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Five Things to Watch as Industry Tackles Methane in 2018

Climate

As we close out 2017, we are energized by successes in our work with oil and gas industry partners. And as we look forward to a new year and a fresh start, here are five things we'll be looking for as industry leaders step up methane action in 2018.


1. Target Setting

This year, 10 leading companies through the Oil and Gas Climate Initiative supported the ambition of achieving "near zero" methane emissions, and committed to set quantitative methane targets in 2018. This is a big deal and one we pointed to as evidence industry is stepping up. 2018 will be a key year for follow through in establishing and announcing those targets. We will look for targets that are ambitious, innovation-forcing and linked to credible plans for verification. We will also look that this action addresses methane from both oil and gas, as the International Energy Agency's (IEA) data shows that more methane comes from oil production than from gas production.

While there are different formats and philosophies for target setting, aiming for absolute emission reductions—whether framed as a cap or percentage reduction from a specified baseline—keeps things simple and assures environmental results. In contrast, intensity-based target's reliance on production volume creates two difficulties—verification by civil society becomes even more difficult as non-public business activity data is needed, and the environmental benefit is uncertain because it fluctuates with production levels

2. Expansion of Global Action Plans

Companies like ExxonMobil committed to five principles to reduce methane emissions globally. This includes key actions like conducting "systematic monitoring," reducing purposeful venting and leaks of methane into the atmosphere, incorporating methane management into maintenance plans and new project design, and highlighting need for regulations.

2018 will be an important year for these multi-national corporations to develop and implement plans to instill methane management as a key part of how they do business all around the world. As companies undertake their action plans, it will be necessary to complement a laser focus on their own operations with a holistic outreach approach that matches the scope of change needed. That's why engaging partners across the value chain, joint ventures and others should also become a priority.

3. Championing of Government Policy and Regulations

Industry leadership on climate must include supporting government action, because as the IEA noted, even strong voluntary efforts—while important—are not sufficient. And the absence of a level playing field rewards the worst actors. This is true for methane as well. In 2017, senior executives from companies like BP, Shell and Exxon committed to support methane policy and regulations, including having their companies work with governments and NGO's in development and implementation of policies.

Even as the Trump administration targets sensible methane safeguards, 2018 will likely bring policy-making opportunities in other venues, such as Pennsylvania, Canada and Mexico. Gone must be the days of industry attacking climate policy through national and state trade associations. Leading companies will be increasingly accountable to support government action that addresses harmful emissions.

4. Technology Breakthroughs

Unlocking breakthroughs in new technologies and approaches to reduce emissions has the potential to cut more emissions at even less cost, helping industry to make good on ambitious targets and commitments. One key metric to watch is the level of monetary support that the Oil and Gas Climate Initiative provides to methane projects in 2018. Although the Oil and Gas Climate Initiative has $1B, of which several hundreds of millions are expected to go to methane, the initial round of supported projects in 2017 did not include anything methane related. That needs to change in 2018.

The Environmental Defense Fund's new collaboration with Stanford and industry advisors focuses on demonstrating new methods to rapidly detect and quantify methane leaks, for example by drone, aircraft or truck. We are nearing completion on a very competitive application season, and next year will look closely at the results of Stanford field testing, to understand which mobile technologies hold potential to replace or enhance traditional approaches to leak detection.

And, 2017 was a breakthrough year for stationary monitoring—with Statoil, Shell and PG&E stepping forward to conduct pilots. 2018 will be an important year to spread learnings from 24/7 monitoring and to expand deployment of this emerging best management practice.

5. Enhanced Disclosure

With industry's reputation at stake in the expanding effort to control methane emissions, enhanced disclosure will be vital to secure public trust, to encourage action by the next wave of energy companies, and to help governments establish sensible emission limits. "Trust but verify" is the watchword, and companies stepping forward will have the onus on them to demonstrate follow-through.

Some companies have begun the journey of disclosing their methane management, but disclosure remains a work in progress even for the leaders, while industry laggards still say little or nothing about their methane management. 2018 must bring progress. The EDF/PRI Investor's Guide to Methane is one resource that operators can consider as they take their methane disclosure to the next level. More companies joining and reporting on their emissions through the UN's Oil and Gas Methane Partnership is another way to increase reporting.

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