Malaysia’s upstream oil and gas industry could gain between US$8.2 million to US$11 million in net revenue from combatting methane emissions in line with the country’s commitments as a signatory to the Global Methane Pledge, new research revealed.
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The financial benefit of solutions in Malaysia that would keep methane, a major component of natural gas and potent greenhouse gas, within the energy system as a fuel source would outweigh its costs, found a study by researchers at the Sarawak campus of Swinburne University of Technology.
Among the solutions that could generate the most earnings are rerouting methane back into fuel systems instead of burning or releasing it into the atmosphere, as well as replacing control systems that release methane with those that use compressed air. Up to 93 per cent of methane emissions reduction can be achieved at a cost of around US$3.7 million for such abatement options, according to the study.
“Some of these methods of abatement essentially generate revenue because natural gas is a source of revenue,” said Dr Viknesh Andiappan, associate professor at the Swinburne University of Technology Sarawak campus, who was co-investigator for the study.
The research, which was one of 2 studies funded by United States-based non-profit the Environmental Defense Fund (EDF) to investigate methane emissions in Malaysia, was presented to industry representatives and the media on Tuesday.
Natural gas consists of more than 90 per cent methane, a greenhouse gas that does not stay in the atmosphere for as long as carbon dioxide, but traps 80 times more heat. Malaysia was one of more than a hundred countries to sign the Global Methane Pledge in 2021 at COP26, under which signatories committed to take voluntary action to collectively reduce global methane emissions by at least 20 per cent by 2030 from 2020 levels.
Researchers at the Swinburne University of Technology’s Sarawak campus used data gathered on methane emissions in Malaysia’s oil and gas sector to develop a marginal abatement cost curve for the industry. The ‘negative’ costs in the categories on the left indicate the opportunity for increased revenue per tonne of methane abated. Image: Swinburne University of Technology and Environmental Defense Fund
However, there are significant gaps in data on Malaysia’s methane emissions, the other study funded by EDF found – a finding that Andiappan told Eco-Business could change the estimated financial gains determined in the research by his team. 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, overlooking other sectors.
Crucially for the oil and gas sector, this study found that Malaysia in its 2022 biennial update report to the United Nations relied heavily on default global emissions factors by the United Nation’s Intergovernmental Panel on Climate Change (IPPC) for methane emissions, “which may compromise the accuracy of emissions estimates,” it said. This form of data, using non-country-specific emissions factors, is categorised by the IPCC as Tier 1, but using Tier 2 methodology, which is based on country-specific factors, is considered ‘good practice’.
Andiappan acknowledged this limitation in the Swinburne study, and told Eco-Business that the financial gains from methane abatement could be more accurately calculated if the researchers had access to more specific data on methane emissions in Malaysia’s upstream oil and gas sector. Although the study engaged industry stakeholders and made adjustments for their feedback on actual abatement costs, the 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 each year. However, using the International Energy Agency (IEA’s) Tier 2 emissions factor led the researchers to a higher estimated methane emissions for the industry at 363,810 tonnes per year.
“To this day, we still have no idea how those 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 most recent study, however, the researchers chose to use the IPCC method for further analysis as it was “more holistic”, he said.
Reporting standard needed
Beyond the oil and gas industry, Malaysia has only reported country-specific Tier 2 emissions data for two subsectors: palm oil mill effluent (POME), which is wastewater from palm oil processing mills, and non-dairy cattle farming, said Dr Yusri Yusup, associate professor in meteorology, atmospheric science and environmental engineering at USM.
Worryingly, the research discovered that using the Tier 2 values resulted in a larger volume of methane emissions being reported. “This means that when we use Tier 1 values, which most of the energy, waste and industrial sectors use, we are likely underestimating methane emissions,” said Yusri.
When country-specific Tier 2 emissions factors were used to estimate Malaysia’s methane emissions instead of generic Tier 1 emissions factors, researchers found that estimated methane emisssions were higher. Image: The National University of Malaysia, Science University of Malaysia and Environmental Defense Fund
Like their counterparts at Swinburne, researchers from USM and UKM also engaged oil and gas industry players to seek more precise methane emissions data but found that few were willing or able to share it. “That is not unexpected,” Yusri said. “[Even] from the government, we keep hearing that there is a lack of stakeholder involvement from the industry when it comes to developing country-specific risk factors, and that this could be due to the confidentiality of data.”
He pointed out that there is already an industry initiative advocating for more granular emissions reporting: the Oil and Gas Methane Partnership (OGMP) 2.0, a UN Environment Programme initiative aimed at improving the accuracy and transparency of emissions reporting in the sector. The partnership today counts more than 130 of the world’s largest oil producers as members, including Malaysian national oil company Petronas, which joined in 2022,
The OGMP 2.0 requires companies to commit to annually reporting their methane emissions using the most accurate, science-based methods as opposed to generic emissions factors, but uses a 5-level system as opposed to the IPCC’s three tiers.
“Sometimes it gets confusing because the OGMP has different dimensions of reporting,” 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 it is not at a level where it can be itemised for the Malaysian government to use in its biennial update report,” he told Eco-Business.
To address this data gap, as well as those of 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 that we should address based on our study is that there is still no established regulatory act or guidelines for mandatory greenhouse gas emissions reporting,” he said.
“There’s a dire need for [these] guidelines to be made mandatory, so that everybody is on the same page when they report and we can come up with an overall picture,” said Yusri.
