It is increasingly clear that methane emissions from fossil fuels operations represent investment risk. Methane emissions are responsible for about 30% of global warming to date – and deep cuts in these emissions are required this decade to meet Paris goals.
In the past year, regulation has tightened significantly on methane emissions from fossil fuels, in both producer and importer jurisdictions. In tandem, companies are increasingly being scrutinised on their methane performance by independent measurement campaigns, helped by the recent launch of new satellite instruments.
The topic also came under the spotlight at COP28 as a raft of nations and companies unveiled new commitments.
While this momentum is promising, significant risks are apparent where companies are poorly prepared for these advancing expectations and requirements. Many remain in the dark as to the true scale and origin of their emissions, relying upon factor-based estimates in reporting rather than direct measurement.
This paper aims to support investors to address these risks in their portfolios. It provides engagement frameworks for addressing methane emissions from oil and gas, and coal operations, and for engaging the ecosystem – including banks, governments, and value chain companies.
These frameworks are supported by chapters covering the climate science of methane, the regulatory and reporting landscapes, and deep dives into tackling methane emissions at coal and oil and gas operations. In each section, take home messages for investors are pulled out as key points.
The scale and urgency of the problem is clear: in the IEA’s Net Zero Emissions by 2050 scenario, methane emissions from fossil fuels falls by 75% by 2030, relative to 2022. Investors are recognising that there is investment and climate opportunity in rising to this challenge.