Recently, the US and EU announced a joint initiative with 11 other countries, called the Global Methane Pledge Energy Pathway. This follows recent UN assessments highlighting mounting evidence about the relevance of methane emissions reductions (IPCC, 2021, UNEP and CCAC, 2021) for climate goals. Methane emissions are a crucial dimension of energy sector decarbonisation but also extend beyond the scope of energy policy. Yet, most countries' climate pledges following the Paris Agreement did not include abatement of methane emissions. The European move to introduce a border carbon tax also excludes methane. The joint EU and the US Global Methane Pledge initiative is therefore an important step.
While methane has a shorter atmospheric lifetime than carbon dioxide (CO2), it has a substantially higher global warming potential (GWP). This is concentrated at the beginning of its atmospheric life. Indeed, methane is the second most important greenhouse gas after CO2 in terms of contribution to global warming (Shindell et al. 2017). It accounted for approximately 30% of recent (2010-19) warming (IPCC 2021) while also contributing to respiratory deaths through ozone formation (UNEP and CCAC 2021). Economic research on climate change has mainly focused on CO2 emissions and the role of energy policy (see Arima 2022 for a critical assessment of the COP26 related to energy). Here we draw attention to anthropogenic methane emissions, much outside the purview of energy policy.
Descriptive evidence: The methane footprint of nations
In Fernández-Amador et al. (2020a), we construct a global panel dataset of national inventories of anthropogenic methane emissions from 1997—2014. Using multi-region input-output analysis, we trace emissions through global value chains to derive methane emissions embodied in production, final production and consumption. From this dataset, we highlight four main stylised facts about the international structure of methane emissions.
First, the importance of methane emissions for global warming in the short term has been underestimated in the policy arena. Table 1 shows the evolution of methane emissions from 1997—2014 in terms of CO2 equivalents calculated using conversion factors corresponding to 100-year and 20-year GWP reference periods. The reference period used to calculate the equivalence between methane and CO2 emissions is significant when considering the importance of methane releases. Methane emissions are about one-third of CO2 emissions from fossil fuel combustion when using the 100-year conversion factor, commonly referred to in analyses. However, using the 20-year factor, the relative GWP of methane increases dramatically to about 95% of that of CO2.
Table 1 Methane emissions relative to CO2 emissions (1997—2014)
Note: CO2e, 100y and CO2e, 20y stand for CO2 equivalents based on a global warming potential over 100 and 20 years, using the conversion factors of 28 and 84, respectively (IPCC 2014). Source: Fernández-Amador et al. (2020a).
Second, in contrast to anthropogenic CO2 emissions, which are mainly related to fossil fuel combustion, methane emissions result from chemical processes associated with very diverse economic activities, such as livestock breeding, drilling and transporting fossil fuels, waste management, and rice cultivation. The sectoral distribution of methane emissions differs considerably between production- and consumption-based inventories; in the latter, emissions are spread across sectors more evenly (Figure 1).
Figure 1 Global methane emissions by sector: production-based, consumption-based, and embodied emission flows (average 1997—2014)
Note: The table on the left shows the subset of the original 57 sectors that emit more than 0.2% of global anthropogenic production-based methane emissions. Percentages are shown in the third column. The colours indicate the aggregated group a sector belongs to. The figure on the right shows the flows of embodied emissions from the sector of production (on the left-hand side) to the sector of final production and consumption (on the right-hand side). The aggregated sectors are agriculture (Agr), livestock (Liv), energy (Egy), manufacturing (Mfc), services (Ser), transport (Trn), and public administration (Pub). Source: Fernández-Amador et al. (2020a).
Third, contrary to CO2, for which high-income economies historically represent a larger share of emissions (Fernández-Amador et al. 2016), developing economies account for the bulk of methane emissions produced and consumed (Table 3). However, this picture reflects the demographic size and methane emissions per capita increase with income. Similarly, trade-embodied emissions (relative to produced emissions) increase with income. High-income countries are net importers of embodied methane, particularly from the energy and livestock sectors. Although this could point to methane leakage, the share of imports from countries that are not part of Annex I of the United Nations Framework Convention on Climate Change (UNFCCC) is higher in lower-income groups than in high-income countries.
Table 2 Main indicators of methane inventories in 2014, by income group
Note: Countries grouped according to World Bank income classification. Megatons and tons of methane emissions are reported as CO2 equivalents with respect to GWP over 100 years. Source: Fernández-Amador et al. (2020a).
Fourth, decompositions of observed changes in methane emissions show that emissions increased over 1997—2014 in developing countries driven by population and economic growth (measured as value added per capita), despite sizable gains in methane efficiency (Figure 2). In high-income countries, methane efficiency gains outweigh population and economic growth effects, resulting in decreasing emissions from 1997—2014. The size of methane efficiency gains differs across sectors and income groups, suggesting differences in abatement potential. These patterns are confirmed by regression-based analyses.
