COP26 Achieves Methane Milestone – Corporates Must Act, Across Value Chains

December 3, 2021 EcoVadis ‏‏‎

The COP26 summit in Glasgow received mixed reactions from activists and onlookers, with many arguing that national leaders remain too lax on a time-bound strategy for halting global warming to 1.5°C above pre-industrial levels. However, quantifiable progress was achieved on one major climate driver – methane – giving reason for optimism amid much uncertainty.

(Authors: Anne Benz, Julia Kostin)

Global emissions of this tiny molecule – made up of one carbon surrounded by four hydrogen atoms – are responsible for up to 30% of all global warming, with 60% of total emissions deriving from human sources. Furthermore, methane is 80 times more potent than carbon dioxide in a 20-year timeframe, meaning that aggressive action to remove and mitigate methane emissions in the near-term can provide immediate benefits for the climate, and will be key to achieving Paris Climate Agreement targets.

As regulators in Europe and North America edge ever closer  to imposing Methane reporting requirements and emissions restrictions on companies, it is essential that business leaders are proactive in their response and acquire a firm understanding of why supply chain action is key to fulfilling  the Global Methane Pledge. 

Aligning International Commitments and Regional Legislation

To kick-start global efforts, 100 countries representing over 40% of global methane emissions joined an initiative committing to curb emissions by a third by the end of this decade. Among the signatories were important actors from both developing and developed nations, including major emitters like Brazil, Indonesia and Pakistan. By shifting focus away from national responsibility and harnessing the amplified impact made possible by international collaboration, the Global Methane Pledge has the potential to mitigate 0.2°C of warming by 2050.

Significantly, regulators are  already demonstrating  their commitment to achieving this ambitious target by crafting legislation intended to transform rhetoric into action. The EU, for instance, is expected to propose legislation by the end of the year. The proposal, an integral part of the EU Methane strategy, will require companies to monitor, report and verify (MRV) their methane emissions, not only in the EU but likely across the whole value chain.This approach reflects the fact that most of the EU’s emissions related to the consumption of oil and gas occur prior to their import. In addition to MRV requirements, developments are underway to place limits on flaring and venting, practices used to dispose of excess gas which cannot be used due to technical, regulatory or economic constraints.  

Furthermore, following several recent years of obstruction on the part of the US federal government,the Biden administration has signaled its intention to refocus the country’s climate action by imposing its strictest methane legislation to date. Earlier this year, a piece of 2016 Obama-era legislation on methane emissions was reinstated by the US Senate after having been rolled back by the Trump administration. However, the new EPA legislation, expected to be finalized by 2022 under the Clean Air Act, will go many steps further by covering both new and existing sources of methane across the oil and gas supply chain, as well as other major emitters (the Obama-era rule had only covered new sources). The law aims to cut methane emissions sharply by 74% by the end of this decade (base year 2005). 

The ambitious target will be achieved by increasing pressure on major polluters to cut emissions using a host of newer technological innovations, tougher monitoring programs, enhanced performance standards, and requirements for states to develop their own action plans to eliminate methane emissions. Separate discussions are also underway in the Senate to impose a “methane fee” that could cost polluters up to $1,500/metric tonne, addressing any remaining emissions after the legislation comes into effect. The US also reinforced its commitment to international collaboration by joining the International Methane Emissions Observatory, a program that seeks to monitor and enhance the availability of real-time, high quality methane data.

Private-sector Implications: Innovation, Monitoring and Compliance

Methane emission sources can be identified in the operation of many businesses  but are largely concentrated within the agriculture, energy and waste industries –sectors that intersect virtually all value chains.  As such, businesses operating in these sectors must prepare for stricter regulations and greater accountability as global and national leaders ramp-up legislation and international commitments to reduce methane. Furthermore, because the vast majority of private sector emissions emanate from the value chain, it is essential that business leaders across all sectors harness the procurement function as a means of engaging suppliers in an effort to improve the sustainability of business processes beyond their internal operations.

