With certified gas based on methane performance taking off so fast, let’s take a minute and think about the impact this could make. Methane is an extremely powerful greenhouse gas: 86 times more impactful than CO₂ on a 20-year time horizon.
If a global market were to develop and mandate no greater than 0.2% leakage of methane worldwide by the end of the decade, we could eliminate 5.7 Gtons of CO₂e. This is the equivalent of all the yearly emissions generated by the U.S. and is arguably the most ambitious role that oil and gas producers can play this decade in meeting a 1.5 C future.
In moving forward with certification, U.S. operators would have the leading advantage at meeting international import standards, state and utility performance targets, as well as pave the way for new and improved forms of emissions and ESG disclosures using measurement.
A certified gas market based on methane emissions can play a major role in achieving these goals—and quickly—whereby buyers will have the opportunity to demand the lowest emissions from every basin in the world.
So, what do we need to do to create a certified gas market that is both successful and impactful?
Effective and efficient markets must be transparent and credible. Given the rising opportunity for a certified gas market, it’s time to establish basic principles for all programs participating in this space to work towards. And because details matter, we cannot rely on platitudes to get us very far.
As we’ve seen with attempts at market developments in other sectors, the risk of greenwashing is real and must be taken seriously—as the promise of a certified gas market can be undone as fast as it was created. Because corrections to deception or bogus instruments will lag behind market uptake, it is imperative to bake credible principles into the foundation—and not try to retroactively bolt them on afterward. With 2025 and 2030 emission reduction targets looming, we don’t have time for corrections to take place organically. Let us all agree that it is our responsibility to live up to these commonsense principles and avoid the undoing of the market itself.
The following principles are a good starting point for a burgeoning environmental attribute market. Producers, buyers, regulators, stakeholders only need to ask themselves, would I settle for lower standards in any other financial instrument? Would I put my investments at risk with anything less?
A transparent and credible certified gas market can be achieved through the following principles and litmus tests:
Principle 1: Transparent, Robust Standards
- Is the certification standard publicly available?
- Does the standard have clear metrics, and are they reproducible, auditable?
- Does the standard allow apples to apples comparison of natural gas methane intensity?
- Do the metrics allow quantification and uncertainty in methane emissions?
- Does it use the most up-to-date methane science and stakeholder feedback to build its framework?
- Are they calibrated over time to reflect impact and accuracy?
Principle 2: Third-party Audits
- Is the auditor a subject matter expert and accredited to the standards?
- Is the auditor independent from the data and data provider?
- Is the auditor independent from the operator?
- Is the auditor independent from the certifier?
- Is there a financial, contractual, and reputational separation between the above parties to avoid conflict of interest?
Principle 3: Facility-wide Certification
- Is the certification facility-wide, so as to avoid “cherry picking” only the best assets?
- Is the certification facility-wide, so as to include all assets—including those that are older, marginal producers with higher potential for emissions?
- Does the overall physical gas from the operator continue to represent the environmental attributes of the certification?
- If a third-party investigation were to review the facility’s assets, would they find no major discrepancies?
Principle 4: Marketable
- Is a Digital Registry used for all natural gas certifications and subsequent trades?
- Does it have policies and governance in place to avoid double counting?
- Is the certification standard technology neutral to enable scalability and innovation of the market to fulfill the need for methane mitigation tools?
- Does it support the entire natural gas supply chain?
- Is it adoptable by global natural gas markets and regulators?
For methane certification to have maximum impact, or to pave the way for smart regulation, a certified gas market must have robust, defendable standards and consist of a credible and transparent foundation. Civil society organizations, like EDF, are already taking a close look at certifications and the risks they pose for the gas industry if set up incorrectly.
This is the right time to set up the rules for a certified gas market that will be viewed as credible by participants, and that will rapidly draw down methane emissions in the process. Trying to bolt on market rules and principles after the fact will only yield continued methane emission releases and a dysfunctional market. Producers, regulators, buyers and other stakeholders need to adopt these basic principles as elemental to any certified gas market in order to launch it for all of its significant potential.
2023-01-27 - Dan Pickering, Chief Investment Officer of Pickering Energy Partners (PEP), discusses U.S. production and M&A after a “funky and weird” 2022 and sees the U.S. shale boom settling into a “shale business.”
2022-12-27 - INPEX’s purchase and sales agreement would add 1 million tons per annum (mtpa) of LNG from the U.S.
2022-12-29 - The assets will generate $55 million in annual gross revenues, Camber said.
2022-12-13 - The block covers an area of 639 sq km and includes the shallow undeveloped Mafraq heavy oil field.
2023-01-25 - PKN Orlen plans for the LNG supplied by Sempra Infrastructure’s Phase 1 Port Arthur LNG project to strengthen energy security in Europe.