How to Cut Methane Emissions
Staff Climate Notes, October 31, 2022
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Bibliographic details
- Authors: Ian W.H. Parry, Simon Black, Danielle N Minnett, Victor Mylonas
- Published: October 31, 2022
- Series: Staff Climate Notes
- DOI: https://doi.org/10.5089/9798400224256.066
Background on methane and the climate goal
- Methane has an outsized impact on temperatures relative to its atmospheric concentration.
- To date, 125 countries have pledged to cut global methane emissions by 30 percent by 2030.
- Limiting global warming to 1.5 to 2°C above preindustrial levels requires rapid cuts in greenhouse gas emissions, including methane.
Sources and opportunities for mitigation
- Most emissions reductions would be in extractives (e.g., oil, gas, and coal sectors).
- In some cases, agriculture is administratively amenable to pricing-based approaches for reducing methane.
Fiscal policy options analyzed
- Putting a price on methane, ideally through a fee, would reduce emissions efficiently.
- Revenue-neutral “feebates” are a complementary policy option: fees on dirtier polluters subsidize cleaner producers.
- A fee-based approach can be administratively straightforward for extractives industries and, in some cases, agriculture.
Quantitative scenario and cost assessment
- A $70 methane fee among large economies would align 2030 emissions with 2oC.
- Most cuts under this scenario would occur in extractives.
- Abatement costs under the modeled scenario would be equivalent to just 0.1 percent of GDP.
- Costs are larger in certain developing countries, implying differential burden across countries and the potential role for international support.
Policy implications and recommendations
- Implement a methane price (fee) as a primary tool for efficient emissions reduction.
- Consider revenue-neutral feebates to protect competitiveness and support cleaner producers.
- Recognize the need for climate finance or international cooperation to address higher costs facing certain developing countries and to enable a global agreement on a minimum methane price.
Staff Climate Note: "How to Cut Methane Emissions" by Ian W.H. Parry, Simon Black, Danielle N Minnett, and Victor Mylonas (October 31, 2022).
Content in this bundle
- How to Cut Methane Emissions; IMF Staff Climate Note 2022/008. October 2022