Figure 2 Kaya-based decompositions of the growth rate of methane emissions (1997—2014)
Note: The growth rates of total emissions (in log differences) are shown as black dots for the four World Bank income groups and three methane emission inventories (production, final production and consumption). These growth rates are decomposed into the contributions of changes (in log differences) in methane intensity (per value added), value-added per capita, and population. Source: Fernández-Amador et al. (2020a).
In Fernández-Amador et al. (2018), we estimate an income-elasticity of methane emissions per capita that is two to three times smaller than that of CO2 in Fernández-Amador et al. (2017). There is a strong relative decoupling of methane emissions from economic growth—GDP per capita grows faster than methane emissions per capita. Moreover, the relationship between GDP and methane is non-linear and slightly weakens at higher levels of development, similar to CO2.
Yet, there is substantial sectoral heterogeneity in the relationship between economic growth and methane (Fernández-Amador et al. 2020b). Manufacturing, services, and the livestock sector show absolute decoupling, whereas agriculture and waste management present relative decoupling. There is no evidence for decoupling in drilling and transporting fossil fuels. The income-elasticity of emissions does not decrease or even increase at higher levels of development in the manufacturing, livestock and energy sectors.
In a recent article, Fernández-Amador et al. (2021) analyse the dynamics of convergence of methane emissions and highlight the difficulties of achieving methane abatement in the short and medium run. Although methane intensities (per value added) converge across countries in all economic sectors, emissions per capita do not converge internationally economy-wide and in methane-intensive sectors such as livestock, waste management, and the drilling and transportation of fossil fuels. This is a consequence of the concentration of methane-intensive industries in a few countries and rigid patterns of specialisation. In this regard, countries that specialise in methane-intensive sectors may struggle to curb methane emissions if demand for these sectors' products increases. Furthermore, methane emissions are close to their country-specific steady-state levels, and abatement of methane will require policies that target the long-term drivers of emissions, that is, technology and production structure.
The way forward
The relevance of methane for climate change in the short term, its specificity relative to CO2, and the potential implications of methane abatement policies for economic development and food supply require a careful design of an international methane reduction strategy.
The differences between methane and CO2 justify a separate treatment of methane in international negotiations. Separate treatment can speed up negotiations, allow for more precisely targeted mitigation policies, facilitate international cooperation in the relevant sectors, and increase voluntary participation and compliance. The Global Methane Pledge launched at the COP26 aims to reduce global methane emissions by at least 30% from 2020 levels by 2030. Although a reduction of methane emissions of 40-45% would be needed by 2030 to prevent global warming beyond 1.5°C above pre-industrial levels (IPCC 2021), the commitment in the Global Methane Pledge narrows the gap between the Nationally Determined Contributions submitted to the Paris Agreement and the reduction necessary to keep the 1.5°C target within reach.
The potential to reduce methane emissions differs across economic sectors, and abatement policies should not compromise economic growth. In this regard, policies aiming at improving technologies to reduce methane emissions offer the best prospects. A fast and cost-efficient way to reduce methane emissions is to improve energy infrastructures to avoid methane leakage, flaring and venting. Considering the market value of the additional gas that could be captured, a large part of methane abatement in the energy sector could be realised at no net cost (IEA 2021). Similarly, emissions from waste treatment can largely be abated at zero net cost, through gas recovery or by avoiding landfill of biodegradable waste. By contrast, mitigation of methane emissions from livestock and rice production is more challenging because of the potential implications for food production and security in many countries. Mitigation options include improved fertiliser and water management in rice production and dietary changes and manure management of ruminants, but the mitigation potential of food sectors is smaller and may carry higher costs (Höglund-Isaksson 2012).
Fast abatement of methane releases requires international collaboration with a leading role of international organisations. International collaboration should focus on the elaboration of inventories of best practices and available technologies for methane-efficient production, technology transfers, investment in research on abatement technologies, and effective mechanisms of financial assistance. International organisations, such as the Food and Agriculture Organization (FAO) and the International Energy Agency (IEA), may provide technical assistance and coordination of these actions. Furthermore, there is increasing demand for the World Trade Organization (WTO) to suggest paths to better integrate the goal of fighting climate change within the WTO system and mechanisms to ensure the consistency of policies targeting methane emissions with WTO law.
A possible methane mitigation strategy should be framed on a sectoral basis and focus on fostering technological upgrading. International organisations should play an active role in the design of the strategy, mainly providing technical and legal assistance. In times of rising concerns about energy security like current ones, this strategy may allow nations to keep up with a climate agenda that is urgent and inevitable.
Acknowledgements: This column reflects work under a grant from the Swiss National Science Funds under its National Research Programme 73 (NRP 73) "Sustainable Economy: resource-friendly, future-oriented, innovative."
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