Methane Abatement in Developing Countries

4. Regulatory building block 1: Setting measurement/monitoring, reporting, and verification requirements

Box 4.1. EFFECT recommendations: Methane measurement/monitoring, reporting and verification requirements

What can governments do?

• Establish a regulatory framework for the measurement, disclosure, reporting and verification of […] methane emissions, using existing reporting templates

• Require the public disclosure of methane emissions information, including publication on a website

• Establish a comprehensive framework […] that includes methane emissions reporting, recordkeeping and disclosure, and third-party verification requirements

• Introduce requirements for LNG project operators to measure emissions during liquefaction and transport.

Source: (OECD, 2022[1]).

Methane measurement, monitoring, reporting, and verification (MMRV) requirements are critical in order for governments and companies to understand the extent of their emissions profile, to monitor progress toward emissions reduction targets, and to design robust methane regulations. In this respect, MMRV requirements are an information-based regulatory approach, where regulated entities must quantify their emissions, either by measuring or estimating, and then report that data to the regulator – see Box 4.2.

Box 4.2. Methane measurement/monitoring, reporting and verification

Measurement / monitoring encompasses systematic observation, identification and assessment of methane sources, including purposeful venting, unlit flares, releases due to emergency situations, and fugitive emissions.

Reporting provisions require companies to send information to the regulator. Reporting requirements support compliance follow-up and help understand whether progress is being made. They are particularly relevant for the establishment of emission baselines.

Verification (or auditing) is a process where independent organisations or professionals observe and report on the validity of the information provided by oil and gas operators. This may include the use of accredited third-party verifiers or where the relevant regulatory agency (e.g. the country’s environmental protection agency) carries out the verification and auditing itself.

Source: Adapted from (IEA, 2021[2]) and (Mohlin et al., 2022[3]).

Developing a regulatory framework for the measurement/monitoring, reporting and verification of methane emissions

The design and implementation of a robust and effective regulatory framework for the measurement, reporting and verification of methane emissions may place a significant burden on the resources and capabilities of many oil and gas developing producing countries. Fragmentation of efforts with the development of different methodologies across jurisdictions would also be counterproductive, limiting the usability of data for improved transparency and accountability. To avoid such suboptimal outcomes, governments can collaborate to develop MRV frameworks or can incorporate existing reporting standards and templates into their regulatory frameworks, in particular when seeking to align reporting requirements with those from importing jurisdictions to facilitate consistency, comparability and usability of reported data.

In terms of existing reporting standards and templates, UNEP’s Oil & Gas Methane Partnership 2.0 (OGMP 2.0) represents the only comprehensive measurement-based reporting framework covering all material sources of methane emissions, from both operated and non-operated assets across all segments of the value chain. OGMP 2.0 sets out a framework for its member companies to report annually on their methane emissions (Scope 1) based on direct measurements, as opposed to using generic emission factors. However, reporting at OGMP 2.0 Level 3 involves the development of granular equipment inventory, with the estimation of asset-level emissions through the use of generic, but source-specific emission factors – an important first step – particularly for under-resourced developing countries and which can provide a basis for future measurements to be prioritised. OGMP 2.0 includes not only a company’s operated assets, but also its joint ventures (UNEP, 2023[4]) – see Table 2.1 for an overview of OGMP 2.0 Reporting Levels.

OGMP 2.0 has achieved global recognition as a reporting standard that can support robust data collection and reporting for the oil and gas sector across all segments of the value chain. For example, the Joint Declaration from Energy Importers and Exporters on Reducing Greenhouse Gas Emissions from Fossil Fuels encouraged the participation of companies in the OGMP 2.0 standard. The EU’s regulation on methane emissions reduction in the energy sector also builds on the OGMP 2.0 framework and encourages regulators and third-party verifiers to use the OGMP 2.0 reporting framework, templates and guidance documents as reference criteria. Furthermore, the EU regulation directs the European Commission to develop a methane emissions reporting template taking into account the latest technical guidance documents and reporting templates of the OGMP (European Commission, 2023[5]). Consequently, the global uptake of the OGMP 2.0 framework by jurisdictions and companies can help the EU gain insights ahead of implementation of their own regulatory standards (Olczak, Piebalgs and Balcombe, 2023[6]).

Colombia’s 2022 methane regulations set out requirements for companies to monitor methane emissions in accordance with the US EPA's Method 21 - Volatile Organic Compound Leaks, as well as an obligation to provide records to the regulator for flared, vented and fugitive emissions. Companies must report to the regulator volumes of flared natural gas on a monthly basis. Companies must quantify volumes of intentionally vented natural gas, either by direct measurement or by mathematical calculation, and report those volumes to the regulator. In addition, operators must identify and quantify the natural gas emissions arising from equipment, components and during well operations.

