Climate Change Reporting Guide: Methane — Chapter 3

Many companies are far from transparent about their methane emissions, but they are under increasing pressure to disclose more and emit less. The rising expectations should prompt journalists, including business journalists, to ask more questions.

This chapter looks into how to investigate corporate responsibility for methane emissions and the companies’ pledges to cut them.

The oil and gas industry, which is responsible for roughly one-third of methane emissions, is the most important sector on which to focus attention. Many companies improved the measurement of their methane output, disclosure efforts, and have set goals to reduce emissions, some to net-zero. But many other firms have not. Companies “are very reluctant to embrace transparency,” commented a person who works on providing industry measurement and therefore was unwilling to speak for attribution.

Whether corporate commitments are sufficient is a matter of ongoing debate. There are differences of opinion about the right goals to set and how to achieve them. But even before addressing the adequacy of pledges, it’s necessary to understand what corporations are saying, which turns out to be somewhat complicated.

This chapter will focus primarily on two important areas for investigation:

• First, how are companies measuring their emissions and what are they disclosing?
• Second, what goals are they setting to reduce emissions and are they fulfilling these public pledges?

Corporate Transparency: An Uneven Landscape

Three out of five oil and gas companies report on methane in some fashion, according to a 2018 Environmental Defense Fund (EDF) report, The Disclosure Divide. The EDF found that 58% of companies surveyed report some information, even if broad, on methane, but more than 40% “fail to report any information at all on methane emissions or their management.”

“It’s really difficult to find a global source of truth on methane emission,” said Andrew Baxter, EDF’s director of energy strategy.

Most commonly, companies disclose a methane emissions “intensity” rate. To calculate this, total methane emissions are divided by total production. In other words, it’s a measure of emissions per unit of energy produced. While such a ratio facilitates comparisons among producers, there is no international standard for doing so and the numbers may be easily manipulated through the selection of the numerator and denominator. Companies also may disclose absolute emissions numbers.

The complexity of measurement forms a shield against inquiry, but not an impenetrable one. To penetrate it, it’s best to consult academic and NGO experts on climate change, and possibly corporate watchdogs and investors. And to ask companies for explanations.

Climate activists have found that investor pressure is a key factor in encouraging increased disclosure across the industry. Some companies are playing leadership roles, and several coalitions have formed to encourage better performance. But broad government reporting mandates are rare worldwide. And reporting on corporate transparency tends to be rare as well. A recent Politifact article noted that of the four major companies represented at a recent congressional hearing — Shell, bp, Exxon Mobil, and Chevron — “only bp provides clear details on the actual dollars it is spending on low-carbon projects.”

Unearthing Corporate Disclosures

Corporate disclosures about methane, where they exist, typically occur on company websites in “sustainability” reports. Very few government entities require corporate methane reporting, however, so most commercial reporting is voluntary. But increased pressure for transparency has led to some new sources of information.

Some corporate disclosures, in a unified format, are available on the site of CDP. This not-for-profit organization manages a global environmental disclosure system and has created a lengthy questionnaire that has standardized reporting.

The answers are viewable by searching the company name (after free registration). Methane emissions, goals, and plans are covered in a series of questions. Specifically see question C4.2b, which asks about “climate-related targets, including methane reduction targets.” There are also sector-specific questions for the likes of coal, electric utilities, and oil and gas sectors (such as C4.2d and C4.6) that ask questions on efforts to reduce methane emissions. Methane is also covered in C6, which asks companies to report their methane emissions as percentages of natural gas and hydrocarbon production or throughput, C7, which asks for an emissions breakdown, including gross scope methane emissions, and C8, focused on energy. For an example, see the ConocoPhillips answer.

CDP grades the adequacy of the replies, naming those who get an “A.” More than 9,600 companies filed disclosures with CDP in 2020, but only 300 made the A list.

A special issue of concern is flaring — the burning off of flammable waste gases – which produces mainly carbon dioxide, methane, and other pollutants, according to an IEA summary and the World Bank’s Global Gas Flaring Tracker. Flaring accounts for 2% of global methane emissions from oil and gas production, according to the IEA.

