The UK’s methane opportunity
Cutting methane emissions in the energy sector isn’t a silver bullet to solving the climate crisis, but it is the fastest way to reign in global warming. Because captured gas can be used instead of wasted, reducing these emissions improves energy security and slows global warming. Both exporters and importers have a part to play in cutting emissions in the energy sector – and a small set of countries that play both roles have a unique opportunity to slash emissions both at home and abroad.
The UK falls squarely into this category, and its leadership in the fight against methane emissions has already proved invaluable. The UK steered the Global Methane Pledge to success at COP26, which now has over 150 countries committed to collectively reducing emissions by 30% by 2030. Despite this success, progress since COP26 has stalled, with limited discussion of and action on methane across all sectors. However, recent developments have started to put methane firmly back on the agenda. Methane abatement was considered for both last year’s Energy Bill and is currently being discussed as part of the Government’s Offshore Petroleum Licensing Bill. And the House of Lords Select Committee for the Environment and Climate Change has recently launched a new inquiry on methane, with plans to publish its findings in the summer.
Furthermore, some of the UK’s key international counterparts, such as the EU and U.S., are stepping up with concrete commitments to cut their methane emissions. Now it’s the UK’s time to deliver – and with a healthy plethora of methane abatement policies being enacted by the UK’s partners, it hardly needs to reinvent the wheel.
For example, last year the EU agreed to the Methane Regulation, putting common sense rules to reduce methane emissions on energy – produced both within the bloc and outside of it. The world’s very first “methane import standard” will be implemented in a phased approach, starting with mandatory data reporting requirements in 2025; monitoring, reporting and verification (MRV) obligations in 2027; and an intensity performance standard in 2030.
These developments are game-changing for the EU’s trading partners, who now stand to gain even more by proactively moving towards stronger regulations and similar import standards, which would guarantee both significant emissions reductions and unpenalized access to the EU market. In the UK for example, setting up its own methane import standard alongside the EU import standard will not only be easier, but it could improve outcomes for British citizens in two ways.
1. Climate Benefits of a UK Import Standard
First, a UK methane import standard would have an outsized and demonstrable climate impact. With the EU already laying the groundwork for its own import standard, a complementary British standard would magnify its 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 – simply put, the more buyers that request low-emission intensity oil and gas, the more competitive these supply chains become.
While the UK is a producer and exporter of oil and gas, it is also one of the world’s largest importers. In 2022, the UK imported 57 bcm of natural gasi, putting it amongst the largest gas importers in the world. ii This makes the UK the ninth largest gas importer in the world, behind China (143bcm), Japan (93bcm), the United States (86bcm), Germany (84bcm), Italy (73bcm), Netherlands (66bcm), and South Korea (63bcm). In terms of oil, the UK imported 835,549 barrels of oil per day.
Top 20 Natural Gas Importers
This means that if the UK were to introduce the same import standard as the EU, a rule limiting the maximum amount of emissions per unit of oil or gas, it could bring about significant returns. If this “methane intensity performance standard” was calculated at a 0.2% equivalentiii – when combined with the planned implementation of the EU’s standard – it would result in a reduction of 25,465 kt of methane, which represents more than 36% of global oil and gas emissions. 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 kt of emissions reductions from within the UK alone.
2. Capitalising on Early Mover Advantage
Second, by moving quickly in establishing an import standard, the UK can capitalise on a crucial early-mover advantage: the opportunity to co-design how an eventual standard would be measured and implemented. While the OGCI has developed an industry best-practice intensity threshold for natural gas – set at 0.2% of methane emissions per unit of gasiv – jurisdictions establishing a regulatory intensity performance standard will need to adapt a more robust methodology that considers, for example, how methane intensity for oil is determined.
The EU is planning to release such a methodology in 2027, which will underpin its performance standard, and swift action by the UK could allow for a coordinated approach on how the standards are measured and what the maximum thresholds should be before penalties are imposed. This would allow the UK to ensure an implementable and practical methodology for its own energy exports to the EU, while laying the groundwork for a shared intensity methodology that can be used by other major importers around the world. This coordination would prove useful for exporters, for whom it will be simpler to report intensities using a single methodology.
For the UK, building and enforcing an import standard will not only guarantee reduced emissions for its imported oil and gas, but it will also ensure the competitiveness of its exports, as oil sent to the EU will not be penalised.
Building a comprehensive approach to reducing methane emissions
The UK should also do more to maintain its leadership in the fight against methane emissions. Establishing an import standard wouldn’t only be an important step to reducing its emissions at home and abroad, it’s one of several important steps the UK should take to reinforce its role as a global methane champion. It should begin by setting out a robust Methane Action Plan as part of its commitment to the Global Methane Pledge, that outlines clear targets and policies to reduce methane emissions across all sectors.
To achieve maximum emissions reduction, the UK can accompany its performance import standard with common sense rules that could be implemented immediately, such as a ban on routine venting and flaring and rules to reduce fugitive emissions, such as mandatory leak-detection and repair. Venting and flaring account for the vast majority of emissions in the oil and gas sector, and countries like Norway have enforced a ban on routine venting and flaring since 1971. The EU also banned routine venting and flaring in its new Methane Regulation. Currently, the North Sea Transition Authority has set a non-binding target to eliminate routine venting and flaring, but this should be set in law and advanced to 2026 at the latest. The UK’s forthcoming Offshore Petroleum Licensing Bill could include such a provision.
Finally, in addition to legislative measures, the UK should consider strategies to raise political and financial capital to reduce methane emissions. At COP28, the UK contributed $2.5 million to the Methane Finance Sprint – it can do more by increasing its contribution at COP29, and leveraging its role as a major shareholder in several International Financial Institutions and Multilateral Development Banks to encourage prioritisation of methane abatement projects across all sectors.
The UK’s unique position
As both a producer and importer of energy, the UK is uniquely positioned to slash methane emissions at home and abroad. This would have demonstrable climate impacts, help increase the competitiveness of low emissions-intensity oil and gas, and help guarantee that UK producers are able to access the EU market in the coming years.
The UK will also be able to play a meaningful role in shaping what may be a global intensity standard methodology, used by major importers in complementary, national performance import standards. International cooperation between importers and exporters benefits all stakeholders, as outlined in the 2022 “Joint Declaration from Energy Importers and Exporters on Reducing Greenhouse Gas Emissions,” and last year, the Japan-led LNG-focused CLEAN initiative launched with the support of the US, EU, South Korea, and Australia.vi
By implementing a UK performance import standard, the UK has an opportunity to leverage its global leadership to take international cooperation on methane to the next level, and take the first steps towards a concrete “Buyers Club” of oil and gas that shares common standards. Doing so would reaffirm the UK’s global leadership in the fight against methane emissions, deliver significant climate benefits through emissions reductions, and benefit energy security for UK citizens.
i IEA, International Natural Gas Data, 2022, available here.
ii For a detailed breakdown of the UK’s LNG imports, see “Supply of LNG in the UK, 2022”, available here.
iii This threshold is set at 1.7 kilotonnes (kt) of methane emitted per million tonnes of oil equivalent (MTOE), which is equivalent to 0.2% on an energy basis.
iv See Oil and Gas Climate Initiative (OGCI), Methane Intensity Target, available here.
