Methane Reduction to Begin in Full Swing
The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.
The COP26 draft has been disclosed. Global countries will be asked to raise their targets for reducing greenhouse gas emissions (vs 2020 levels). China has publicly announced a methane reduction plan, marking a first for the country. The Korean government is also participating in a global methane reduction pledge. Moving ahead, we expect biogas plants and methane capture facilities to draw attention.
COP26 draft released
The UK, the host of the 26th UN Conference of the Parties (COP26), has proposed a draft to raise greenhouse gas reduction goal by next year. Under the proposal, each member country is to strengthen its national greenhouse gas reduction goals in 2030 in line with the Paris Agreement, and hold a climate summit in 2023.
Achieving this goal will require a 45% reduction in carbon emissions by 2030 (compared to emission levels in 2010) and an acceleration in the suspension of financial support for coal use and fossil fuels. The UK noted the DMs’ current funding pledge (to provide US$100bn pa to EMs for climate change) is not being fulfilled, calling for related financial support to be doubled. The final day of COP26 is Nov 12, but negotiations are to continue after the closing date.
Global countries’ efforts to reduce methane to begin in full swing
The US and China have announced a joint declaration regarding climate change, agreeing upon a methane emission reduction plan. We view as meaningful the fact that China has committed to a methane reduction plan for the first time. The Korean government has also announced that it would join the Global Methane Pledge, which targets a 30% reduction in methane emissions by 2030 (compared to the 2020 levels).
Methane is one of the six major greenhouse gases. In the 6th report of the Intergovernmental Panel on Climate Change (IPCC) released in Aug 2021, methane was cited as accounting for 30% of global warming. Since methane has a 21x greater impact on the atmosphere than CO2, the effects of reducing greenhouse gas are large in scale when reducing methane emissions. Of note, methane is produced by human activities such as natural gas mining, agriculture, among others.
As of 2018, Korea’s methane emissions totaled 28mn tons, representing 3.8% of domestic greenhouse gas emissions. Methane releases divided as 44% from agriculture, 31% from waste, and 23% from energy. In order to reduce methane emissions in the future, it is deemed necessary to utilize low-methane feed and bio char (soil improving agent), and to install livestock manure bio-energy facilities and methane capture facilities in waste landfills. Going forward, biogas plants and methane capture facilities are to attract market attention.