Platts proposes to begin publishing assessments of Natural Gas Methane Performance Certificates

S&P Global Platts seeks market feedback on a proposal to launch Methane Performance Certificate (MPC) price assessments on October 1, 2021.

The MPC assessment would reflect the market value of low methane emissions in natural gas production in the contiguous United States and Canada.

Methane emissions generated by production are a significant contributing factor to the carbon intensity of natural gas. Detecting, measuring, and managing methane emissions will be a critical component of the energy transition to determine the methane intensity of specific production streams. Methane intensity represents the ratio of methane emissions to natural gas produced.

MPCs would reflect a volume of avoided methane emissions based on the methane intensity percentage of natural gas produced. The lower the methane intensity percentage below the Platts-established threshold, the more certificates a producer would register and have available to sell.

The initial emissions threshold for methane intensity proposed by Platts would be 0.10%, which encompasses approximately 45% of US natural gas production based on a Platts analysis of 2019 Subpart W data collected by the US Environmental Protection Agency (EPA). This data set uses the Natural Gas Sustainability Initiative (NGSI) protocol for calculating methane intensity percentage. The threshold would be reviewed as new data becomes available.

For example, if a company produced 1,000 MMBtu of natural gas with a verified methane intensity percentage of 0.04%, or 60% below the 0.10% threshold, this would allow the issuance of 600 MPCs.

Platts proposes to reflect the value of certificates that require independent third-party verification of emissions. This independent verification ensures the credibility of the level of methane emissions.

The launch of a daily MPC price assessment would coincide with the anticipated development of a freely traded market for such instruments.

Platts would use data from market participants, including traders, brokers, and exchanges to inform the assessment process. The information would include bids, offers, and trades, registry change of ownership information, and market participant intents to trade. Platts would also seek to publish all relevant data during the assessment process and time stamp the assessed value at market close. The assessment would be published in $/MPC and converted to a $/mtCO2e (metric tons of carbon dioxide equivalent). It would be published in various existing publications including Gas Daily and on Platts information services alongside other Energy Transition offerings.

Since EPA Subpart W data represents estimated emissions and research indicates that it understates actual emissions, Platts believes that MPC instruments should reflect measured emissions verified by third parties rather than estimated self-reported data. Platts is seeking feedback from market participants as to whether Platts specifications for its MPC assessments should include limitations around the methodology of methane detection and calculation. That might include references to existing technologies such as ground sensors, drone sensors, satellite readings, other modeling tools that uses emissions factors along with some combination of ambient monitoring, or mass-balance computations with producer specific emissions factors.

Platts is hosting a virtual round table event on August 24, 2021, and will present details of this proposal, answer questions, and pose questions to industry participants. For registration information go to https://www.spglobal.com/platts/en/events.

Please send any further queries or feedback to Americasgaspricing@spglobal.com, Platts_Carbon@spglobal.com and Pricegroup@spglobal.com by August 31. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.