C(H)4; Let’s Talk Methane
Welcome to week 2 of COP26, the UN Climate Change Conference taking place in Glasgow, Scotland. As the calendar flips towards November 12 and the clock ticks menacingly towards midnight on an official conference emissions agreement (think the 2015 Paris Climate Accords), there have been a number of other newsworthy commitments, announcements, and pledges — along with some newsworthy lack of commitments, announcements, and pledges — to report on. And while not everyone is as thrilled with admittedly (and familiarly) toothless promises, these declarations represent big swings by important actors and they are worth discussing. In today’s newsletter (as well as over the last month-plus in general), one lesser known, incredibly potent greenhouse gas is getting its day in the sun.
As of November 2, over 100 nations have joined the Global Methane Pledge to cut 2030 global methane emissions by 30% when compared to 2020 levels. So, what is methane? And why all the attention now? Methane, or CH4, is the primary component of natural gas and the second most abundant greenhouse gas after CO2, accounting for ~20% of global emissions. Methane, which is primarily emitted by humans in the agriculture and energy sectors, is classified as a short-lived climate pollutant (“SLCP”) and has a much shorter lifespan than CO2 with ~80–90% of it removed naturally from the atmosphere in 10–12 years, compared with a close to 100-year lifespan for CO2. With ~1/5 of emissions and 1/10 the lifespan, why is methane all of the sudden such a flashpoint and topic of conversation? That’s because, within its lifespan, methane is generally considered to be around 84x more potent than CO2, trapping more heat and thus, disproportionately contributing to climate change.
Beyond its potency, however, reducing methane emissions in the short-term can slow global warming immediately, has commercial value as the main component of natural gas, and the technology to do it already exists! (Estimates claim that up to 75% of methane emissions from the oil and gas industry can be avoided using existing technology, with 2/3 of that reduction coming at no net cost.) While this all sounds great — outsized impact with existing technology and even pending policies to lend teeth — it’s worth noting that China, Russia, and India, the world’s top-3 methane emitting countries, have not signed the pledge. Oh, and also the pledge is just that, a pledge, not a legally binding commitment.
Here at FWP we won’t let that stop us from trying to move this needle. We are actively sourcing and underwriting projects and new technologies that are addressing the methane issue. Heralded by U.S. climate envoy John Kerry as the “single fastest strategy that we have to keep a safer, 1.5-degree Centigrade future within reach,” reducing methane emissions represents an achievable and, importantly for our clients, profitable ambition.
Tucker Pribor, Head of Investments
The U.S. Congress (finally) passed the bipartisan infrastructure bill last week; the bill has billions of dollars slated for environmental purposes such as EV charging, clean energy and grid-related investments, and climate resiliency measures.
Want to cut your own personal methane footprint? Bypass that red meat and choose the alternative protein option (better you than me… nobody’s perfect).
Looking for some light reading? The Biden administration released the first ever National Intelligence Estimate (“NIE”) on climate change last month, showing that climate change is an increasing risk to U.S. National Security.
This newsletter is intended solely for informational purposes, and should not be construed as investment/trading advice and are not meant to be a solicitation or recommendation to buy, sell, or hold any securities mentioned. Any reproduction or distribution of this document, in whole or in part, or the disclosure of its contents, without the prior written consent of Flat World Partners is prohibited