Half of fossil fuel Methane reduction targets can be met at no net cost. Why isn’t it happening? – GWC Mag

We need to cut global methane emissions from fossil fuels by 75% by 2030 to be on target to limit warming to 1.5°C. That equates to 90 Mt of the current total of 120 Mt of annual fossil fuel methane emissions. The IEA says 80 Mt can be avoided through the deployment of known and existing technologies, often at low – or even negative – cost. And the 75% cut needs $170bn in spending to 2030, a very achievable sum given it represents less than 5% of the income the fossil fuel industry generated in 2023. Here, the IEA summarises the key findings in its latest Global Methane Tracker 2024 report. Close to 70% of methane emissions from fossil fuels come from the top 10 emitting countries. But the policies and pledges already made by the key players are not nearly sufficient. Around 40% of the needed cuts could be avoided at no net cost: the costs of abatement measures are less than the market value of the methane captured and sold. So why aren’t they doing it? The IEA offers the possible answers, including the fact that monitoring of emissions is so poor the emitters may not even know of the opportunity.

Methane emissions from the energy sector remained near a record high in 2023

We estimate that the production and use of fossil fuels resulted in close to 120 million tonnes (Mt) of methane emissions in 2023, while a further 10 Mt came from bioenergy – largely stemming from the traditional use of biomass. Emissions have remained around this level since 2019, when they reached a record high. Since fossil fuel supply has continued to expand since then, this indicates that the average methane intensity of production globally has declined marginally during this period.

The latest IEA Global Methane Tracker is based on the most recently available data on methane emissions from the energy sector and incorporates new scientific studies, measurement campaigns, and information collected from satellites.

Analysis of this data reveals both signs of progress and some worrying trends. On one hand, more governments and fossil fuel companies have committed to take action on methane. Global efforts to report emissions estimates consistently and transparently are strengthening, and studies suggest emissions are falling in some regions. However, overall emissions remain far too high to meet the world’s climate goals. Large methane emissions events detected by satellites also rose by more than 50% in 2023 compared with 2022, with more than 5 Mt of methane emissions detected from major fossil fuel leaks around the world – including a major well blowout in Kazakhstan that went on for more than 200 days.

Close to 70% of methane emissions from fossil fuels come from the top 10 emitting countries

Of the nearly 120 Mt of emissions we estimate were tied to fossil fuels in 2023, around 80 Mt came from countries that are among the top 10 emitters of methane globally. The United States is the largest emitter of methane from oil and gas operations, closely followed by the Russian Federation (hereafter “Russia”). The People’s Republic of China (hereafter “China”) is by far the highest emitter in the coal sector. The amount of methane lost in fossil fuel operations globally in 2023 was 170 billion cubic metres, more than Qatar’s natural gas production.

The methane emissions intensity of oil and gas production varies widely. The best-performing countries score more than 100 times better than the worst. Norway and the Netherlands have the lowest emissions intensities. Countries in the Middle East, such as Saudi Arabia and the United Arab Emirates, also have relatively low emissions intensities.

Turkmenistan and Venezuela have the highest. High emissions intensities are not inevitable; they can be addressed cost-effectively through a combination of high operational standards, policy action and technology deployment. On all these fronts, best practices are well established.

Cutting methane emissions from fossil fuels by 75% by 2030 is vital to limit warming to 1.5 °C

The energy sector accounts for more than one third of total methane emissions attributable to human activity, and cutting emissions from fossil fuel operations has the most potential for major reductions in the near term. We estimate that around 80 Mt of annual methane emissions from fossil fuels can be avoided through the deployment of known and existing technologies, often at low – or even negative – cost.

In our Net Zero Emissions by 2050 (NZE) Scenario – which sees the global energy sector achieving net zero emissions by mid-century, limiting the temperature rise to 1.5 °C – methane emissions from fossil fuel operations fall by around 75% by 2030. By that year, all fossil fuel producers have an emissions intensity similar to the world’s best operators today. Targeted measures to reduce methane emissions are necessary even as fossil fuel use begins to decline; cutting fossil fuel demand alone is not enough to achieve the deep and sustained reductions needed.

Full implementation of COP28 and other pledges would cut fossil fuel methane emissions by 50%

The COP28 climate summit in Dubai produced a host of new pledges to accelerate action on methane. Importantly, the outcome of the first Global Stocktake called for countries to substantially reduce methane emissions by 2030. Additionally, more than 50 oil and gas companies launched the Oil and Gas Decarbonization Charter (OGDC) to speed up emissions reductions within the industry, new countries joined the Global Methane Pledge, and new finance was mobilised to support the reduction of methane and greenhouse gases (GHGs) other than carbon dioxide (CO₂).

