When it comes to the discussion on greenhouse gas emissions, carbon dioxide is often touted the most. Methane emissions are also classified as a greenhouse gas, and are deserving of as much attention as carbon when discussing strategies to mitigate climate change. Here, we look at the anthropogenic sources of methane in the atmosphere and whether a methane tax is feasible to reducing this planet-warming greenhouse gas.
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What is Methane?
The term greenhouse gas is a catch-all, umbrella term that refers to several different types of emissions, produced either naturally or anthropogenically. In short, any type of gas that traps heat within the atmosphere is a greenhouse gas. To break it down, in 2020, carbon dioxide accounted for 79% of emissions, with methane accounting for 11%, nitrous oxide with 7%, and fluorinated gases with 3%. Carbon emissions are created by burning fossil fuels, solid waste, and biological materials, whereas methane is created in the production and transport of fossil fuels, as well as agricultural byproducts and decaying organic matter. While carbon certainly makes up the majority of emissions, methane has a shorter lifespan by comparison and is 25 times more effective at trapping heat within the atmosphere.
Despite its harmful compounding effects, methane continues to be lumped in with carbon under more general emissions taxation policies, though there are certain measures being taken to increase the regulation of methane emissions across international standards. The Global Methane Pledge is one example of an organisation of states acknowledging the need for greater management of methane emissions, formed in November of 2021 at COP26. With 111 countries signed on, the pledge encapsulates roughly 45% of total global emissions, with the goal of reducing emissions by at least 30% below 2020 levels by the year 2030. However, the pledge is non-binding, members are not assigned individual reduction targets, and heavy emitters like China, India, or Russia have notably not joined in. As such, the pledge is largely symbolic posturing, providing a general goal to work towards, yet it does not specify any actions or steps in achieving its targets.
Can We Widely Adopt A Methane Tax?
That said, on an individual basis, there are certain countries that are innovating on methane regulation. Prior to the formation of the Global Methane Pledge, in 2016, Canada had already announced plans to reduce methane emissions from its oil and gas sector by 40-45% below 2012 levels by the year 2025. Since then, adjustments have been made to the Canadian Environmental Protection Act to reflect such ambitions through provincial regulations and federal investment programmes. As of December of 2021, the Canadian government has affirmed that they are on track to meeting their methane reduction goals. However, it is important to note that despite such regulation, Canada’s carbon tax does not apply to methane emissions, due to a lack of robust baseline measurement.
Conversely, Norway was one of the first countries in the world to formally introduce a carbon tax in 1991, targeting the fossil fuel industry. Aside from carbon, harmful gases regulated by the tax also include methane, among several others. Overall, Norway has been able to encourage energy efficient measures within fossil fuel activities, and thanks to their policy, they have been able to maintain consistently low methane emissions by combining stringent regulatory standards with robust taxation measures.
In the United States, the Biden Administration is also committing to their own action plan, involving multiple institutions of the government and new actors to help the country achieve the goals of the Global Methane Pledge. As per the Methane Emissions Reduction Plan, the US government aims to clean up orphaned oil and gas wells, implement a Methane Reduction Infrastructure Initiative, cut down on methane leaks from pipeline systems, reduce emissions from beef and dairy farms, and form a Greenhouse Gas Monitoring and Measurement Interagency Working Group to engage with key stakeholders.
However, it is important to consider that despite some degree of regulation, taxation policies that explicitly prioritise methane emissions do not yet exist in any meaningful capacity. Since methane is much shorter-lived and more harmful as opposed to carbon, policy options need to be timely and effective, rather than band-aid, stopgap measures. Innovation is possible, as shown by the examples of Canada, Norway, and the United States, yet there is more that could be done and those three countries have demonstrated that robust methane taxation policies can be feasible.
The International Energy Agency maintains an online policy database that catalogues emissions reduction strategies in countries around the world, geared toward cutting back on the heaviest sources of emission, all to varying degrees of success. Therefore, in countries where methane regulation has shown promising potential, a methane tax would facilitate faster and more effective results. In the past, carbon taxes have encouraged the adoption of clean and more energy efficient technologies, transition away from fossil fuel dependence, and resulted in revenue gains. With such a track record, taxes focused on methane emissions would likely follow suit.
More specifically, with the examples of Canada, Norway, and the United States, the policy structure on industry-wide emissions regulation already exists, so something like a methane tax would not come as a shock to the system. Of course, internal politics present the most significant obstacle that must be overcome. In the United States, a proposed methane tax, as part of a larger climate bill, is still being debated. On a case to case basis between country to country, the possible implementation of a methane tax will look different, yet that does not preclude the fact that existing regulations even before escalating to that scale have been effective. Contextually, a methane tax levied against the heaviest sources of emission is not only feasible, but necessary.
The climate crisis is scaling up, not down, so policy responses need to be proportional and commensurate to counteract the declining health of the planet. As such, when it comes to cutting back greenhouse gas emissions, methane needs to be prioritised. With all of the calls for action and innovation, all options need to be considered, and taxing methane is one move in the right direction.
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