Why does methane matter? It is a powerful greenhouse gas with a global warming potential 80 times that of carbon dioxide over a 20-year period. While carbon dioxide emissions remain in the atmosphere for hundreds to thousands of years, methane breaks down in a decade – impactful while it lasts (and, so far, it’s responsible for around 30 percent of global temperature rise), but it has a shorter life in the atmosphere.

Reducing methane emissions now would have an impact in the near term and give us a chance to keep the world on a pathway to a 1.5°C future.

If it leaks from the pipe, it’s lost from the pocket: Methane is the primary component of natural gas, so any leak means loss of salable product – which is estimated at $2 billion in lost product annually. Stakeholders are concerned: In 2021, investors managing over $6 trillion supported strong federal methane regulations.

How are methane emissions quantified? Directly through empirical measurement, or indirectly through calculations and modeling. Unfortunately, estimates can miss persistent or significant leaks. Direct measurement, on the other hand, involves a variety of technologies (e.g., on-the-ground infrared cameras and/or aerial surveys) to identify and measure methane on the ground and in the atmosphere. Combining direct measurement’s ‘top down’ and ‘bottom up’ tools reconciles measurements and identifies unexpected or significant leaks.

Are the numbers reliable? Numerous recent studies have highlighted problems with exclusively using estimates to quantify methane emissions from the oil and gas industry. According to the International Energy Agency, global methane emissions from the energy sector are about 70 percent greater than the amount national governments have officially reported. Studies in the United States have found actual emissions to be one to two times greater than reported emissions. In certain oil and gas basins, actual emissions are more than 10 times higher than industry-disclosed figures.

So, what’s the alternative? Initiatives like the Oil & Gas Methane Partnership 2.0 (OGMP) provide a comprehensive, measurement-based reporting framework to improve the accuracy and transparency of global methane emissions reporting. OGMP advocates using direct measurement technologies to help companies identify the actual (not assumed) sources of emissions from their operated assets and provide a credible and transparent framework for analyzing and reporting those emissions. Together, such measurement and reporting improve methane data quality and consistency and enable companies to make more strategic and targeted reduction efforts.

Miller/Howard Investments and others engage companies on emissions management: We discuss processes, protocols and technologies; we encourage companies to join initiatives like the OGMP; we file and support shareholder resolutions that seek company commitments to transparent reporting with accurate and credible information.

At the end of the day, access to reliable, quantitative information is a fundamental concern for investors evaluating climate-related risks. Companies that do not effectively measure and manage methane emissions put their reputations and licenses to operate – and their investors – at risk.

Luan Jenifer
CEO and President, Miller/Howard Investments