Box 4.3. USA – Greenhouse Gas Reporting Program

The Greenhouse Gas Reporting Program (GHGRP) requires reporting requirements for a wide range of emission sources and entities across the oil and gas industry. It requires affected owners or operators to collect GHG data, calculate GHG emissions, and follow the specified procedures for quality assurance, missing data, recordkeeping, and reporting.

The GHGRP covers emissions from different aspects of the oil and gas industry through several of its subparts:

• Subpart W applies to any facility that participates in production, processing, compression, gathering and boosting, storage, transmission, and distribution and that emits 25 000 mt CO₂e or more per year.

• Subpart Y applies to any facility that refines petroleum and meets the source category definition. This subpart does not specify a minimum level of emissions (or “threshold”) reporting requirement, so it applies to all petroleum refineries.

• Subpart MM applies to all petroleum refineries and to importers and exporters of petroleum products and natural gas liquids whose supplied products would result in 25 000 metric tons CO₂e or more per year if the products were fully combusted.

• Subpart NN applies to suppliers of natural gas liquids and to natural gas distribution companies that deliver 460 000 Mscf or more of natural gas per year. Facilities subject to Subpart NN requirements must report the emissions that would result from the complete combustion or oxidation of the products that they sell.

The GHGRP sets out different methodologies for measuring emission of GHGs. Facility owners and operators are required to use the methodologies in the relevant subpart (see above) to determine annual emissions for each source category.

Source: (EPA, 2024[7]).

Nigeria’s 2022 methane guidelines impose requirements to put in place a system for identifying, classifying, and quantifying methane emissions from process equipment, components and other sources of emissions across oil and gas operations. Section 3.1 provides that the requirement to monitor emissions from operations (flaring and venting) and leaks from equipment (fugitive emissions) applies to all facilities, including well production facilities, natural gas gathering compressor stations, natural gas transmission compressor stations and natural gas processing plants. Operators are directed to undertake measurement/estimation and quantification of GHG emissions (including CO₂, CH₄ and N₂O) from their operations on a quarterly basis.

Governments should require the installation of metering systems for emissions sources where possible (e.g. flow meters on vent heads) while for non-metered sources emissions should be calculated based on emission factors. For example, in Alberta, Directive 060 provides that methane emissions may be quantified using continuous metering, periodic testing, or estimates based on accepted engineering practices. Directive 060 provides that an operator must include the following information in its annual methane emissions report for each upstream oil and gas facility:

• Routinely vented gas (gas volumes in m³ + corresponding mass of methane emitted in kg)

• Vented gas from pneumatic instruments and pumps (vent gas emitted in m³ + corresponding mass of methane emitted in kg)

• Vented gas from compressor seals (vent gas emitted in m³ + corresponding mass of methane emitted in kg); and

• Fugitive emissions (in m³ + corresponding mass of methane emitted in kg).

Additional monitoring and measurement may be required on a case-by-case basis, and in this regard, section 7(1) of the Alberta Methane Emission Reduction Regulation 244/2018 empowers the regulator to direct an operator to conduct additional monitoring and measurement, related to methane emissions in a manner and frequency specified.

Governments should also be aware of the emergence of MRV frameworks that seek to cover the entire oil and/or gas value chain as these may impact on methane emission reporting in the upstream oil and gas sector. For example, on 15 December 2023, the U.S. Department of Energy announced the creation of an international working group1 which will develop a consistent framework for the measurement, monitoring, reporting, and verification of methane, carbon dioxide, and other GHG emissions that occur across the natural gas value chain. The international working group was formed in recognition that a lack of comparable and reliable information to characterise the GHG intensity of cargos of natural gas limits the ability of buyers to demand and suppliers to provide natural gas with a lower GHG profile, which hinders market-driven emissions abatement efforts (FECM, 2023[8]).

Enhancing accountability through third-party verification and public disclosure

Third party verification refers to an assessment of reported GHG emissions and emissions reductions undertaken by an independent entity. Developing producer countries should ensure that verification requirements are comprehensive and that these requirements go beyond a desktop auditing process of a methodology and include verification of emissions measurements where feasible. Third-party verification is a requirement in Mexico, where oil companies are required to contract the services of an authorised third party to verify the fulfilment of methane emission reductions requirements (IEA, 2021[2]), whereas in Nigeria, data is validated by a multi-disciplinary team comprised of the regulator and the operator. However, the regulator has the discretion to appoint a third-party verifier if required.

Developing producer countries should also take note of third-party verification requirements in the EU Regulation to reduce energy sector methane emissions that apply to imports of oil and gas. From 1 January 2027, importers must demonstrate to EU regulators that oil and gas imported into the EU has been subjected to verification measures at the level of the producer that are equivalent to those that apply to production activities within EU borders. As a result, producing countries seeking to export to the EU will need to ensure that their regulatory framework includes third-party verification provisions that meet the equivalence test (European Commission, 2023[5]). The new EU Regulation to reduce energy sector methane emissions sets out strict requirements for third-party verification for upstream oil and gas projects in the EU. Verifiers must be independent from the operators and are directed to carry out their verification activities in the public interest. In addition, third-party verifiers must be accredited by a national accreditation body (European Commission, 2023[5]).

