{"id":20984,"date":"2021-04-07T01:00:44","date_gmt":"2021-04-07T05:00:44","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=20984"},"modified":"2021-04-06T16:38:19","modified_gmt":"2021-04-06T20:38:19","slug":"cutting-methane-emissions-from-natural-gas-gives-eu-global-climate-leverage","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2021\/04\/07\/cutting-methane-emissions-from-natural-gas-gives-eu-global-climate-leverage\/","title":{"rendered":"Cutting methane emissions from natural gas gives EU global climate leverage"},"content":{"rendered":"

\"\"<\/a>Policymakers around the world increasingly recognize that along with carbon dioxide, cutting emissions of methane is critical for reaching the temperature goal of the Paris Agreement<\/a>. Methane is a key element in the reinvigorated U.S. climate strategy and \u2014 for the first time \u2014 discussed in China\u2019s latest five-year plan.<\/p>\n

Now the EU has a chance to significantly influence methane emission reductions not only within Europe, but globally.<\/p>\n

Methane from human activities is responsible for at least 25% of today\u2019s warming. One of the largest emitters is the oil and gas industry. The European Commission Methane Strategy released last October identifies the global oil and gas sector as the most cost-effective opportunity for methane emission reductions.<\/p>\n

The key to the EU\u2019s global methane leverage lies in the continent\u2019s vast gas market. A new policy brief by the Florence School of Regulation and Environmental Defense Fund<\/a> describes policy pathways to unlock the opportunity, while a separate analysis<\/a> prepared for EDF by Germany\u2019s Enervis Energy Advisors illustrates how a comprehensive policy could offer far-reaching climate benefits.<\/p>\n

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Europe\u2019s global methane footprint<\/strong><\/p>\n

Europe is the world\u2019s largest buyer of internationally traded gas. Imports account for 85% of its consumption. Top suppliers include Russia, Norway and Algeria, with an increasing role for liquid natural gas from Qatar, Nigeria and the U.S.<\/p>\n

Crucially, the \u2018methane footprint\u2019 of gas produced in these supplier countries is estimated to be between three and eight times larger<\/a> than the methane emissions from the gas supply chain within the EU\u2019s borders. A solution for the EU to consider: A methane performance standard for all gas consumed in the EU, both imported and domestically produced.<\/p>\nCutting methane emissions from natural gas gives EU global climate leverage <\/a><\/span>Share on X<\/a><\/span>\n

A performance standard would complement other essential measures under discussion in Brussels, including limits on routine venting and flaring, and safeguards like frequent leak detection and rapid repairs at well sites and compressor stations. It would also create the potential to extend methane reductions far beyond the gas produced for the EU.<\/p>\n

Implementing a methane performance standard<\/p>\n

A performance standard could be introduced through different routes such as the revised Gas Directive, through a Carbon Border Adjustment Mechanism or as standalone legislation. The FSR brief explains how performance could be measured with a clearly specified \u201cemission intensity\u201d metric \u2014 the amount of methane emitted relative to the volume of gas sold by the producer. The lower the intensity, the better.<\/p>\n

The emissions data could come from an EU methane monitoring, reporting and verification regulation that builds on the OGMP 2.0 reporting framework<\/a> spearheaded by the EC, the UN Environment Programme, the Climate & Clean Air Coalition and EDF<\/a>. Gas from companies not reporting according to an MRV regulation would be assigned a default methane emissions intensity value.<\/p>\n

Based on existing industry commitments<\/a>, FSR and EDF suggest an initial benchmark upstream emission intensity of 0.20%. Any gas with a higher methane intensity would be subject to financial penalties. To avoid methane penalties, entities shipping gas on the EU transmission system would either need to reduce volumes of unabated gas or switch to a lower methane intensity source.<\/p>\n

Potential for high impact at low cost to EU households<\/strong><\/p>\n

Combining domestic methane regulations with the EU\u2019s significant purchasing power in global gas markets creates powerful leverage. To illustrate, EDF asked Enervis to estimate the impact of an EU methane emissions price on all natural gas imported or produced in the EU in line with the penalties described in the FSR policy brief.<\/p>\n

While the numbers are based on specific assumptions, the results underscore the potential:<\/p>\n