Flaring accounts for 2% of global methane emissions from oil and gas production, according to the IEA. Image: Shutterstock

The World Bank’s Zero Routine Flaring initiative (ZRF) enlists governments and oil companies to publicly report their flaring and progress toward eliminating routine flaring no later than 2030. Some environmental activists have urged quicker action, however, calling for zero routine flaring by 2025. The flaring data self-reported by countries and corporations is published on the ZRF website. Separately, satellite-based estimates of global flaring data are published on this website. The latest annual World Bank report said gas flaring has dropped 14% since 1996 and declined by 5% from 2019 to 2020.

A new metric, the Imported Flare Gas (IFG) Index, identifies how countries that import crude oil are exposed to gas flaring. It was developed by the World Bank’s Global Gas Flaring Reduction Partnership and aims to show oil-importing countries which of their suppliers have the most “flaring hotspots.”

“These importing countries should shoulder some of the responsibility in the gas flaring reduction efforts of their oil-producing partner countries,” according to a 2021 World Bank blog post. Specifically, the importing countries could “engage in a dialogue with countries from which they buy oil; assist producing countries in implementing flaring reduction initiatives; and improve the carbon intensity of the oil they consume.”

Initiatives to Improve Disclosure

A variety of efforts are underway to facilitate better reporting about emissions reporting in the oil and gas sector.

The Oil and Gas Methane Partnership (OGMP) is an initiative with 74 large corporations as members, representing 30% of the world’s oil and gas production. Various UN agencies and the EDF are involved. The partnership has established what it calls a “gold standard reporting framework” and companies will be rated on whether they show improvement. However, the framework terms assure confidentiality for all information submitted by the companies. The first report on the data, released in November, 2021, states, “As expected, the quality of data in most cases is limited, as the majority of companies have not yet ventured into higher reporting levels for the majority of assets.” The member company plans are in the appendix.

The Oil and Gas Climate Initiative (OGCI) is an industry initiative by 12 large oil companies, including six national oil companies (NOC)s: Equinor, Gazprom, Petronas, Rosneft, Socar, and Qatar Petroleum. Under its Methane Guiding Principles (MGP), OGCI members have committed “to continually reduce emissions, improve the accuracy and transparency of methane data, report progress and challenges of methane mitigation, and advocate for sound methane policy and regulation.” The OGCI Reporting Framework describes agreed-on disclosures (see Section 7.3 on methane) and the complex “intensity-based” target.

A consortium of some oil and gas companies created Methane Guiding Principles, which lays out best practices.

MARCOGAZ, a nonprofit that represents the European gas industry and has developed technical standards for measurement and reporting and materials, including an emissions glossary.

The Science Based Targets initiative (SBTi), a global body “enabling businesses to set emissions reduction targets in line with climate science,” in July 2020 said more than 600 companies have committed to the most ambitious targets through the SBTi’s Business Ambition for 1.5°C campaign.

The ONE Future Coalition is a group of more than 45 US natural gas companies pledged to voluntarily reduce their methane emissions to 1% (or less) by 2025.

An emerging trend is for “responsibly sourced gas” (RSG), the term for certification of gas based on its emissions. See summary article in Natural Gas Intelligence.

Investigative Questions

The Basics

When it comes to reporting on corporate methane emissions, these questions are a good place to start when interviewing company representatives or scientists:

• What are your methane emission levels?
• Are they rising or falling, and by how much?
• How are your figures calculated?
• Will you disclose your methodology?
• What proportion of the data comes from direct measurement?
• How often is measurement data collected?
• Do you report all emissions, including those from affiliates, so-called non-operated joint ventures? (See the EDF report, which points out the size of this little-noticed sector and the transparency gap that it can create.)
• Have the emissions figures been audited by a third party?
• Also, ask about emissions from specific facilities.

Leverage Investor Scrutiny

An EDF document from 2020, aimed at investors, also lists a number of questions about how decisions are made relating to climate change, with a focus on non-operated assets.

