Nearly 90 countries join pledge to reduce methane emissions

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Nearly 90 countries have joined a U.S. and EU-led effort to decrease emissions of the potent greenhouse gas methane 30% by 2030 from 2020 levels, a pact aimed at tackling one of the main causes of climate change, a senior Biden administration official said.

Methane is the main greenhouse gas after carbon dioxide. It has a higher heat-trapping potential than CO2 but breaks down in the atmosphere faster – meaning that cutting methane emissions can have a rapid impact on reining in global warming.

Reuters state that “the Global Methane Pledge, which was first announced in September, now includes half of the top 30 methane emitters accounting for two-thirds of the global economy, according to the Biden administration official.”

One of the world’s top five biggest emitters of methane is Brazil who are now a new signatory of the pledge. However, China, Russia and India, also top-five methane emitters, have not signed on to the pledge, despite being targeted to join. 

United States and European Union have worked hard to get the world’s biggest methane emitters to join the partnership, since it launched back in September. There were roughly 60 countries signed up only last week, after a final diplomatic push from the United States and EU ahead of the current COP26 summit.

Reuters go on to state that “while it is not part of the formal U.N. negotiations, the methane pledge could rank among the most significant outcomes from the COP26 conference, given its potential impact in holding off disastrous climate change.”

A U.N. report in May said steep cuts in methane emissions over the coming decade could deter an increase of 0.3°C of global warming by the 2040s. The 30% methane cut would be jointly achieved by the signatories, covering all sectors. Key sources of methane emissions include leaky oil and gas infrastructure, old coal mines, agriculture and landfill sites.

If fulfilled, the pledge is likely to have the biggest impact on the energy sector, since analysts say fixing leaky oil and gas infrastructure is the fastest and cheapest method to curb methane emissions.

Source: Reuters

Action on Climate change presents both opportunity and risk for fund selectors. One of many climate change targets is to encourage electrical vehicle usage and investment in renewables, which could provide an opportunity for ESG investors to compliment emission goals, while still making a return. On the other hand, investors in coal for example, could see their profits waver, if they fail to seek other sources of income as coal is phased out with the new green agenda.

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