EFFECT recommends the public disclosure of methane emissions information, including publication on a website. Regulators may choose to publish information on emissions – in a general from or on a company-by-company or project-by-project basis. This approach may create an additional incentive for companies to comply by adding another layer of scrutiny to their operations. In addition, the information generated from MRV requirements can provide governments with increased visibility over the extent of their methane emissions, which in turn can support the design of tailored regulations to further reduce methane emissions for the upstream oil and gas sector.

Several jurisdictions publicly disclose data on methane emissions from flaring and venting on a regular basis – including Brazil, Canada, Guyana, Mexico, and Norway (Ministry of Natural Resources, 2023[9]); (World Bank, 2022[10]). In Alberta and Saskatchewan, the methane emission regulations empower the regulator to publish emissions data on its website and include information on methane emissions at the provincial level but also a breakdown of emissions for individual oil and gas facilities. In Alberta, the Alberta Energy Regulator (AER) publishes an annual report on its website (ST60B: Upstream Petroleum Industry flaring report) that includes a list of operators ranked by their flaring and venting emissions. The AER may also make this information available to licensees and operators, in order to encourage and facilitate clustering opportunities, where multiple operators on adjacent fields collaborate to capture associated gas for storage or use. In Saskatchewan, the methane regulations empower the minister to publicly disclose methane emissions data. Section 20 provides that the minister shall publish an annual report on its website setting out the following:

• Combined emissions at all oil facilities in Saskatchewan;

• Combined potential emissions2 at all oil facilities in Saskatchewan; and

• Individual emissions for each oil facility in Saskatchewan.

International transparency initiatives can also play a key role in ensuring public access to methane emissions information. For example, in Nigeria, the Nigeria Extractive Industries Transparency Initiative (NEITI) undertakes a detailed reconciliation process of payments paid for flaring to the Nigerian government. Details of these transactions are published in the NEITI website with a time lag of less than two years (World Bank, 2022[10]).

References

[7] EPA (2024), Greenhouse Gas Reporting Program (GHGRP), U.S. Environmental Protection Agency, https://www.epa.gov/ghgreporting.

[5] European Commission (2023), Commission welcomes deal on first-ever EU law to curb methane emissions in the EU and globally, European Commission, https://ec.europa.eu/commission/presscorner/detail/en/IP_23_5776.

[8] FECM (2023), DOE Announces Global Collaboration to Reduce Methane Emissions, U.S. Department of Energy’s (DOE) Office of Fossil Energy and Carbon Management (FECM), https://www.energy.gov/fecm/articles/doe-announces-global-collaboration-reduce-methane-emissions.

[2] IEA (2021), Driving Down Methane Leaks from the Oil and Gas Industry, International Energy Agency, Paris, https://www.iea.org/reports/driving-down-methane-leaks-from-the-oil-and-gas-industry.

[9] Ministry of Natural Resources (2023), Data Visualization, Petroleum Management Programme, https://petroleum.gov.gy/data-visualization?tid=All&tid_1=All.

[3] Mohlin, K. et al. (2022), Policy instrument options for addressing methane emissions from the oil and gas sector, Environmental Defense Fund, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4136535.

[1] OECD (2022), Equitable Framework and Finance for Extractive-based Countries in Transition (EFFECT), OECD Development Policy Tools, OECD Publishing, Paris, https://doi.org/10.1787/7871c0ad-en.

[6] Olczak, M., A. Piebalgs and P. Balcombe (2023), A global review of methane policies reveals that only 13% of emissions are covered with unclear effectiveness, One Earth, https://www.sciencedirect.com/science/article/pii/S2590332223001951.

[4] UNEP (2023), Oil & Gas Methane Partnership 2.0, United Nations Environment Programme, https://ogmpartnership.com/faq/.

[10] World Bank (2022), Global Flaring and Venting Regulations: A Comparative Review of Policies, World Bank, https://thedocs.worldbank.org/en/doc/fd5b55e045a373821f2e67d81e2c53b1-0400072022/global-flaring-and-venting-regulations-a-comparative-review-of-policies.

Notes

← 1.  International MMRV Working Group participants include Australia, Brazil, Canada, Colombia, East Mediterranean Gas Forum (Observer), Egypt (Observer), European Commission, France, Germany, Italy, Japan, Norway, Republic of Korea, United Kingdom, and the United States.

← 2.  Potential emissions are calculated in accordance with an emissions intensity limit for each type of crude oil.