A 2021 blog post by EDF staffer Dominic Watson posed 5 questions on flaring for investors to ask oil and gas companies. Watson discussed each question in detail, but in brief they are:

• What are your flaring reduction targets?
• What incentives have you tied to flaring performance targets?
• How do you ensure routine flaring doesn’t happen when a well comes online?
• When you must flare, how are you inspecting flares to ensure they are lit and functioning properly?
• What steps have you taken to support a policy goal of zero routine flaring by 2025?

For more ideas on questions to ask potential methane emitters, read:

• Hitting the Mark: Improving the Credibility of Industry Methane Data, a 2020 EDF report that concluded: “Today, the oil and gas industry has a methane-emissions data problem.”
• Methane Disclosure in the Oil and Gas Industry: Tracking the Impact of Shareholder Engagement, published in 2018 by the Interfaith Center on Corporate Responsibility, a coalition of shareholder advocate organizations based in New York. ICCR defined ideal disclosures in its 2020 Investor Engagement: Guidance on Methane.
• Best Practice Guidance for Effective Methane Management in the Oil and Gas Sector: Monitoring, Reporting and Verification (MRV) and Mitigation, a 2019 report by the United Nations Economic Commission for Europe.
• JPMorgan Chase assesses the emissions performance of its clients, as described in a 2018 report, in which it observed: “Data quality and reliability is a well-known challenge for the oil and gas sector. This arises from inconsistencies in measurement, management and reporting of data across the industry, as well as the lack of reliable and standardized techniques for measurement in areas such as methane.”

Numerous companies advise investors about individual company’s performance on environmental, social, and governance (ESG) issues, including on methane emissions, but their research material is generally proprietary.

Verification Programs

Verification regimes also exist, designed to certify that corporate operations are meeting standards. For example, Project Canary certifies whether companies are implementing continuous monitoring approaches. MiQ is an independent, nonprofit partnership between systems firms RMI and SYSTEMIQ, aiming to reduce methane emissions in the oil and gas sector through “a gas certification system which introduces natural gas to the market that has been differentiated based on methane emissions during production.” In September 2021, ExxonMobil signed an agreement with MiQ, to begin the certification process for natural gas produced at its Permian Basin facilities in New Mexico.

A legitimate line of questioning for companies is whether they will join such verification efforts. In addition, asking companies about their positions on proposed government policies relative to methane regulation may be revealing.

Using freedom of information (FOI) requests also may be useful in some countries to learn about company performance. Ask environmental ministries and energy agencies about corporate violations of safety and environmental standards.

Government data and FOI requests helped Ruth Hayhurst of Drill or Drop in the UK. She wrote a story on how one oil site continues to vent hundreds of tons of methane. Likewise, requesting official documents from the government was the key to this 2021 Unearthed story: Revealed: The North Sea Oil Giants Fueling Climate Change with Millions of Tonnes in Preventable Emissions. Reporter Lawrence Carter, who works for Unearthed, a journalism arm of Greenpeace UK, obtained data about corporate greenhouse gas emissions from the National Atmospheric Emissions Inventory (NAEI), a UK government agency, through an Environmental Information Regulations request.

The Unearthed project used UK government documents to reveal massive emissions from North Sea oil giants. Image: Screenshot

Corporate Commitments Being Fulfilled — Or Not

There has been a marked uptick in the number of corporations making promises to reduce methane emissions. The details of their commitments, however, may not be so clear, and the adequacy of their pledges is a matter of much debate. (Pledges to reduce methane emissions may be folded into broader climate change commitments.)

Evaluating corporate pledges involves understanding sometimes complex or vague language and digging into the details of how the goals will be met. And skepticism is often warranted, since “some plans are more credible than others,” according to Adele Peters, author of a 2021 Fact Company article: How to Tell if a Company’s “Net-Zero” Goals are Serious—or Just Greenwashing.

