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    From the Editor: Methane emissions in the crosshairs [Gas in Transition]

Summary

The industry must eliminate emissions and demonstrate to other stakeholders that it is doing so. [Gas in Transition, Volume 1, Issue 6]

by: Joseph Murphy

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Complimentary, Natural Gas & LNG News, Top Stories, Insights, Premium, Editorial, Gas In Transition Articles, Vol 1, Issue 6, Energy Transition

From the Editor: Methane emissions in the crosshairs [Gas in Transition]

In various jurisdictions, new legislation is on the horizon that will seek to curb how much methane is escaping into the atmosphere from energy installations, amid growing awareness of its significant potency as a greenhouse gas. Whereas 2020 was the year when hydrogen took centre stage in discussions on how energy can be decarbonised, in 2021, the focal point is clearly on methane release. Part of this issue of Gas in Transition is therefore devoted to this critical subject.

The EU, keen to establish a leadership position in decarbonisation efforts, is preparing to publish a legislative proposal this November that will set requirements for oil and gas partners to accurately quantify, report, and more importantly take steps to reduce, the amount of methane that is released from their infrastructure. Over in the US, the Biden administration not only wants to bring back Obama-era rules on energy sector methane emissions, but impose even tougher standards for operators to follow.

While both government and industry alike recognise the urgent need to address methane emissions, perhaps the greatest difficulty in crafting effective legislation to tackle the problem is quantifying how much methane is really escaping. Analysts of satellite data typically provide much higher estimates for energy sector emissions than those of the operators quantifying methane release on the ground. And both sides say their evaluations bear closer resemblance to reality.

Seeking to overcome these inconsistencies, efforts are underway to create a uniform standard for accurately quantifying energy sector methane emissions that the majority of stakeholders can accept. Meanwhile, various industry-led initiatives are underway to tackle the emissions now, rather than wait for legislative solutions.

The industry faces two serious challenges here. First it must eliminate emissions, whether known or fugitive, wherever possible. Second, it must convince other stakeholders of its commitment to this task; to demonstrate that the sector can be part of the solution rather than just a source of the problem. Failure to do so will likely lead to unrealistic, impractical and perhaps even draconian rules being imposed on the industry by authorities, further putting global energy security at jeopardy to the detriment of all.

Natural gas suppliers face another threat. Increasingly, natural gas itself is no longer recognised as having a role to play in the energy transition, and suppliers have responded by making the case for blue hydrogen as a means of bringing about further reductions in emissions. But blue hydrogen too is now under unprecedented attack.

While the European Commission and other authorities view blue hydrogen as an inferior product to green hydrogen in the decarbonisation toolset, they have also generally recognised that blue hydrogen has an intermediary role to play in establishing a fully-formed hydrogen market. But a recent report has been widely circulated in media that casts doubt on the benefits that blue hydrogen can provide, going so far as to say that blue hydrogen might even have a greater greenhouse gas footprint than burning gas or coal for heat. As we explore in this issue, this claim has been contested.

Cause for optimism, the UK announced its long-awaited hydrogen strategy last month, which sets out a technology-agnostic approach to hydrogen. The government views both green and blue hydrogen as equally important solutions for decarbonising hard-to-abate industries.

The UK can establish a leadership position in European hydrogen, according to the strategy, producing sufficient volumes of the fuel to not only clean up its own industries, but export a large surplus to continental Europe. That in turn would help scale up a hydrogen market for European industry, while it waits for green hydrogen to become sufficiently low-cost and available to make a dent in emissions.

With the EC's recent unveiling of its Fit for 55 package, which aims to bring regulations across most sectors in line with the bloc's new climate ambitions, Europe looks set to spearhead the decarbonisation drive, even though it is not the biggest source of emissions. That unwanted title goes to China, but Beijing is also taking steps to confront its emissions.

In an effort to accelerate its Blue Sky programme to supplant coal with gas in the power sector, China's government launched its own carbon trading market over the summer. The landmark move follows president Xi Jinping's pledge last year to ensure that Chinese emissions peak no later than 2030, ahead of the country reaching carbon neutrality by 2060.

Results from China's nascent carbon market have underwhelmed. While trading volumes were high in the first few days of trading, they have since slumped. Rules governing the market are nowhere near as stringent as those in Europe, although further reforms have been proposed. But in any case, by signalling that it is taking emissions more seriously than ever before, the government has succeeded in pressuring provincial authorities and companies to reduce coal use as much as possible and switch to cleaner fuels such as natural gas.

While China is scaling up gas use, neighbouring Japan is taking a decidedly different path. In its 2030 strategy released in July, Japan strives to scale back the share of LNG in its power mix from 37% at present to 20% by the end of the decade. But this strategy assumes a rapid deployment of renewables that may not be achievable, and it also assumes that nuclear power will be able to reclaim its status as a key energy source. According to the Tokyo-based Renewable Energy Institute, almost all of Japan's 27 reactors would have to return to operation. So far only 10 have restarted since the 2011 Fukushima nuclear accident, and local opposition to more facilities coming back online remains strong.