Substantial new policies and regulations on methane were also established or announced in 2023, including by the United States, Canada, and the European Union and China published an action plan dedicated to methane emission control. A series of supportive initiatives have been launched to accompany these efforts, such as the Methane Alert and Response System and the Oil and Gas Climate Initiative’s Satellite Monitoring Campaign.

Taken together, we estimate that if all methane policies and pledges made by countries and companies to date are implemented and achieved in full and on time, methane emissions from fossil fuels would decline by around 50% by 2030. However, in most cases, these pledges are not yet backed up by detailed plans, policies and regulations. The detailed methane policies and regulations that currently exist would cut emissions from fossil fuel operations by around 20% from 2023 levels by 2030. The upcoming round of updated Nationally Determined Contributions (NDCs) under the Paris Agreement, which will see countries set climate goals through 2035, presents a major opportunity for governments to set bolder targets on energy-related methane and lay out plans to achieve them.

Around 40% of today’s methane emissions from fossil fuels could be avoided at no net cost

Methane abatement in the fossil fuel industry is one of the most pragmatic and lowest cost options to reduce greenhouse gas emissions. The technologies and measures to prevent emissions are well known and have already been deployed successfully around the world. Around 40% of the 120 Mt of methane emissions from fossil fuels could be avoided at no net cost, based on average energy prices in 2023. This is because the required outlays for abatement measures are less than the market value of the additional methane gas captured and sold or used. The share is higher for oil and natural gas (50%) than for coal (15%).

There are many possible reasons why companies are not deploying these measures even though they pay for themselves. For example, the return on investment for methane abatement projects may be longer than for other investment opportunities. There may also be a lack of awareness regarding the scale of methane emissions and the cost-effectiveness of abatement. Sometimes infrastructure or institutional arrangements are inadequate, making it difficult for companies to receive the income from avoided emissions.

Regardless of the value of captured gas, we estimate that it would be cost-effective to deploy nearly all fossil fuel methane abatement measures if emissions are priced at about USD 20/tonne CO₂‑equivalent. Tapping into this potential will require new regulatory frameworks, financing mechanisms and improved emissions tracking.

Delivering the 75% cut in methane emissions requires $170bn to 2030

We estimate that around USD 170 billion in spending is needed to deliver the methane abatement measures deployed by the fossil fuel industry in the NZE Scenario. This includes around USD 100 billion of spending in the oil and gas sector and USD 70 billion in the coal industry. Through 2030, roughly USD 135 billion goes towards capital expenditures, while USD 35 billion is for operational expenditures.

Fossil fuel companies should carry the primary responsibility for financing these abatement measures, given that the amount of spending needed represents less than 5% of the income the industry generated in 2023. Nonetheless, we estimate that about USD 45 billion of spending in low- and middle-income countries requires particular attention, as sources of finance are likely to be more limited. To date, we estimate that external sources of finance targeted at reducing methane in the fossil fuel industry total less than USD 1 billion, although this should catalyse a far greater level of spending.

New tools to track emissions will bring a step change in transparency

Better and more transparent data based on measurements of methane emissions is becoming increasingly accessible and will support more effective mitigation. In 2023, Kayrros, an analytics firm, released a tool based on satellite imagery that quantifies large methane emissions on a daily basis and provides country-level oil and gas methane intensities. GHGSat, another technology company, increased its constellation of satellites in orbit to 12 and started to offer targeted monitoring of offshore methane emissions, while the United Nations Environment Programme (UNEP) Methane Alert and Response System (MARS) ramped up usage of satellites to detect major methane emission events and alert government authorities and involved operators.

Despite this progress, little or no measurement-based data is used to report emissions in most parts of the world – which is an issue since measured emissions tend to be higher than reported emissions. For example, if companies that report emissions to UNEP’s Oil & Gas Methane Partnership 2.0 were to be fully representative of the industry globally, this would imply that global oil and gas methane emissions in 2023 were around 5 Mt, 95% lower than our estimate. Total oil and gas emissions levels reported by countries to the UN Framework Convention on Climate Change are close to 40 Mt, about 50% lower than our 2023 estimate. There are many possible reasons for these major discrepancies, but they will only be resolved through more systematic and transparent use of measured data.

Regardless, all assessments make clear that methane emissions from fossil fuels operations are a major issue and that renewed action – by governments, companies, and financial actors – is essential.

Visit here to read the IEA’s “Global Methane Tracker 2024” report

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This article is taken from the IEA Newsroom and is published with permission