Methane is one of the most potent greenhouse gases (GHGs), and reducing it is one of the most obvious and cost-effective strategies in fighting climate change. Advancements in mitigation and methane leak detection technologies have and will continue to spur economic growth and help reduce industrially created GHGs. Here is how it works.

Canada’s oil and gas (O&G) industry

O&G production activities release methane into the atmosphere both unintentionally and intentionally, and methane that could have been conserved for use or sale is lost potential profit. When industry implements methane mitigation technology(s), to comply with regulations and/or social and environmental pressure from investors, the gas can be destroyed or conserved for use or sale. An Alberta study indicates that reducing methane emissions by 45% would have total installation and operation costs of less than $200, 000 for 95% of firms and would be profitable for 4% of firms . Consequently, the O&G industry has opportunity to reap some economic gains, whilst complying with their obligation to help achieve Canada’s climate goals of reducing emissions. However, implementation of new technologies is often hindered by upfront costs and uncertainty about financial benefits to production activities.

Underestimated methane emissions equal underestimated economic benefits

Methane emissions are underestimated in Canada, which means that economic analyses performed on official inventories are likely not be an accurate reflection of reality. A larger volume of available methane improves the economics of mitigation, since the most economically feasible options become those of conserving, rather than destroying, excess methane. When enough methane can be recovered, the profit generated from using or selling it outweighs the cost of the technology needed to conserve it. Conversely, with a small volume of methane it is usually more cost-effective to just destroy the excess.

Energy policies are contingent on economic feasibility

Governments must ensure they are impacting the environment and the economy positively in order to pass GHG mitigation policies. The government of Canada conducted an impact analysis, which addressed the economic and environmental costs and benefits of implementing stricter regulations on methane. The analysis indicated that mandating reduction of methane by 45% would generate a net benefit of $11.7 billion between 2018 and 2035, consisting of $13.4 billion in avoided climate change damages, $1.6 billion worth of natural gas conserved, and implementation costs of $3.3 billion. This is clearly good news both financially and for the planet given expected methane emissions will be reduced by 282 Mt CO2e.

The methane mitigation industry

Implementing methane mitigation policies increases the size of the methane mitigation industry. A recent study published by the Environmental Defence Fund (EDF) indicates that the methane mitigation service industry in the US has nearly doubled since 2017, and how more stringent methane regulations will allow these companies, most of them small businesses, to continue to grow and provide more jobs. A Canadian study by the Methane Emissions Leadership Alliance (MELA) from 2017 indicates there are over 170 companies in Canada working in methane mitigation management, 40% of which expect a 100%+ growth in the number of employees as a result of Canada’s new methane regulations.

Our future

Methane is a potent GHG with a high global warming potential and reducing it is critical in the fight against climate change. Given methane has market value, reducing emissions using mitigation technology provides a unique opportunity, at reasonable cost, for companies required to reduce their climate impact. Installing new mitigation technologies is a known cost, whereas the benefits of the technology are foremost in avoided climate damages. Financial gains for industry are more complicated to predict. Despite these challenges, the future of methane mitigation is bright as government, technology innovators, and industry continue to work together to develop and implement cost-effective strategies to reduce methane emissions.

Mallory Long