Businesses can begin by staying abreast of new developments, technological applications and management approaches through international collaboration and public-private partnerships. For example, the Methane Guiding Principles is a multi-stakeholder organization that promotes transparency, innovation and implementation of best practices for methane emissions abatement and reporting. Ultimately, sector-specific approaches will be the best way forward, since methane reduction strategies must be tailored towards the needs and capacities of particular industries. 

The agricultural sector is the biggest emitter of methane, contributing 40% of anthropogenic emissions through gastroenteric releases of livestock, paddy rice cultivation or manure. Tackling agricultural methane will require a fundamental rethinking of current practices within the sector; however, this reform process can be supported by implementing proven approaches like decreasing manure storage time and optimizing  dietary systems for cattle.  

The energy and fossil fuel sector, accounting for 35% of anthropogenic CH4 emission, received a lot of attention during COP26 because such  methane emissions are particularly easy and cheap to avoid. The IEA found in their methane report that it is technically feasible to avoid 75 % of today's oil and gas emission and 40% of them at no net cost. Since Methane is a valuable resource it can generate additional income for companies which would partially offset reduction efforts.  

Another 20 % of methane emissions arise from landfills and wastewater. In consideration of an estimated 60 % increase in waste production until 2050, emissions will keep rising unless substantial intervention takes place. While governments are trying to accelerate the movement with regulations, and supporting technologies were heavily discussed during COP26, it remains important to retain focus on the value chain. Corporate targets need to reflect the significance of the global methane problem. Effective goals cannot fall short of including up- and downstream emissions from operations. Action plans need to include and engage suppliers and offer support where capacities are not sufficient to intensify  efforts.

Supply Chain Leaders Must Get Ready to Act

For organizations with numerous and difficult to pinpoint methane sources embedded throughout their operations, supplier engagement and performance tracking will be key to driving down methane emissions over the coming decade. The EcoVadis Carbon Action Module can help businesses who wish to step up to the international challenge of reducing methane emissions by providing a streamlined digital performance tracking tool that enables comprehensive monitoring and integration of GHG emissions along the entire value chain. 

The Carbon Action Module is aligned with internationally recognized reporting standards such as the Greenhouse Gas (GHG) Protocol, which directly incorporates methane emissions in their accounting method. Furthermore, the EcoVadis assessment incentivizes methane emissions reduction measures throughout the value chain by evaluating and recognizing industry-specific innovative technologies, work processes and other best practices.

Global action to halt methane emissions will be significantly accelerated in the coming months, as the extremely potent yet shorter atmospheric lifetime of methane requires immediate action to yield the greatest climate benefits. Businesses that are proactive and pave the way as example-setters and front-runners in their methane reduction strategies will benefit, not only by staying ahead of tightening regulations, but by yielding  a tangible competitive advantage as procurement teams continue to integrate sustainability performance into their buying decisions.

Get in touch or find out more about how EcoVadis can help your company to keep ahead of the regulators and proactively build sustainability and resilience throughout your organization and supply chain.

About the Authors

Anne Benz  joined EcoVadis in 2021 as a Sustainability Analyst. She has completed her Master of Science in Environmental and Resource Management and holds a Bachelor degree in Environmental Engineering. During her studies she used to work with the German corporation for international Cooperation (GIZ) and the Federal Ministry of Environment. 

Julia Kostin
Julia Kostin is a CSR Analyst at EcoVadis dedicated to promoting biodiversity and sustainable land management in global supply chains. Prior to joining EcoVadis, she worked as a science manager and environmental researcher in Germany. She holds a master's degree in Sustainable Development from Leipzig University, where she specialized in research on climate change and land-use effects on soil ecosystems.

About the Author

EcoVadis ‏‏‎

EcoVadis is the world’s most trusted provider of business sustainability ratings, intelligence and collaborative performance improvement tools for global supply chains. Backed by a powerful technology platform and a global team of domain experts, EcoVadis’ easy-to-use and actionable sustainability scorecards provide detailed insight into environmental, social and ethical risks across 200+ purchasing categories and 160+ countries.

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