What the methane emissions policy future might look like [Making Sense of Methane]

Over the last five years – since January 2014 – the level of activity and debate regarding methane emissions amongst governments and policy shapers and makers has intensified, and in a few countries and political unions it is clearly evolving into one of the most critical challenges for the industry.

For some years, the G20 energy and sustainability working group has called for action to be taken on reducing all methane emissions and there is clear consensus emerging that greater focus on this issue is required. In June 2016, the G20 energy ministerial Meeting was followed by a G20 natural gas day with the theme “Natural Gas Promoting Sustainable Development.”

Panelists from government, industry and academia addressed delegates with strong cases presented supporting the role natural gas should play in a lower-carbon, cleaner air world. In his lead-off presentation, Fatih Birol, executive director of the International Energy Agency (IEA), concluded with a suggestion that reducing methane emissions was the most pressing issue the industry needs to deal with “or face the consequences.”

Increasingly, non-governmental organisations (NGOs) and researchers are questioning whether the methane emissions reported by the oil and gas sector are understated. Uncertainty regarding accurate accounting and reporting of methane emissions coupled with the recent discovery of potential “fat tails” threatens the position of natural gas as a low-carbon fuel.

In response to these issues, some governments have moved to regulate methane to curb emissions from industry. One notable policy announcement was made in October 2014, when the European Council agreed on a new 2030 framework for climate and energy, including European Union (EU)-wide targets and policy objectives for the period between 2020 and 2030. These targets aim to help the EU achieve a more competitive, secure and sustainable energy system and to meet its long-term 2050 greenhouse gas reductions target.

In November 2018, the European Commission presented its strategic long-term vision for a prosperous, modern, competitive and climate-neutral economy by 2050. The aim of this long-term strategy is to confirm Europe's commitment to leading global climate action and to present a vision that can lead to achieving net-zero greenhouse gas emissions by 2050 through a socially-fair transition in a cost-efficient manner. The proposed strategy does not intend to launch new policies, nor does the European Commission intend to revise 2030 targets.

Released in June 2019, Gas Infrastructure Europe and Europe’s Marcogaz, with contributions from the natural gas industry, developed the report Potential Ways the Gas Industry Can Contribute to the Reduction of Methane Emissions, for the Madrid Forum. The report notes, “…associated documents to the strategy include many references to the reduction of methane emissions in key sectors…it indicates that the largest driver for methane emissions reduction in the energy sector are reductions in fossil fuel consumption itself and associated reductions in emissions from fossil fuel extraction and distribution in the EU.”

In March 2016 Canada committed to reduce methane emissions from oil and gas-related infrastructure by 40% to 45% below 2012 levels by 2025. In April 2018, Environment and Climate Change Canada (ECCC) published federal methane regulations to deliver on this commitment.

Canada’s outcome-focused regulations apply to upstream oil and gas facilities, which are responsible for extraction, production, processing and transportation of crude oil and natural gas. The requirements target two key methane sources: fugitive emissions and venting emissions. The regulations contain both general and conditional requirements. The first federal requirements come into force in 2020, with the rest of the requirements coming into force in 2023.

Responding to a request from the Governments of the UK, Wales, and Scotland to reassess the UK’s long-term emissions targets, in May 2019 the the UK government’s independent advisory committee on climate change published Net Zero – the UK’s Contribution to Stopping Climate Change. In June 2019, the prime minister announced that the UK will cut net greenhouse gas emissions by 2050.

According to the UK parliament, a statutory instrument (a tactic that allows for fast-tracking through both houses of parliament) will be laid which will amend the Climate Change Act 2008, in order to implement the announcement. This would mean that the UK would be the first G7 country to legislate for net zero emissions. How the UK’s net zero policy will impact the natural gas industry is something to follow as legislation details develop.

Globally, it can be expected that over time emerging regulations will increasingly become tougher on industry. It is important to ensure that regulatory developments are pragmatic and cost-effective.