Pledge review for COP27: Methane pledge countries work to tame emissions

Author Chris Knight & Nader Itayim

The surge in natural gas prices has increased the incentives for the oil sector to control leaks of methane, as countries develop rules to meet a "global methane pledge" that aims to cut emissions of the greenhouse gas (GHG) by 30pc by 2030, relative to 2020 levels.

More than 100 countries signed the pledge last year with hopes of controlling a short-term GHG that scientists say is responsible for nearly a third of warming since pre-industrial times. Oil and gas sources are the first target of that initiative because methane can be captured at far lower costs than other diffuse sources, such as rice fields or cattle operations.

Surging prices caused by Russia's war on Ukraine have increased incentives for operators to capture methane. Over the past year, US gas futures have roughly doubled to more than $9/mn Btu, while European prices have jumped fivefold to nearly $70/mn Btu. At elevated prices, "almost all" options to capture methane leaks from oil and gas facilities can be implemented at no net cost, OECD energy watchdog the IEA says.

The US, the world's third-largest methane emitter, is laying groundwork for achieving emission cuts from its oil and gas sector. President Joe Biden's administration aims to finish by May 2023 regulations it says will cut methane emissions from existing oil and gas facilities by nearly 75pc by 2030, relative to 2005.

The viability of those standards, which would not go into full effect until 2026, could hinge on control of the White House and whether the regulations hold up in court. [President Joe Biden mid-August signed into law a bill]( that will offer $1.5bn to help industry monitor and control methane. It would also impose a new fee — starting at $900/t in 2024 and rising to $1,500/t by 2026 — on excess emissions from around 2,400 large oil and gas facilities. The fee will not apply if the methane regulations are fully in effect.

Canada is working to publish draft regulations by early next year in support of its goal to lower oil and gas sector methane emissions by at least 75pc below 2012 levels by 2030. The country intends to expand the number of facilities covered by its existing regulations, and is considering giving operators new flexibility in deciding how to achieve increasingly stringent standards.

The EU last year proposed banning routine flaring by oil and gas companies, and to require transparency on methane emissions from fossil fuel imports. Reducing methane leakage from new US pipelines and LNG export facilities were a key component of an EU-US agreement earlier this year intended to reduce the bloc's reliance on Russian natural gas imports.

Finding pledges

Saudi Arabia, another signatory to the methane pledge, already has a head start as it has among the lowest methane intensity of its production. The country has controlled methane partly through the expansion of state-controlled Saudi Aramco's Master Gas System, which helps to capture gas that was previously flared. Flaring fell to 0.22bn ft3/d (2.27bn m³/yr) in 2020, down from a peak of 4.2bn ft3/d in the 1970s, the World Bank says. Aramco's plans to reduce flaring and leaks align with its plans to boost its natural gas output by more than 50pc to 20bn ft3/d by 2030.

Yet four of the world's 10 largest methane emitters — China, India, Russia and Iran — have yet to join the emissions pledge. These countries represent more than a third of global methane emissions. Russia's oil and gas sector releases more than 14mn t/yr of methane, or 4pc of global emissions of the GHG, the IEA says.

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