Likewise, a November 2020 report by two NGOs, Data-Driven EnviroLab and New Climate Institute, said 1,541 companies had pledged to meet net-zero targets, but across various timelines and with a wide array of detail. The report noted: “Some companies outline specific targets, backed up by pledges to track and report their progress, while others make more general targets, or sign onto initiatives in which they pledge to further develop their targets and action plans.” A related report from the same sources looks at navigating the nuances of net-zero targets.

What to Ask About Corporate Pledges

Beside asking the questions about measurement issues (above), it’s smart to seek information on the specifics and mechanisms of commitments.

Some suggestions include:

• Because stated reduction goals are often for extended periods, like 10 or 20 years, ask about short-term and intermediate goals.
• Inquire about how, exactly, any emissions reductions plans will be implemented, which is not always spelled out.
• Look into the methods for achieving reductions. For example, some pledges involve procuring offset credits, a strategy that has come under fire because of how the credits are created. (For more on this viewpoint, read the Greenpeace article on why offset credits can be little more than a marketing ploy)

For the energy sector, “the adoption of net-zero pledges to 2050 remains uneven across the industry,” according to a November 2020 blog post by Ben Ratner, EDF senior director, and Erin Blanton, senior research scholar at Columbia University’s Center on Global Energy Policy. “And with the most notable exception of bp, even those with net-zero aspirations have not yet offered concrete strategies with near-term milestones that the market can digest and value,” they wrote in a column designed to help investors seeking to make responsible climate change decisions.

NGOs, governments, and investors are carefully watching corporate pledges. British Petroleum’s public commitment to reduce methane is notable for its detail and ambition. Here’s its summary:

Our aim 4 is to install methane measurement at all our existing major oil and gas processing sites by 2023, ‎publish the data, and then drive a 50% reduction in methane intensity of our operations.

And we will work to influence our joint ventures to set their own methane intensity targets of 0.2%.

Other examples of corporate pledges are cited in the 2020 Guidelines for Methane Emissions Target Setting, from three European oil and gas industry associations.

But what corporations say versus what they do on methane often conflicts. The Methane Misinformation Scorecard by the US NGO Earthworks in 2020 focused on eight major oil and gas companies, particularly on their policy positions. Several US states have also sued companies for alleged misrepresentations of their climate change efforts. (See this Reuters article about a lawsuit brought by the US state of Vermont.)

In August 2021, the Australasian Centre for Corporate Responsibility filed suits against Australian oil and gas producer Santos Ltd. over its claim to have a “clear and credible” path to net-zero greenhouse gas emissions. In its legal filing, the climate action group claimed the company made misleading or deceptive statements in a 2020 annual report. “This is the first court case in the world to challenge the veracity of a company’s net-zero emissions target,” the group said. Among other things, the group alleges that by relying heavily on carbon capture and storage technology, the company is depending on “expensive and unreliable” technology. The company declined to respond publicly to the suit, saying “it would not be appropriate for Santos to comment on matters before the court.”

Best Targets for Reporting Focus

Picking the largest methane emitters as initial targets makes sense, but remember that there are many emissions sources.

The most obvious choice is the fossil fuel industry. An especially promising focus would be the large national oil companies (NOCs) like Saudi Aramco, Rosneft, National Iranian Oil Company, China National Petroleum Corporation, Kuwait Petroleum Corporation, Petroleos de Venezuela, Nigerian National Petroleum Corporation, and China Petroleum & Chemical Corporation (Sinopec).

Countries where NOCs dominate the industry “account for 75% of all oil and gas sector methane emissions,” according to a 2021 study by Carbon Limits for EDF. A “large share” of these emissions “can be eliminated profitably or at low cost,” the study claims, in its analysis of the constraints on action. The 15 highest methane emission levels among NOC countries are: Russia, Iraq, Libya, Iran, Turkmenistan, Venezuela, China, Saudi Arabia, Algeria, Uzbekistan, Nigeria, UAE, Kuwait, Kazakhstan, and Egypt.

