This article is an excerpt from the Good Investment Review October 2021, from Square Mile Research and Good With Money.
While much attention in the climate change and decarbonisation debate has rightly centred on carbon emissions, methane is starting to come into focus and face tighter scrutiny. Methane accounts for 23 per cent of greenhouse gases, the largest contributor to climate change after carbon dioxide.
What are carbon emissions?
Carbon emissions do not just come from carbon dioxide; carbon is an omnipresent molecule that finds partners very easily. Methane, for example, comprises one carbon and four hydrogen molecules and is another critical greenhouse gas to control. While not as abundant, methane has a more potent warming potential if emissions are not kept in check. Here, we look at the source of the problem, suggest some solutions that are commercially available today to arrest growth of this harmful greenhouse gas and limit its contribution to global warming.
Methane emissions: a climate wildcard
While methane (CH4) is not as plentiful as carbon dioxide, it has a very high warming potential. Over a period of 100 years, CH4 has a global warming potential 28 times larger than CO2. Over shorter time frames, this warming potential compounds to much higher levels.
Methane’s natural cycle is heavily influenced by human activity. About 50 per cent of methane derives from human activity. The largest source of anthropogenic methane is agriculture, representing about 20 per cent of emissions, big sources include rice fields and animal farming, particularly enteric fermentation by cows and manure. Fossil fuels are responsible for another 17 per cent while landfills represent 8 per cent.
The thawing of the world’s permafrosts also represents a key threat. Thawing of permafrost leads to decomposition of materials which generate methane.
While this represents a small fraction of emissions currently, global warming could lead to a great increase in emissions. Temperatures in the Arctic region have been increasing at double the global average rate – what scientists call “Arctic amplification”.
Because methane has a short atmospheric life, and the extent of human interference on its natural cycle, rapid action now can quickly reduce atmospheric concentrations.
Why decarbonisation needs a methane strategy
A substantial part of anthropogenic methane emissions come from natural gas production. While it has long been heralded as a transition fuel, recent research has raised doubts about the environmental merits of natural gas due to leakages (known as fugitive emissions) throughout the natural gas supply chain.
Addressing methane matters for three reasons. First, it would be helpful to reduce emissions from gas-fired power plants in the transitionary period whilerenewable sources of electricity are being scaled up.
Second, while renewable sources such as wind and solar will be the dominant sources of electricity in the future, there may still be a need for some gas, combined with carbon capture and storage as back-up capacity.
Third, electrification is unlikely to cover all energy needs. ‘Green’ hydrogen can be produced using renewable energy sources, but some of the required hydrogen will need to be ‘blue hydrogen’, produced using natural gas as a source fuel coupled with carbon capture and storage. Addressing methane leaks would help make blue hydrogen a credible low-carbon solution.
Solutions are ready and need to be scaled up
Methane emissions are not an intractable problem. Technical solutions exist today. Additionally, addressing the issues can make good financial sense; a study from the United Nations identified that just over 50 per cent of available measures have cost benefits – the measures pay for themselves quickly by delivering cost savings.
Detecting and addressing fugitive emissions is critical and solutions such as infrared cameras have become the most widely adopted technology. Satellite imagery is increasingly used to identify problem areas.
Avoiding methane emissions is, of course, the best option when it is technically and economically feasible, for example, by renewable energies displacing fossil fuel- based power generation. Innovations within the waste management sector are diverting more waste away from landfills. However, for existing landfills, reducing fugitive emissions can be achieved with equipment upgrades and capture technologies.
Landfills across the globe are increasingly being equipped with methane capture and purification technology, which enables methane to be used as a renewable natural gas.
The growth in plant-based foods would be an effective way of reducing food’s methane footprint – as well as reducing water, carbon and biodiversity footprints. Additives for animal feed that reduce rumination are also being commercialised. At the same time technology capturing methane from manure to make renewable natural gas is evolving.
Avoiding a methane bubble
Awareness of the need to address methane emissions is gathering momentum. Better understanding of the science, increased scrutiny from stakeholders including investors, regulatory support as well as companies’ acceleration in sustainability targets are all contributing to a favourable backdrop for solutions to the methane challenge, which we expect to lead to attractive growth but also help tackle climate change.