The financial benefits of solutions in Malaysia to keep methane – a major component of natural gas and a potent greenhouse gas – as a fuel source in the energy system outweigh the costs, according to a study by researchers at the Sarawak campus of Swinburne University of Technology.

Solutions that could yield the highest returns include returning methane to fuel systems rather than burning it or releasing it into the atmosphere, and replacing control systems that release methane with ones that use compressed air. According to the study, such mitigation options can reduce methane emissions by up to 93 percent at a cost of about $3.7 million.

“Some of these mitigation methods essentially generate revenue because natural gas is a source of revenue,” said Dr. Viknesh Andiappan, associate professor at the Sarawak campus of Swinburne University of Technology, who co-authored the study.

The research, one of two studies funded by the U.S.-based nonprofit Environmental Defense Fund (EDF) to examine methane emissions in Malaysia, was presented to industry representatives and the media on Tuesday.

Natural gas consists of more than 90 percent methane, a greenhouse gas that does not stay in the atmosphere as long as carbon dioxide, but stores 80 times more heat. Malaysia was one of more than a hundred countries that signed the Global Methane Pledge at COP26 in 2021, in which signatories committed to taking voluntary action to collectively reduce global methane emissions by at least 20 percent by 2030 compared to 2020 levels.

Researchers at Swinburne University of Technology’s Sarawak campus used data on methane emissions in Malaysia’s oil and gas sector to develop a marginal cost curve for reducing emissions in the industry. The “negative” costs in the categories on the left indicate the opportunity for higher revenue per tonne of methane reduced. Image: Swinburne University of Technology and Environmental Defense Fund

However, there are significant gaps in the data on Malaysia’s methane emissions, the other EDF-funded study found – a result that Andiappan told Eco-Business could alter the estimated financial gains his team found in the study. Scientists from the National University of Malaysia (UKM) and Science University of Malaysia (USM) revealed that research on methane emissions in Malaysia has so far been biased towards agriculture, land use and waste, ignoring other sectors.

Crucially for the oil and gas sector, this study found that Malaysia relied heavily on the UN’s Intergovernmental Panel on Climate Change (IPPC) standard global emission factors in its 2022 biennial update report to the United Nations for methane emissions, “which could affect the accuracy of emissions estimates,” it said. This type of data, which does not use country-specific emission factors, is classified as Tier 1 by the IPCC, but using the Tier 2 methodology based on country-specific factors is considered “good practice.”

Andiappan acknowledged this limitation in the Swinburne study, telling Eco-Business that the financial gains from methane reduction could be calculated more accurately if researchers had access to more specific data on methane emissions in Malaysia’s upstream oil and gas sector. Although the study included industry representatives and made adjustments to their feedback on actual reduction costs, researchers had used the IPCC’s Tier 1 methodology to estimate that Malaysia’s upstream oil and gas sector emits a total of 306,040 tonnes of methane annually. However, using the International Energy Agency’s (IEA) Tier 2 emissions factor led researchers to a higher estimate of the industry’s methane emissions of 363,810 tonnes per year.

“To date, we have no idea how these scaling factors come about. We are trying our best to understand it because if we had that information, we could scale (the methane emissions data) accordingly,” Andiappan said. For the latest study, however, the researchers decided to use the IPCC method for further analysis because it is “more holistic,” he said.

Reporting standard required

Beyond the oil and gas industry, Malaysia has only reported country-specific Tier 2 emissions data for two subsectors: oil palm mill effluent (POME), i.e. wastewater from palm oil processing factories, and non-dairy livestock farming, says Dr. Yusri Yusup, associate professor of meteorology, atmospheric sciences and environmental engineering at USM.

Worryingly, the research found that using Tier 2 values ​​resulted in a larger amount of reported methane emissions. “This means that we are probably underestimating methane emissions if we use Tier 1 values, which are used in most energy, waste and industry,” Yusri said.

When country-specific Tier 2 emission factors were used to estimate Malaysia’s methane emissions instead of general Tier 1 emission factors, the researchers found that the estimated methane emissions were higher. Image: The National University of Malaysia, Science University of Malaysia and Environmental Defense Fund

Like their colleagues at Swinburne, the USM and UKM researchers have engaged oil and gas industry stakeholders to obtain more accurate data on methane emissions, but found that few were willing or able to share that data. “This is not surprising,” Yusri said. “(Even) from government, we keep hearing that industry stakeholders are not sufficiently involved when it comes to developing country-specific risk factors, and that this could be due to the confidentiality of the data.”

He pointed out that there is already an industry initiative pushing for more detailed emissions reporting: the Oil and Gas Methane Partnership (OGMP) 2.0, a UN Environment Programme initiative that aims to improve the accuracy and transparency of emissions reporting in the industry. The partnership now counts more than 130 of the world’s largest oil producers among its members, including Malaysian state-owned oil company Petronas, which joined in 2022.

The OGMP 2.0 requires companies to report their methane emissions annually. No generic emission factors are used, but rather the most precise, scientifically based methods. However, instead of the IPCC’s three-tier system, a five-tier system is used.

“Sometimes it’s confusing because the OGMP has different reporting dimensions,” Yusri said, adding that the partnership also does not currently require public disclosure of data. “Companies publish the report but (the data) is aggregated… so not at a level where it can be disaggregated for the Malaysian government and used in its biennial update report,” he told Eco-Business.

To close this data gap, as well as the gaps in the oil and gas sector, Yusri called for a regulatory framework that would require the industry to apply and disclose emissions based on a common standard. “The first thing we should address based on our study is the fact that there are still no established regulatory laws or guidelines for mandatory reporting of greenhouse gas emissions,” he said.

“It is urgent that (these) guidelines be made mandatory so that everyone is on the same page in terms of reporting and we can get the big picture,” Yusri said.