How the UK can tackle methane emissions

Tackling methane emissions is one of the fastest, most cost-effective, and impactful actions the UK can take to address the energy and climate crises. COP26 was a watershed moment for methane. Countries worldwide have now stepped up to act, whilst the UK has languished. Now is the time for the UK to re-emerge as a leader on methane emissions reduction. 

Action on methane emissions can: 

• Slow Global Warming: Methane is a greenhouse gas with more than 80 times the warming power of carbon dioxide over a 20-year timeframe and is responsible for 0.5°C of the warming we are experiencing. Methane accounted for around 14% of UK emissions in 2022. Rapid methane reductions can help reduce the rate of warming and are critical to limiting warming to no more than 1.5°C. The energy sector accounts for 11% of UK methane emissions, but a study by Princeton has found that as much as five times more methane is being leaked from oil and gas production than reported. 

• Improve Energy Security: North Sea oil companies are currently wasting enough gas to supply at least 700,000 average UK homes each year. With current plans to wait until 2030 to ban venting and flaring of methane, the UK is set to waste enough gas to supply the annual needs of nearly 4 million average UK homes. 

• Deliver Economic Benefits: As the price of energy rises, cutting methane emissions has become more economically beneficial. Venting and flaring methane during oil and gas operations is a major economic loss. The International Energy Agency estimates that globally, nearly $60 billion was lost due to venting and flaring in 2021. During the last decade, the UK has wasted £2.6 billion in lost gas sales due to flaring and venting and released 45 million tonnes of carbon dioxide into the atmosphere. The IEA has shown that oil and gas operators in the UK can waste 72% less methane by tackling leaks, venting and flaring, with existing technologies, much of which would be profitable for companies.   

• Demonstrate Global Leadership: Methane emerged as a global climate priority at COP26, where the UK government supported the creation of the Global Methane Pledge, endorsed by over 150 countries worldwide. Signatories committed to collectively reduce global methane emissions by at least 30% by 2030, from a 2020 baseline. UK partners are moving forward with ambitious measures: Canada is planning monthly leak detection and repair at all oil and gas sites; the U.S. adopted a methane fee; and the EU agreed its first ever rules on reducing methane emissions in the energy sector. The UK risks lagging behind, and can demonstrate global leadership by taking ambitious action on methane at COP29.  

Recommendations

• Leadership of the Global Methane Pledge: Incorporate methane mitigation as a priority of UK climate diplomacy in international fora (COP, G7, G20, the Commonwealth). Set ambitious methane reduction targets and financing goals for multinational bodies like the G7 and G20. Demonstrate leadership at home through the development of a robust Methane Action Plan, that outlines clear objectives and policies across the energy, waste, and agriculture sectors. 

• Mobilise international finance for methane mitigation: The UK government should support strategic, high impact funding opportunities, such as the Climate and Clean Air Coalition, the official secretariat of the Global Methane Pledge. According to the Climate Policy Initiative, $119 billion is needed each year across the agriculture, energy, and waste sectors to keep global temperature increases below 2°C. Current spending is at just 10% of that level, leaving a gap of $107 billion. To close this gap, the UK should leverage its significant shareholder positions in multilateral development banks to champion methane abatement projects and leverage its bilateral aid to target projects that have both development and methane benefits. 

• Venting and flaring: A voluntary elimination of non-emergency venting and flaring is expected by 2030, but this deadline should be advanced, and put into law to avoid backsliding. 51% of offshore field venting and 49% of offshore field flaring is currently performed routinely. The government should also increase clarity on the levels of fines for flaring, specifically for flare rates, and ensure these fines are enforced.  

• Improving measurement, monitoring, reporting and verification (MMRV): The UK should propose legislation for a comprehensive MMRV framework for oil and gas companies, require quarterly leak detection and repair inspections (which can reduce up to 80% of fugitive emissions), and establish a third-party verification system to ensure reported emissions match what is measured. The UK could develop the most transparent reporting systems for offshore oil and gas in the world. A comprehensive MMRV framework will be required to export oil and gas to the EU without penalty as of 2027.  

• Measures to clean up imported and domestically produced fossil fuels: The EU has agreed its first ever rules on reducing methane emissions in the energy sector, which include landmark obligations on importers of fossil fuels. As the UK will need to comply with the EU’s methane import standard from 2027, the government should set the necessary domestic regulations equivalent to the EU’s rules, allowing unfettered access to the EU market. The UK also has an opportunity to introduce its own methane import standard, which could reduce more than 36% of global oil and gas emissions when combined with the EU’s import standard. 

• Methane fee: According to the International Energy Agency, the UK’s energy sector lost 232 kilotonnes of methane in 2023 (of which 164 kilotons came from oil and gas operations). Approximately enough gas is lost through venting and flaring to supply at least 700,000 average UK homes. Unlike the oil and gas that is brought to market, this lost gas is not taxed. A methane fee, like that adopted by the U.S. Inflation Reduction Act (IRA) in 2022, could generate up to £200 million annually in additional revenue for the UK’s energy transition as it incentivises less waste of methane.¹  

Background

Methane Intensity Performance Standard (aka an “Import Standard”) 

• This standard would set a maximum threshold of emissions per unit of oil or gas, meaning any importer putting oil or gas on the UK market above this threshold would be faced with a financial penalty.  

• If the “methane intensity performance standard” were set at 0.2% — the industry best-practice threshold established by the Oil and Gas Climate Initiative — and combined with the planned EU standard, it could reduce methane emissions by up to 25,500 kilotons. This reduction would account for more than 36% of global methane emissions from oil and gas. 

• As the WTO’s non-discrimination rules require fair competition between domestic and foreign producers, any UK rules on imports would require equally rigorous rules on domestic production within the UK. This means that ultimately, the UK import standard could see up to 124 kilotons of emissions reductions from within the UK alone (if the UK’s domestic production also met the 0.2% equivalent – based on current emissions and total production).    

• A UK import standard would have significant climate impact, by encouraging an even larger share of oil and gas produced abroad to meet a low-intensity threshold. This would have a direct impact on oil and gas directly imported to the UK, but it would also have significant knock-on market effects – the more buyers that request low-emissions intensity oil and gas, the more competitive these supply chains become. 

• By moving quickly in establishing an import standard, the UK can capitalise on the opportunity to design how an eventual standard would be measured and implemented. 

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¹ Annual revenue generated from a fee in the UK assumes a fee of £1500 per ton of methane lost in oil and gas operations (using IEA estimates for total methane loss). Revenues from the fee will decrease as companies make investments to avoid wasteful, harmful emissions driving emissions down as much as 120 kt over a few years. In the U.S., the IRA introduces a gradual increasing fee structure, whereby companies are required to pay $900 per ton in 2025, $1200 per ton in 2026, and $1500 per ton in 2027 for the preceding year’s emissions.