The Economic Impact of Cutting Methane Emissions

Photo: Unsplash

Written by Manasvi Parikh

The United Nations climate conference, COP26, took place in Glasgow, Scotland from October 31 to November 12, 2021, and many global leaders were in attendance, including the U.S. President, Joe Biden, and India’s Prime Minister, Narendra Modi. Some global leaders are absent from the conference, such as Russia’s Vladimir Putin and China’s Xi Jinping (“COP26: Biden Attacks China and Russia leaders for missing summit,” 2021). Though their leaders are not present at the conference, both Russia and China have sent delegations to the summit (Abnett et al., 2021). The United Nations climate summit aimed to push pledges to combat climate change and encourage countries to cut back on emissions.

The Global Methane Pledge is a crucial goal of COP26. The pledge aims to cut 30% of 2020’s methane emissions by 2030 (“COP26: US and EU announce global pledge to slash methane,” 2021). Reducing methane reductions will have a drastic effect on reducing climate change, as methane is the second-most abundant greenhouse gas present in the atmosphere after carbon dioxide. Methane is more harmful than carbon dioxide as it is more effective at trapping heat; however, it breaks down much more quickly than carbon dioxide does (Abnett et al., 2021). Because methane breaks down faster than carbon dioxide, there is a higher amount of carbon dioxide in the atmosphere. Though there are natural sources of methane emissions, about 60% of methane emissions come from human activities and come primarily from the gas, oil and agricultural sectors (Clark et al., 2021). A drastic reduction of methane emissions could curb a projected 0.3 Celsius increase in temperature by 2040 (Abnett et al., 2021). Thus far, over one hundred countries have signed the pledge (Sommer, 2021). It is vital to reduce methane emissions in order to combat climate change, and in order to have a drastic reduction of methane emissions, it is imperative that world leaders work together.

Though over one hundred countries have signed the pledge, the success of the Global Methane Pledge is largely dependent on the cooperation of three countries—Russia, India and China—three of the top five emitters of methane, all of whom have not yet signed the pledge (Abnett et al., 2021). Russia has been secretive about its methane emissions. According to an article by The Washington Post, Russia has lied about its methane emissions: “Russia claims that it emitted 4 million metric tons of methane from the oil and gas sector in 2019, the most recent year reported…The Paris-based International Energy Agency (IEA)… puts the country’s 2020 figure at nearly 14 million tons, which would make Russia the world’s largest emitter of oil and gas-based methane.” (Ahmed et.al., 2021). India has not signed the pledge due to concerns about its potential economic impact, particularly in the agricultural sector where nearly half of India’s population is employed (Arora & Bhardwaj, 2021). Since these three countries emit large amounts of methane, it is vital that they reduce their methane emissions to curb climate change.

In addition to combating climate change, there are important economic factors that need to be taken into account. There are costs to cutting methane emissions, including significant changes to the energy and agricultural sectors. The agricultural sector accounts for 40% of human caused methane emissions (Silverstein, 2021). To accommodate the pledge, farmers will have to change how they raise livestock (Clark et al., 2021). In the oil and gas sectors, there is an average cost of $520 USD for each ton of methane reduced, and in the agricultural sector, there is an average cost of $830 USD for each ton of methane reduced (Climate and Clean Air Coalition, 2021). Undoubtedly, there are some short-term economic costs associated with a reduction of methane emissions.  

Despite these initial costs, there are long term economic benefits of cutting methane production. In the fossil fuel industry, methane can be released through leaky infrastructure, such as pipes. Fixing leaky infrastructure has a simple solution, since producers are incentivized to fix leaky technology as they will save extra gas that would have been wasted (Clark et al., 2021). According to an article in Forbes Magazine, “If that methane could be captured and marketed to chemical makers and manufacturers, the Obama administration said that natural gas producers [in the U.S] could increase revenues by $188 million yearly while also reducing the level of greenhouse gases.” (Silverstein, 2021). Globally, there is a push to cut methane emissions, and many gas and oil producers are in agreement as it is profitable to resell the captured methane. There are possible economic benefits to curbing methane emissions as less gas will be lost through faulty infrastructure and producers are able to sell the methane that would have otherwise been lost.

There are many social impacts of cutting back on methane emissions that can have a positive impact on the economy, environment and global health. Accounting for several factors (shown in the infographic below) such as lost work hours and respiratory illnesses, the benefits of cutting methane emissions, “would be equal to a global saving of approximately US$470 billion.” (Climate and Clean Air Coalition, 2021).

Source: Climate and Clean Air Coalition

Methane emissions are a focal point in the fight against climate change due to their significant role in warming the planet. In addition to the positive environmental and health impacts of reducing emissions, it is economically profitable and beneficial to curb methane emissions. Though there are short term costs, they are far outweighed by the long term economic, social, and health benefits that come with curbing methane emissions. However, in order to drastically reduce emissions, it is necessary for Russia, India and China to sign the Global Methane Pledge and decrease their methane emissions.  


Abnett, Kate, Filks, Ilze, Volcovici, Valerie. “Nearly 90 countries join pact to slash planet-warming methane emissions.” Reuters, November 2, 2021, www.reuters.com/business/environment/nearly-90-countries-join-pact-slash-planet-warming-methane-emissions-2021-11-02/ 

Ahmed, Maema, Dennis, Brady,  Khurshudyan,  Isabelle, Mooney, Chris, Mufson, Steven and Muyskens, John. “Russia allows methane leaks at planet’s peril.” The Washington Post, October 19, 2021, www.washingtonpost.com/climate-environment/interactive/2021/russia-greenhouse-gas-emissions/?itid=lk_inline_manual_71

Arora, Neha and Bhardwaj, Mayank. “Fears for farming and trade stopped India signing COP26 forest, methane pledges.” Reuters, November 3, 2021, www.reuters.com/business/cop/fears-farming-trade-stopped-india-signing-cop26-forest-methane-pledges-2021-11-03/ 

“Benefits and costs of mitigating methane emissions Global Methane Assessment key findings.” Climate and Clean Air Coalition, www.ccacoalition.org/en/content/benefits-and-costs-mitigating-methane-emissions

“COP26: Biden attacks China and Russia leaders for missing summit.”  BBC News, November 2, 2021 https://www.bbc.com/news/world-59138578

“COP26: US and EU announce global pledge to slash methane.” BBC News, November 2, 2021, https://www.bbc.com/news/world-59137828

Clark, Aaron, Malik S. Naureen and Rathi Akshat. “Why Methane Is Climate’s Low-Hanging, Invisible Fruit: QuickTake.” The Washington Post, November 9, 2021, www.washingtonpost.com/business/energy/why-methane-is-climates-low-hanging-invisible-fruit/2021/11/02/a21e2fe0-3c19-11ec-bd6f-da376f47304e_story.html

Silverstein, Ken. “Capturing Methane From Oil And Gas Operations Is Doable And Profitable.” Forbes, May 10, 2021, www.forbes.com/sites/kensilverstein/2021/05/10/capturing-methane-from-oil-and-gas-operations-is-doable-and-profitable/?sh=59d804a44b54

Sommer, Lauren. “Here’s what world leaders agreed to – and what they didn’t at the U.N. climate summit.” NPR, November 13, 2021, www.npr.org/2021/11/13/1055542738/cop26-climate-summit-final-decision