Summary:
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The Global Methane Pledge, which was presented by the US and EU in late 2021, aims to reduce human-caused methane emissions in oil and gas as well as other significant industries like livestock, agriculture, coal mining, and trash by 30% globally by 2030 from levels in 2020.
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The first global initiative to address methane is the Global Methane Pledge.
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Other industries that produce significant amounts of methane have seen fewer policy advancements.
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The European Union has started to think about how to include methane in the proposed carbon border adjustment mechanisms.
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Ironically, the United States, the world’s top producer of oil and gas, is the only G-7 member without a carbon price while adopting one for methane.
Methane is a climate pollutant that stays in the air for only about 20 years, but it has more than 80 times the warming power of carbon during those 20 years. Climate experts have long identified methane as “carbon dioxide on steroids.” At least one-fourth of the current global warming is due to it, and if we make big changes over the next few decades, we might be able to stop the temperature from going up even more.
And yet, methane has long been given far less attention in climate policy than carbon. However, a lot of change seems to be coming, and the oil and gas industry has made a lot of corporate and governmental reduction pledges. The Global Methane Pledge, which was presented by the US and EU in late 2021, aims to reduce human-caused methane emissions in oil and gas as well as other significant industries like livestock, agriculture, coal mining, and trash by 30% globally by 2030 from levels in 2020. Along with the Kigali hydrofluorocarbon regulation and the Paris carbon framework, initial commitments to this new framework were made by 103 countries.
The first global initiative to address methane is the Global Methane Pledge. As of right now, it has 150 members and backs an international agreement with very loose rules. Being a member shows that there is broad support for global goals to reduce emissions rather than specific domestic policy commitments. However, the pledge does imply that there is more worldwide willingness to take action on methane than was possible just two years ago.
As a defining climate achievement, the United States has taken the lead with bold new initiatives on energy methane under the Biden Administration. Instead of relying on a single policy measure, this is a set of policies that work together to ensure that methane emissions from oil and gas activities go down by a lot. Over the past few decades, Norway has been a world leader in this complementary approach. This is clear from the fact that its methane loss rates have stayed low.
The new American strategy includes a legal tax on methane emissions that will start in January 2024, a long time before the expected implementation of stricter regulations. More than 2,100 production, storage, and transmission facilities will have to pay fees if they release more than a best-practice standard. However, they may not have to pay if they and their state follow all the rules once the regulations are in place. This incentive could help stop states and industries from trying as hard as they have in the past to stop or get around federal methane controls. On federal lands, the higher oil and gas royalty rates will now apply to methane that is wasted by venting, flaring, or just being left alone.
Recent ideas from the Environmental Protection Agency for the next generation of performance standards include tighter rules on flaring, better coverage of current sources, and a “super-emitter response program” that encourages reliable outside sources to report leaks. On federal lands, the Bureau of Land Management is looking into similar production processes. Through recent legislation on infrastructure and climate change, Congress gave businesses and production states early incentives, such as money to clean up orphan wells and pay for “industrial equipment and processes.”
Several countries that have also made new rules about methane have come together to form what could be called a “methane club” of national leaders. Canada is willing to talk with the US about ways to work together, and it has kept putting in place ambitious methane performance criteria. Colombia’s adoption of the global pledge was accompanied by new rules and financial penalties. Significant reductions in flaring have been achieved in Kazakhstan and Nigeria. Policymakers often talk about taking advantage of low-cost options like electrifying equipment and fixing leaks. This demonstrates that there is a lot of “low-hanging fruit” in the energy methane sector.
However, broader policy dispersion is still minimal. The biggest oil and gas companies haven’t signed the Global Methane Pledge and haven’t come up with practical ways to reduce methane emissions. Venezuela, China, Russia, Iran, and other non-Pledge countries continue to be big methane laggards. Russian gas exports have a methane loss rate that is double that of American shipments and quadruple that of Qatari exports.
Other industries that produce significant amounts of methane have seen fewer policy advancements. On a national and international scale, livestock and agriculture produce more methane than oil and gas, but they are still generally resistant to policy changes that would help reduce their effects. Cost-effective choices aren’t as common in this industry, which is protected by a regulatory or pricing structure that doesn’t like subsidy payments for voluntary programs but does like the programs themselves. Through new climate laws, payments for programs like cover crop planting, anaerobic digester biogas production, and related initiatives will increase in the United States. But even though it’s in the Global Methane Pledge, progress in this area is still as slow as a glacier. There are still issues with waste management and coal extraction, as seen by the massive Russian mine breaches and China’s Shanxi province’s enormous mining releases.
As the technology to measure releases, mainly via satellite, advances, the size of the methane crisis becomes more and more clear. Improvements in measurement accuracy have made it possible for a nearly constant stream of research to show that private companies and government agencies around the world tend to underestimate how much methane leaks. Recent studies have found that the dangers from super-emitter sources, low-producing wells, flaring failures, and certain basins have been greatly underestimated. According to a study by the International Energy Association, “official data don’t give a true picture of the world’s emissions.” Significant measures to strengthen measurement and monitoring are part of the new American policy. But there are probably still big gaps, as shown by the fact that new laws are being made to improve methane monitoring and make a reliable national methane census.
Both domestically and internationally, methane policy has advanced in some significant ways. Under a tolerant international system, carbon policy and methane policy are still very different from one industry and country to the next. Hydrofluorocarbons under Kigali continue to be the climate gold standard because it has a strong global policy framework with a lot of national participation, additional policy tools, trade consequences for poor performance, and financial help for developing countries.
As more countries look at possible links between trade policy and carbon emissions, methane is starting to come up as a possible companion case that could help the Global Methane Pledge. The European Union has started to think about how to include methane in the proposed carbon border adjustment mechanisms. At the exact time that it accelerates the transition away from high-methane Russian sources, this would probably start with Europe reporting on the methane stewardship practices of countries and companies from which it purchases energy. This could lead to taxes on both imported and made-in-country methane, or it could mean that methane is directly included in efforts to change trade.
Such actions could eventually lead to more countries and businesses using methane reporting and price mechanisms or other trade levers to force countries and businesses that aren’t doing as well to improve. At a time when New Zealand is putting the finishing touches on a pricing system for methane and other greenhouse gases from its farm sector, those practices might start in the oil and gas sector but eventually spread to others. Ironically, the United States, the world’s top producer of oil and gas, is the only G-7 member without a carbon price while adopting one for methane. The United States gains newfound credibility and possible leverage in the creation of future global methane policies when that new pricing mechanism is combined with complementing regulatory and subsidy measures, especially if it can execute such policies quickly and effectively.
