Moving on Methane: Cutting Methane Emissions Area of Focus During COP28

December 13^th marked the end of the COP28 climate talks in Dubai. Amid discussions of climate adaptation and negotiations on addressing fossil fuels were several advances toward making significant cuts in methane emissions. COP28 saw the launch of a global alliance of oil and gas companies aimed at eliminating methane emissions in the industry. At the same time, the United States and Canada announced new industry regulations on methane at the meeting.

Industry Action: Oil and Gas Companies Agree to Slash Methane Emissions

Fifty oil and gas companies from around the world signed onto the Oil and Gas Decarbonization Charter (OGDC), an agreement to decarbonize the industry and eliminate methane emissions by 2030. The companies signing on to the OGDC account for more than 40% of worldwide oil and gas production. Some steps outlined in the OGDC include a ban on gas flaring, increased efforts to detect and mitigate methane leaks, and independent monitoring of oil and gas wells and equipment. Methane is a notable contributor to climate change as it has more than 80 times greater warming potential than carbon dioxide over its first two decades in the atmosphere, thus eliminating methane emissions from leaking oil and gas wells would mark a significant step toward meeting global climate goals.

US Oil & Gas: EPA’s Upcoming Regulations

Like previous climate meetings, COP28 set ambitious targets for addressing climate change. However, the only way to meet these targets is through the actions of individual nations. To that end, the United States announced new rules on oil and gas methane emissions that will be implemented by the Environmental Protection Agency (EPA). The EPA projects that once implemented these new rules would cut industry methane emissions by almost 80 percent through 2038, keeping an estimated 58 million tons of methane out of the atmosphere. This reduction would have a similar climate impact to eliminating the emissions of 300 million fossil fuel-powered cars over one year.

One of the main requirements of the EPA rules is the banning of routine flaring of natural gas, with later requirements to capture methane instead of burning it. The EPA will also require oil and gas companies to closely monitor wells and equipment for methane leaks. The new regulations also call for independent monitoring by third parties using various remote sensing methods to detect leaks that might otherwise be missed.

Canada Oil & Gas: Amended Methane Reduction Framework

At the COP-28 summit, Canada’s Environment Minister Steven Guilbeault announced proposed amendments to federal regulations for oil and gas practices in order to reduce methane emissions, with many restrictions becoming effective in 2027. The stated goal of the proposed regulatory framework from Ottawa is to reduce methane releases by 75% by 2030 (from 2012 levels), keeping ~200 million metric tons of GHG emissions out of the atmosphere.

Implementation costs for the industry (2027-2040) were estimated at about $15 billion. One study indicates that methane reduction costs may average ~$11/ton; however, costs of capture and transport are highly variable.

In the proposed regulatory amendments:

• Elimination of venting and flaring after 2030 (with some exceptions)
• Establishment of a methane “Centre of Excellence” to support better data and reporting ($30 million in federal funding)
• Equipment inspections/replacements, continuous monitoring, and leak detection/repair:
  • Type 1 – Upstream facility with a natural gas compressor, a tank for produced liquids storage, a flare, or a gas-liquid separator. Requires frequent comprehensive inspections and emissions review.
  • Type 2 – Other upstream facilities not classified as Type 1. Requires fewer inspections and fewer emissions readings.

Existing regulations are already in place to reduce methane emissions by 40% to 45% by 2025, and a 2021 report said Canada was expected to achieve the reduction rate. However, accurately monitoring and measuring methane leaks and releases is still a work in progress. The U.S. is the world’s largest producer of both oil and natural gas, and Canada is the fourth largest oil and sixth largest gas producer.

The U.S. EPA has also recently released national methane reduction regulations and programs that are intended to monitor and measure industry methane emissions. Questions remain about state implementation and legal/technical details. The EU is also legislating acceptable levels of methane emissions and intensity for both domestic production and imported energy.

Federal Push/Provincial Pushback

Alberta, Saskatchewan, and British Columbia previously signed equivalency agreements with Ottawa, allowing provinces to follow their own methane regulations to reach the federal goals. The agreements for Alberta and B.C. expire in 2025 and Saskatchewan’s ends in 2024. The premiers of these provinces are pushing back against federal restrictions on their oil and gas sectors, as there are already provincial standards and practices that are meeting the current climate goals.

Alberta, Canada’s largest producer, has its own regulatory framework on methane and reached its 45% methane emissions reduction goal for 2025 (from 2014 levels) three years early, in 2022.

Saskatchewan signed an agreement with Ottawa in 2020 to manage its emissions and achieved a 60% emissions reduction between 2019 and 2022. Saskatchewan officials said the amendments amount to a production limit and infringe on provincial jurisdiction and resource management.

B.C. regulations include emissions caps on oil and gas, with new LNG projects required to plan for net-zero emissions by 2030. The B.C. framework includes the goal of 45% emissions reduction (from 2005 levels) by 2030.

Additional legal questions remain about federal overreach on environmental matters.

Comments are open until February 14, 2024, with finalized regulations expected in spring 2024.