In addition, reporters could look into the often highly unregulated world of methane flaring in these countries. Russia, Iraq, Iran, Algeria, Venezuela, Nigeria, and the United States have remained the top seven gas flaring countries for nine years running, according to a 2021 report by the World Bank’s Global Gas Flaring Reduction Partnership. In 2021, the Global Gas Flaring Reduction (GGFR) partnership started a new index to address the complicity of net oil importers in supporting source countries with high volumes of flaring.

There are many regional sources of information on flaring, such as this 2020 report by the Arctic Council in Norway.

Don’t Overlook Supply Chain Accountability

Methane emissions don’t just occur at the extraction point. Attention is increasingly being focused on emissions all along the supply chain.

Corporate emission reduction commitments are now made and evaluated at three levels, known as scope 1, scope 2, and scope 3. These are defined by the widely-used international accounting tool, the Greenhouse Gas (GHG) Protocol, by the World Resources Institute (WRI) and World Business Council for Sustainable Development.

Scope 1 emissions come from producing the product. In the natural gas sector, however, most of the emissions occur “midstream,” one step beyond a company’s immediate control, mainly in transportation of the product (scope 2), and “downstream,” in the use of the product (scope 3). While scope 2 and 3 emissions may be out of the control of the producer, there still may be relevant actions they can take to lower down-the-line emissions.

Many Industries to Investigate

Agricultural production — in particular, livestock belching — is a significant source of methane emissions. Illustration: Marcelle Louw for GIJN

While the focus on the fossil fuel industry is considered critical, methane emissions derive from agriculture, aviation, maritime shipping, and other sectors.

Agricultural production, in particular, is a significant source of methane, mainly from rice growing (released by bacteria in flooded paddies) and cattle farming (via belching, not flatulence). Methane emissions are produced mostly by “enteric” fermentation in the digestive process in ruminants (mostly cows), and, as a result, cattle are the number one source of agricultural methane emissions worldwide. Modeling the amount of methane emitted is difficult as it varies across countries and regions based on a number of factors, including type and amount of diet. But it’s estimated that, each year, a single cow is responsible for burping out 220 pounds (roughly 62 US gallons) of methane.

Reporting on the upstream methane challenges for companies with a large agricultural footprint can take the form of this Bloomberg article, which took a deep dive into the fast food giant McDonald’s and its massive methane footprint.

Stories on emissions mitigation in the sector tend to be more difficult, but this Wired article looked at the strategies being used to minimize methane, such as reducing the use of mineral fertilizers and changing animal diets.

The Food and Agriculture Benchmark, issued in September 2021 by the World Benchmarking Alliance, measures and ranks 350 of the world’s most influential food and agriculture companies “on their contributions to transforming our global food system.” The report does not address methane specifically, but includes a finding that “only 26 companies have set greenhouse gas (GHG) emission reduction targets aligned with the Paris Agreement.” (See Reuters story.)

The Coller FAIRR Protein Producer Index, from December 2021 reports “that 85% of the biggest meat, fish, and dairy producers do not even measure their releases of methane.” Journalists can request access to the database, whose intended audience is investors. The report assesses the 60 largest listed global meat, dairy, and aquaculture companies across 10 environmental, social, and governance categories.

The climate responsibilities of industrial meat and dairy producers, lead author Oliver Lazarus, published in 2020 in Climate Change, looked at the world’s 35 largest meat and dairy companies’ commitments on climate change. Among other conclusions, the paper said that all 10 US companies studied contributed to efforts to undermine climate-related policies.

In a 2022 interview in Civil Eats, one of the authors, Jennifer Jacquet, said: “Frankly, I think corporate actors have gone under the radar for way too long. They clearly don’t take much responsibility. If you look at how many of these 35 meat and dairy companies analyzed in that report even calculate the share of their own emissions, it’s less than half.”

Following the latest research on solutions is a necessary supplement to reporting on methane. New ideas are being tested at a rapid pace. Following the science will potentially yield timely questions for those in responsible sectors.

Chapter Four addresses how to hold governments to account on methane.