Methane from fossil fuels is a climate wrecker. Don’t let it wreck the safeguard mechanism, too

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With parliament about to rise for its pre-Budget break, we’re getting to the pointy end of the political contest around the federal government’s proposed Safeguard Mechanism (SGM) legislation.

The SGM compels Australia’s 215 biggest polluters, which emit at least 100,000 tonnes of carbon dioxide equivalent per year, to cut (Scope 1) greenhouse gases directly emitted onsite from the operation of their facilities, including coal and gas mines plus LNG processing plants.

The policy is the centrepiece of the government’s emissions reduction agenda, so it is critical that our politicians get it right.

Our new research report, Short-term warming effect of methane from fossil fuels and implications for the Safeguard Mechanism, is pertinent to the current debate questioning the adequacy of the SGM to do as is really intended.

It throws a spotlight on the elephant in the room: the outsized contribution to our emissions budget of the climate-wrecking greenhouse gas methane, and the need for increased ambition and rigour in the SGM framework to account for and reduce it.

Mining coal and extracting gas releases “fugitive” methane. Its “Global Warming Potential” (GWP) is 85 times that of carbon dioxide  over the near term of 20 years, relative to 25 times  over 100 years. With the latest clarion warning from the IPCC this week that the window to avert catastrophic climate change is closing, this should make us sit up and take notice. Urgency is needed, and the next two decades count most, not the next century.

Our report finds that when methane’s 20 year Global Warming Potential is calculated, coal mine methane emissions in Australia are 43% of all emissions covered by the Safeguard Mechanism.

This is nearly double the 23% on the 100 year timeframe used by the federal government’s Clean Energy Regulator – a metric which obscures and dramatically understates the immediate, near term warming impacts of facilities that predominantly emit methane.

Further, total fossil fuel sector (coal, oil and gas) facility methane emissions are 69% of all emissions covered by the SGM on a 20 year timeframe. This highlights that the sector is responsible for the lion’s share of short-term emissions from SGM-covered facilities, which pose the greatest immediate climate risk.

We know, too, that Australia is underestimating methane emissions. The IEA found that methane released from energy production was 63% more than federal government estimates. If this adjustment is applied to SGM facilities, coal mine methane emissions make up 50% of all emissions covered under the SGM. The fossil fuel sector’s share as a whole increases to a massive 77% of all emissions covered.

This risk is further exacerbated by the fact that methane emitting facilities are eligible for unlimited use of carbon offsets under the proposed SGM legislation. Allowing credits based on carbon dioxide drawdown measures such as land-based sequestration of carbon to offset methane emissions on a GWP100 basis is a false equivalence, and irretrievably flawed. As our report details, there is no technically feasible way to draw down methane from the atmosphere, and no “like for like” offsetting is possible.

The only credible path to emissions reduction under the SGM is responsibly accounting for the short term impacts of methane within the framework, requiring fossil fuel facilities to mandatorily avoid methane emissions, and restricting new fossil fuel entrants to the SGM scheme.

The Greens have led the debate in parliament and in public about why the science dictates that we must not accept new coal and gas projects.

In addition, Federal Teal MP Zali Steggall’s proposed amendments to the SGM legislation currently before parliament address the concerns identified in our report by placing a cap on fugitive emissions from fossil fuel facilities, and requiring facilities to adhere to world’s best practice in data collection with real time monitoring, public reporting and verification at every site. This would help ensure integrity and restore public confidence in the scheme, whereas currently most oil and gas activities report based on flawed national averages rather than actual emissions.

Allegra Spender MP’s proposed amendment to legislate the emissions budget for this decade is also key.

The world is moving on methane, and with deep emissions cuts needed this decade to keep hope of holding warming to 1.5 degrees alive, action is overdue. Australia is now a signatory to the Global Methane Pledge which commits to a 30% cut in methane emissions on 2020 levels by 2030.

The IEA says that is not enough: there needs to be a 75% reduction in methane by 2030 to achieve net zero by 2050. President Biden has introduced a US$1,500/t tax on all US methane emissions above industry best practice of 0.2% methane emitted as a proportion of total oil or gas extracted, transmitted or processed by a facility.

At the 2022 federal election the Australian people elected a parliament to act on climate, and to finally grasp our enormous potential to lead the global energy transition. After a devastating lost decade of climate and energy policy failure, the Labor Government should take the opportunity that mandate provides to reform the Safeguard Mechanism in line with the climate science.

This is our chance to get it right. Let’s not blow it.

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