In April 2015, the Rhodium Group, a New York-based advisory firm, published a report on the importance of reducing global methane emissions. According to the report, some 3.6 trillion cubic feet of natural gas—primarly composed of methane—escaped into the atmosphere in 2012 from oil and gas operations. Methane leakage is bad for the economy and the environment—the former because the wasted gas translated into roughly $30 billion in lost revenue, the latter because methane is 84 times more potent than carbon dioxide in the first two decades after its release.
Rhodium’s report, Untapped Potential: Reducing Global Methane Emissions from Oil and Natural Gas Systems, finds that countries can eliminate methane leakage at little cost, simultaneously reducing emissions and monetizing economic waste. “Because methane is the primary component of natural gas,” according to the report, “recovering and using leaked methane can increase sales revenue. That can offset some, if not all, of the cost of leak detection and repair.” That finding has been confirmed by the Environmental Protection Agency and non-profit organizations such as the World Resources Institute.
The Rhodium report suggests that countries can commit to reducing methane leakage through their Intended Nationally Determined Contributions, or INDCs, the climate pledges that countries have agreed to make ahead of the 2015 United Nations Climate Change Conference in Paris later this year. When they were designed in 2013, INDCs were meant to encourage countries to take steps toward reducing greenhouse gasses without forcing them into more stringent agreements, which have historically failed.
In the first two decades after its release, methane is 84 times more potent than carbon dioxide.
But the INDC model is plagued by weakness. For one, few believe that the pledges will result in enough actual action to keep global warming within the limits established by the United Nations Framework Convention on Climate Change, adopted in 1992. In February of this year, Christiana Figueres, the United Nation’s top climate official, told reporters in Brussels that the INDCs “will not get us onto the 2°C pathway,” referring to the global agreement to keep the increase in temperatures less than two degrees Celsius above pre-industrial levels.
Other experts have echoed Figueres, pointing out that countries design their pledges independently and without transparency. There is no way to hold them accountable to their goals, there is no third-party verification system through which a central body can verify whether countries have reduced their emissions, and the United Nations Framework Convention on Climate Change has no enforcement mechanism. The long-term nature of climate-related commitments allows politicians to delay real action, bequeathing the problem to their successors.
The INDC’s shortcomings should not prevent climate negotiators from seeking to reduce methane emissions. On the contrary, countries should develop bilateral or small group agreements that compliment INDCs and drive near-term action. Programs that provide multiple benefits, such as one that links improved air quality with economic growth, are ideal candidates, as they would not be propelled solely by climate goals.
The United States should take the lead in initiating such an agreement aimed at limiting methane emissions in the oil and gas sector. The United States is well positioned for this role given its place at the forefront of the shale oil and gas revolution. A bilateral or small group agreement could build credibility for U.S. President Barack Obama and the U.S. Congress with a relatively small financial investment. And U.S. energy companies, which already face domestic pressure to become more climate-friendly, could see expanded international growth as a result of a small group methane deal.
The long-term nature of climate-related commitments allows politicians to delay real action, bequeathing the problem to their successors.
The United States participates in a variety of energy and climate initiatives, including direct partnerships with China and India and UN programs such as the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants (CACC). But some of these, such as the CACC, are too large and unwieldy to focus on specific objectives. A well-designed agreement should be small enough to be functional and should provide adequate incentives to all sides.
Consider a hypothetical climate agreement between the United States and a country, such as Argentina or Nigeria, in the top 30 percent of global methane emitters. The partner country—in this case Argentina or Nigeria—would commit to limiting its emissions to below a certain percentage and allowing third-party verification. In exchange, the United States would provide financing, technology, and professional expertise in the oil and gas sector. For the partner country, the carrots include increased gas sales, improved air quality, the implementation of best practices in infrastructure design, and a bolstered international reputation. And then there’s the stick: If a country fails to meet its reduction goal, it would have to pay back the United States for its investment.
The UN should enthusiastically support these sorts of deals. A common critique of such agreements is that they undermine UN leadership. Not so. Smaller agreements can complement INDCs by providing greater incentives for countries to meet their international commitments. And implementing a workable international partnership provides the building blocks for future negotiations, another UN objective. Due to the economic and public health benefits of reducing methane emissions, such agreements can also limit climate freeriding as more and more countries will be driven to participate.
If the United States wants to repair its environmental reputation, reassert its position as a global leader, and promote U.S. industry, it should capitalize on the window created by the upcoming Paris negotiations and begin reaching out to a small group of modestly sized oil and gas producing nations. As the Rhodium report argues, the “reduction of methane leakage today can deliver immediate climate benefits while nations pursue longer-term strategies to reduce CO2.” Foregoing this opportunity will further erode international confidence in the ability of the United States and the United Nations to structure effective climate solutions. And neglecting to reduce methane emissions in the near term will all but ensure that the globe continues to warm to unsafe levels.