In the evolving landscape of climate policy, 2024 is emerging as a pivotal year for GHG emissions regulations. With a heightened focus on the halfway milestone to 2030 since the Paris Agreement’s goals, governments, international bodies and the energy sector are gearing up for a significant push to keep the objective of limiting global temperature rises to 1.5C by 2030 alive. The highly anticipated COP28 climate summit opens Thursday November 29. World leaders and heads of state and government, including King Charles III, the UK prime minister, Rishi Sunak, representatives from U.S. President Joe Biden, the European Commission president, Ursula von der Leyen, high-level representatives from the Chinese President XI and the Pope, will attend the first few days of the talks. The summit will reportedly work to lay out a robust climate roadmap for 2024 that will keep 1.5C within reach. GHG emissions regulation — especially methane abatement regulations and investment — will be key to making this happen. Let’s break down what 2024 has in store for emissions regulations. COP28: The Methane Momentum for 2024
The 28th United Nations climate change conference (COP28) will take place from November 30 to December 12 in Dubai, United Arab Emirates. The U.S. and China will be represented by high-level representatives. The EU and its 27 member states will attend the event, as parties to the UN Framework Convention on Climate Change (UNFCCC). Global methane abatement will be at the center of the summit’s conversations on mitigation and climate finance. More than 150 countries across the world have promised to slash their methane emissions 30% from 2020 levels by 2030 under the U.S.- and EU-led Global Methane Pledge (signed in 2021), but few have detailed how they will achieve this.
In the weeks leading up to COP28, the UAE has called on the energy sector to phase out its methane emissions by 2030 and is lobbying for a final agreement to include firm plans for turning the Global Methane Pledge into action.
Beyond lobbying governments, the UAE is also urging independent and national oil and gas companies to commit to eliminate routine flaring by 2030 at COP28. Here’s what to expect at COP28:
The World Bank launches a new 2024 fund, with backing from independent energy sector companies, for detection and cleanup programs in developing countries that are major methane emitters.
A commitment by world leaders to double grant funding for methane detection and cleanup.
A global commitment to phase out oil & gas methane emissions by 2030, turning the 2021 #MethanePledge into real action.
A commitment for national oil and gas companies to stop routine flaring by 2030
China (the world's biggest GHG emitter) commits to including methane emissions in its 2035 national climate plan.
U.S. announces finalized methane rules that it committed to at COP27.
Canada commits to targeting oil and gas companies by requiring a 70% cut in methane emissions from the industry by 2030.
U.S. Methane Regulations: PHMSA Regulations & IRA Methane Tax Go Into Effect
In 2022, the Inflation Reduction Act (IRA) included a significant chunk of climate legislation to ensure the U.S. reduces its national GHG emissions by 40% by 2030 as per its renewed commitment to the Paris Agreement.
This included nearly $400 billion in federal funding (the bulk of which is made up of tax credits) for nuclear power, clean electricity electric vehicles, climate-smart agriculture and energy efficient supply upgrades.
In addition to these tax incentives, grants and loans, the IRA included a substantial tax on methane emissions that will go into effect on January 1, 2024. The fee applies to a facility’s reported emissions exceeding 25,000 metric tons of carbon dioxide equivalent (CO2e) per year:
$900 per metric ton of methane in 2024
$1200 in 2025
$1500 in 2026.
To calculate their methane emissions, facilities must apply applicable emissions thresholds. For oil and gas production facilities, the threshold is emissions exceeding 0.2% of the natural gas sent to sale from the facility. An estimated 32 percent of methane emissions from oil and gas facilities will be subject to the methane fee by 2026. This means the energy sector must implement compliance strategies and robust data management systems to ensure they accurately monitor, verify and report their emissions performance. The IRA regulations build on the PIPES Act of 2020, which required all pipeline facilities with maintenance and inspection procedures to address the elimination of hazardous leaks and minimize releases of natural gas (e.g. methane) —whether fugitive emissions or intentional releases due to venting from maintenance and other activities. In 2023, the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a long-awaited notice regarding the proposed implementation of the PIPES Act. The proposed regulatory provisions include requiring facilities to implement advanced leak detection technologies, conduct frequent and thorough surveys of their pipelines, and annually report the number and grade of all leaks detected and repaired (as well as the emissions related to those leaks).
Combined with the fact that according to numerous estimates, wasted methane from leaks translates into roughly a total of $30 billion of lost revenue for the global gas industry, these regulations further compound the financial incentive for the energy sector to aggressively reduce emissions.
EU GHG Emissions Regulations: Leading the Way
In the European Union, a series of robust regulations are set to redefine the approach to GHG emissions in 2024. The cornerstone of these regulations is the EU Methane Strategy, an integral part of the 2020 European Green Deal. This strategy outlines a comprehensive framework for reducing methane emissions across the EU, with a specific focus on the energy sector.
The EU Methane Strategy establishes sector-specific reduction targets, aiming to cut methane emissions by a significant percentage in each identified sector. A key aspect of the EU strategy is the enhancement of methane monitoring and reporting mechanisms. On Nov. 15, 2023, the European Council and the Parliament reached a provisional political agreement for 2024 on regulation on tracking and reducing energy sector methane emissions. The deal is likely to be endorsed and formally adopted by both institutions in 2024. The regulation introduces new requirements for the oil & gas industries to measure, report and verify methane emissions, including detecting and repairing methane leaks and limiting venting and flaring.
The regulation includes:
The first methane emissions inspection must be completed no later than 21 months after the date of entry into force of the regulation.
Energy sector operators must submit reports containing the quantification of their source-level methane emissions within 18 months and for operated assets within 24 months.
Natural gas leaks over the stipulated threshold must be addressed (or replacement of components must begin) within five days and be completed within 30 days.
EU member states must maintain and regularly update an inventory of all natural gas wells. Proof of no methane emissions “should be produced” for wells permanently plugged and abandoned less than 30 years ago and, where available, for other wells.
Moving Forward: The 2024 Turning Point
Going into 2024, the world is witnessing a paradigm shift in GHG emissions regulations, with methane at the forefront of global initiatives. With major emitters like the U.S., EU, UAE and China, announcing new rules and regulations or support for them, global pieces are coming together to seriously tackle methane emissions and significantly reduce them by 2030.
In this era of focus on GH emissions regulation, compliance with — and even surpassing — these regulations will not be just a legal requirement but a strategic imperative for industries and investors committed to sustainable and resilient growth.