When 100 countries signed a global pact to cut methane emissions at the COP26 climate conference in Glasgow in November 2021, there was one notable absence from the proceedings: Russia.
On paper, the world’s fourth-largest emitter of methane has much to gain from signing on to the deal. It is the biggest exporter of natural gas, essentially methane mixed with a few traces of heavier hydrocarbons. Any molecules that it emits into the atmosphere are ones it is not making money selling.
The idea behind the Global Methane Pledge (GMP), was that plugging leaks was so profitable that companies and governments would do it out of self-interest alone, helping advance the goal of cutting emissions by 30 percent over the decade through 2030.
Russian President Vladimir Putin, gearing up for an invasion of Ukraine four months later in which natural gas would be used as a weapon of war, chose not to attend the Glasgow meeting.
Yet that conflict might be doing more to reduce the world’s methane emissions than all the well-meaning actions of signatories over the 18 months since the US and EU instituted the GMP. Putin’s failure to score a long-awaited pipeline deal so far during this week’s summit with Chinese President Xi Jinping (習近平) only underlines that reality.
METHANE MENACE
Methane is seen as particularly important because its ability to warm the atmosphere is much greater than carbon dioxide. Although human methane emissions of 357 million metric tonnes a year are less than 1 percent of the tonnage of carbon dioxide pumped out annually, they account for about a quarter of global warming.
Some estimates are even higher. The Intergovernmental Panel on Climate Change this week said anthropogenic methane has raised global temperatures by 0.5°C, compared with 1.2°C for carbon dioxide.
If only the world had evidence that it is making progress on reversing that trend. Far from falling, methane emissions from the energy industry were up by about 4.9 percent last year relative to 2020 levels, the International Energy Agency (IEA) reported last month.
That is particularly troubling when you consider that conditions last year, when natural gas prices in Europe rose to more than 10 times their 10-year average, were about as favorable as is ever likely to be seen for efforts to make profits out of waste methane.
Part of the problem is that the theoretical benefits of capturing and selling leaking gas are often less than meet the eye. Gas that is not vented or burned off must be captured, piped, chilled, processed, liquefied, shipped or otherwise delivered from its source to a paying customer. Doing all that requires a lot of property, facilities and equipment, and if the returns on that investment look thin, companies would not do it unless they are forced to.
Half way to its target, a 2015 World Bank initiative to end routine flaring by 2030 has made precious little progress. Last year, it represented about the same 4 percent of gas production that it has for more than two decades.
Far from rushing to take advantage of the opportunity opened up by the GMP, the world is instead softening laws designed to compel the plugging of gas leaks. EU energy ministers last year watered down European Commission legislation on the topic, and Republicans in the US House of Representatives last week proposed a bill to repeal a fee on methane emissions introduced under US President Joe Biden’s Inflation Reduction Act.
In contrast to the gradualist aspirations of the pledge, Putin’s attempt to weaponize methane looks more like a revolutionary change. As with many revolutions, though, it might well end up backfiring on its plotters.
Not only did it not increase the world’s dependence on natural gas, it has brought an unexpected consumption peak into view. The IEA last year forecast that demand would not grow past a high of about 4,372 billion cubic meters (bcm) in 2030, even in its most conservative scenario.
The world’s gas consumers are shying away from a terrifyingly unreliable supplier. If the shock nudges governments to stick to the decarbonization pledges they promised, rather than just legislation currently on the books, the reduction would be even larger.
That could represent a real improvement. There is about 3.4 bcm of methane released into the atmosphere for every 100 bcm delivered to customers, so cutting 2030 demand by 680 bcm would slash methane emissions by 23 bcm — more than a fifth of the reduction needed to hit the GMP’s target of a 30 percent cut.
On top of that, the price of gas appears to have structurally reset at higher levels. Benchmark US Henry Hub futures for delivery in December 2025 are trading at about US$4.87 per million British thermal units at present, about two-thirds higher than the US$3 levels at which they languished for five years before the Ukraine invasion.
COSTS MUST RISE
If anything is going to encourage gas producers to fulfill the GMP’s promise of turning waste into profits, it is higher long-term prices for that waste.
Even if oil and gas emissions are cut to zero, some of the biggest sources would be unaffected. Farming, biomass and bioenergy together account for nearly half of our emissions and might pump out enough gas to warm the planet by 1°C this century. Almost as much methane leaks from coal mines as from all the gas installations in the world. The producers responsible for those slices of the problem often lack the capital, sophistication or technical ability to capture pollution as effectively as the petroleum industry, and have zero financial incentive to do so.
Cutting the global methane footprint is going to be far more challenging than the positive vibes of the GMP would suggest. It might end up being war, rather than good intentions, that finally breaks the back of our gas habit.
David Fickling is a Bloomberg Opinion columnist covering energy and commodities. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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