IEEFA highlights “gross under-reporting” of fugitive methane

Man in suit points to methane symbol (fugitive)
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Fugitive emissions of methane in Australia are far higher than reported, meaning industry efforts to meet the country’s net zero targets may need to be significantly recalibrated, according to a new report from research group Institute for Energy Economics and Financial Analysis (IEEFA).

The International Energy Agency (IEA) recently published estimates of actual methane emissions by country for 2022, including emissions detected by satellites. The IEA estimates that methane emissions from coal mining in Australia are about 81% higher than the national inventory data, and for oil and gas sector, 92% higher.

Related article: Methane the “elephant in the room” in Safeguard Mechanism

Although it has a shorter life in the atmosphere, methane is a far more damaging greenhouse gas than carbon dioxide. This is because it absorbs much more energy than CO2 while it exists in the atmosphere—warming 82 times more than CO2 over a 20-year period.

“According to the IEA estimates, Australia is currently omitting 28 million tonnes of CO2 equivalent (MtCO2e) of fugitive methane emissions from its inventory, which is about 6% of its total emissions,” IEEFA Australia CEO and report author Amandine Denis-Ryan says.

The IEA data means major industrial emitters covered by the federal government’s Safeguard Mechanism would have to more than double their emissions reductions by 2030.

“It is critical to correct these underestimates as soon as possible, in particular in the context of the declining cap set on Australia’s largest industrial emitters as part of the Safeguard Mechanism,” Denis-Ryan says.

“The under-reporting will have a very material impact on the Safeguard Mechanism baseline declines. Based on our calculations, the baseline decline rate would need to be doubled from 4.9% to 9.8% a year for covered facilities. This would require covered facilities to more than halve their emissions over a period of seven years.”

Related article: Why fugitive methane needs to be part of Australia’s climate change conversation

The only alternative would be to increase emission reduction requirements from other sectors of the economy. With such strong implications, it is critical that methane emissions under-reporting is corrected as soon as possible, and that a plan is developed to address those emissions to ensure that Australian industries and households do not bear the brunt of the cost for the methane emissions by the coal, oil and gas industries. For example, the United States introduced a new waste emissions charge for methane emissions from the oil and gas industry equivalent to A$45 per tonne of CO2 equivalent in 2024, A$60/tCO2e in 2025, and A$76/tCO2e in 2026 onwards.

Read the full report here.

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