil and gas have remained at the same level since 2019, when they reached a record high, despite countless new pledges from operators.
Instead, a combination of market forces and government intervention will drive the emissions reductions needed to meet our climate goals. It’s the same pattern seen across a wide range of markets:
- Renewable power generation: Government support provided to solar and wind, combined with increased consumer demand for clean energy, has created a market boom. The cost of wind and solar subsequently dropped, further encouraging the manufacturing and deployment of the technologies worldwide. As a result, global renewable capacity has significantly increased, generating more than 30% of the world’s electricity last year.
- Electric vehicles: Government subsidies spurred the initial uptake of electric vehicles and underpinned the scale-up in their manufacturing. Prices have dropped significantly, and electric vehicles are now a mass-market product in many countries, with sales potentially reaching 17 million in 2024, accounting for more than one in five cars sold worldwide.
- Emissions trading markets: The first major emissions trading scheme was the European Union’s Emissions Trading System (EU ETS) launched in 2005, which was shortly followed by the US’s Regional Greenhouse Gas Initiative (RGGI), paving the way for a massive expansion in these schemes globally.
The oil and gas sector is now experiencing a similar market pull and regulatory push in relation to its methane emissions.
Natural gas buyers and markets are demanding lower-emission gas. In Europe, MiQ recently facilitated a pilot transaction for independently certified LNG entering the European market and has now certified a major European LNG terminal. Elsewhere, LNG buyers and government agencies in Japan and South Korea have launched the Coalition for LNG Emission Abatement toward Net-zero (CLEAN) Initiative to provide more information to LNG buyers.
At the same time, regulators are examining how to limit methane emissions from imported gas. The European Union’s methane regulation includes new rules on reporting and third-party verification of emissions, and producers have until January 2027 to comply with the rules.
What we’re seeing – very similar to what lay behind the explosive growth of renewable energy and electric vehicles – is that a combination of both market forces and government interventions are necessary to drive emissions reductions. This recipe yields not just climate benefits, but also economic expansion and opportunities. The dual pressure of market demand and regulatory action will drive the emissions reductions needed, not empty pledges. And companies that can manage these two factors will lead the way in the energy transition.
However, we must also ensure that claims made by companies on emissions are credible and that new regulations are robust.
MiQ is providing the world’s biggest oil and gas operators the data needed to reduce emissions and service demand from buyers. The MiQ certification standard has a robust governance structure, is independent from technology providers and, crucially, relies on third-party auditors who are experts in emissions management. It is also designed to be adopted by governments who want to implement an import standard, or ensure that any regulation is effective.
Markets and regulations – not empty pledges – are the way to achieve our climate goals, ensure energy security, and keep energy costs low.