Reducing methane emissions is achievable, but there are several prickly issues.
Global methane emissions resulting from human activity have continued to rise quickly, and are projected to increase by over 50 per cent from 1990 levels by 2030. It must be cut by 34 per cent by 2030 to meet the target of limiting global warming to 1.5 degrees. While the agriculture sector is the largest contributor, the oil and gas sector has the greatest potential for quick methane emissions reduction. This fruit may hang low in oil and gas, but it comes with a couple of prickly issues.
Abatement for Free
Developing countries may be concerned about the cost of abatement. But the methane captured can be monetised to fund capture, storage and utilisation technologies. As the gas prices return to pre-Covid level, at least 45 per cent of the methane emissions can be saved for free. Leak Detection and Repair programmes involve monitoring via sensors, and inspections could reduce global annual leakages by two thirds.
Abatement policies are also essentially free. Through a mixture of policies that already work, governments need not expend resources for policy experimentation. Regulations can mandate the use of better compressors and pneumatic devices and prevent flaring and venting of surplus gas.
Despite these available measures, methane abatement remains tricky because of two less attended issues involving the emissions system’s broader and more fundamental aspects.
Abatement Delays Transition
As the reduction of methane emissions in the oil and gas sector is achievable and relatively cost-free, it may give the sector a cleaner image. The Methane Pledge to reduce emissions could become an excuse for governments to keep or increase their reliance on gas as the main energy supply. In fact, gas has been considered the most appropriate transition fuel for a low carbon future. Major oil and gas producers in the region – Petronas and Shell Malaysia – share this view and have vowed to cut methane intensity, whereas Chevron, which operates large oil fields in Indonesia and Thailand, has been silent. The longer-term scenario of significant investment in oil and gas may see the crowding out of renewable investment and increased risk of carbon lock-in.
Developing countries may include methane-abated oil and gas facilities in their strategies to access international climate finance. Notably, the European Union is set to include investments in gas plants in its sustainable finance taxonomy, which may encourage the use of gas as a transition fuel. But policy-makers need to coordinate between methane abatement and the overall phase-down of fossil fuels. Decarbonisation policies such as fuel switching, energy efficiency and transport demand management should continue to be made more progressive over time. Overall the goals should be achieving the twin cut of carbon and methane emissions.
As the reduction of methane emissions in the oil and gas sector is achievable and relatively cost-free, it may give the sector a cleaner image.
Another sticky issue relates to the measurement, reporting and verification (MRV) of methane emissions. MRV processes have to be accurate, transparent and credible. Methane budgets are still subject to large uncertainties and discrepancies. Independent research on offshore facilities in Southeast Asia indicates that many sources are still unaccounted for in current methane inventories.
Mainly driven by the European countries, the Oil and Gas Methane Partnership 2.0 (OGMP) framework and the International Methane Emissions Observatory (IMEO) offer opportunities to bring major oil and gas companies in line with the Methane Pledge to reduce emissions. Given – the voluntary nature of these initiatives, companies are not obliged to participate, let alone comply.
Complicating this is the myriad of MRV frameworks. The GIIGNL framework and the Statement of Greenhouse Gas Emissions (SGE) Methodology for MRV of liquid natural gas (LNG) were developed to meet the fast-growing demand for transparency through a verified statement of emissions. In Asia, the first ‘carbon-neutral’ labelled LNG cargos were delivered to Japan, Korea and India in 2019; the Carbon-Neutral LNG Buyers Alliance was established by Tokyo Gas.
Oil and gas companies will shop for the MRV framework most favourable to them, resulting in a race to the bottom. Already stretched government regulators may drown in a flood of different reporting methods.
As Chair of the G20 and the critical energy actor in the region, Indonesia should call for greater coherence between methane and carbon abatement strategies. A straightforward acknowledgement of the issue in the Leader’s Declaration will be a necessary start. Energy ministers can also show in-principle support for coupling actions of methane abatement and carbon markets.
Within Southeast Asia, signatories of the Methane Pledge (Singapore, Vietnam, the Philippines and Indonesia) can assess their methane measurement capability. The governments should resource outreach programmes for helping oil and gas companies join the OGMP and IMEO. Regulators can even tie such participation with the other licensing requirements.
In the longer-term, on-the-ground continuous monitoring mechanisms should be made a major milestone for methane abatement. In addition, regulators and certifiers can leverage satellite imagery as another source of information for verification. More economically advanced countries like Singapore and Malaysia can fund feasibility studies that identify regulatory and infrastructure adjustments for realising continuous monitoring. Early adopter countries are well-positioned to influence this critical agenda and ensure comparability of emissions data.
In promoting efficient transition, the regulators will resort to market-based instruments. Emission factors can be used to set the levels of financial incentives for methane abatement. Therefore, more granular data collection at the sub-sector level will be necessary to change the behaviours of super-emitters. After all, you can’t manage what you don’t measure properly.