Oil and gas companies across the value chain are facing new pressures to manage and reduce methane emissions. Their ability to access premium markets and buyers, appeal to investors and avoid costly fees depends on developing a credible plan to measure and reduce methane emissions. At the very least, the industry’s regulatory outlook, its non-governmental quasi-oversight and its access to capital are changing in ways that make understanding sometimes inconsistent emissions data vitally important. In today’s RBN blog, we explore the recent changes and the mounting external pressures around methane emissions.
In Part 1 of this blog series we discussed how operators can begin to address key environmental goals while protecting — even improving — their bottom line. We also explained why the push to reduce methane emissions is so important. Methane is a short-lived but very potent climate pollutant — 120 times as potent a greenhouse gas (GHG) as carbon dioxide (CO2) instantaneously and 86 times as potent over a 20-year time horizon. That means that, pound for pound, methane emissions may have an outsized near-term impact in achieving climate goals.
We’ll start this blog by unpacking the regulatory changes in the U.S. and Canada. After building slowly over the past 15 years, regulatory change has accelerated since 2021, as both governments develop new policies to deliver on their commitments under the Paris Agreement and the Global Methane Pledge. These new and evolving federal regulations add a layer to the existing patchwork of federal and state/provincial rules governing the oil and gas industry. What’s different today, though, is that not only must a producer comply with these environmental regulations, but its environmental credibility may have a direct impact on its access to certain capital markets, customers and investors, raising the stakes beyond a simple regulatory hurdle to clear. Currently, Canadian climate and GHG regulations are tighter than those in the U.S., but recent policy shifts indicate that the U.S. may not be far behind. What's more, forthcoming regulatory changes in both countries either require additional measurement protocols or push operators toward improved measurements of methane emissions.
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