Methane misestimation

Hi there,

We’re Overview Capital and we invest in the mitigation of methane and other super pollutants at the earliest stages. Welcome to the third edition of our newsletter, The Overview: our biweekly dispatch on the world of methane and other super pollutants.

The topline

We have drastically underestimated methane emissions across sources. Why is that? 

While methane isn’t visible to the naked eye, being able to ‘see’ methane isn’t a novel technical feat. Methane emissions come from a variety of sources; the largest human-caused emissions sources are agriculture, oil, gas, and coal, and waste. Still, until recently, measurement of these emissions hasn’t been a focal point for operators or legislators for several reasons: 

Technology and cost: For one, while technologies to measure methane have been around for decades, they haven’t been cheap and haven’t necessarily been ongoing or continuous. At present, oil and gas operators might monitor a pipeline for leaks once a month, if not less often. Technologies to measure methane continuously and precisely are now coming to market at a manageable cost in a more accessible, open-source way, given the heightened emphasis on climate goals and methane’s role in driving global warming. For other emissions sources, such as enteric methane from cows or methane emissions from rice farming, technologies simply haven’t existed, or haven’t been sufficiently affordable to deploy at any meaningful scale.

Policy: Historically, there hasn’t been substantial national or international political will to create sticks and carrots to monitor and reduce methane emissions. This is changing over the past few years; last year’s COP conference was a watershed moment for voluntary commitments to reduce methane emissions and many countries, ranging from the U.S. to Denmark, have doubled down with additional policies to accelerate this work.

CO2 tunnel vision: Carbon dioxide has long dominated climate discussions. It is the most significant driver of warming over long timeframes, as it can remain in the atmosphere for thousands of years. However, when we analyze shorter timeframes, such as the time remaining between now and 2050 (let alone 2030), methane’s role in driving warming becomes substantial owing to its potency (84x more potent over a 20-year timespan) and shorter atmospheric lifespan (~12 years vs. 300-1,000 for carbon dioxide).

Given the tailwinds in the methane space, including more capital allocation alongside improvements and cost declines in technologies like satellite launches and LiDAR, methane monitoring and measurement technologies are now improving across a number of dimensions, including how accurately they can measure methane to how close to 24/7 coverage they can offer. At Overview, we have invested in several, including:

• Mitti Labs: Satellite and AI technology to measure small-holder rice farming emissions

• Xplorobot: Detecting and verifying methane emissions with laser OGI

Another example is the EDF’s new MethaneSAT methane satellite, which launched last month and cost about $88M, can spot methane in as diffuse concentrations as two parts per billion (there are roughly 2,000 parts per billion of methane in our atmosphere). Then there are systems like those that LongPath Technologies is building in the Permian Basin, replete with $189M in conditional loan funding from the DOE’s Loan Program Office. 

As these trends accelerate, they are forcing a reckoning with estimates of past emissions that have been, well, estimates (and often quite inaccurate ones).

Forcing a reckoning

As these technologies that can measure, monitor, and quantify methane and other greenhouse gas emissions continue to improve, they don’t just unlock new business models, and, ideally, more accountability on the part of major emitters. As we’re seeing so far in 2024, they also force updates to previous estimates of methane emissions that were often woefully inaccurate. 

Here are just a handful of examples:

• 40% higher: Recent studies from 2024 posited that methane emissions from U.S. landfills are now 40% higher than previously thought. 

• 2x higher: A 2023 study suggests that methane emissions from wastewater treatment in the U.S. may be twice as high as typically reported.

• 3x higher: Another 2024 report estimated that oilfields in the U.S. release up to 3x more methane than previously estimated.

• 184x higher (!): German coal mine methane emissions measurements that it reports to the UN are, to this day, based on a 1989 study by a coal mining company. So, it shouldn’t be too surprising that a recent analysis by Ember found German coal mines actually emit 184x (!) more methane than what the country reports.

Why it matters

While the volume of total global methane emissions is roughly a known quantity (it’s easier to measure atmospheric methane levels and extrapolate global methane emissions levels from there), what we’re seeing is that better measurement technologies improve our understanding of what emissions come from which sources. Said differently, top-down, total global methane emissions are known reasonably well (with error bars). What updates to specific emissions sources do is change our attribution of that total, which can inform resource allocation alongside additional research.

Of course, this also matters for enforcement of new policies, such as the EPA’s waste emissions charge, that could penalize companies for their methane emissions in the future, as well to hold corporations and countries accountable to voluntary emissions reductions targets they’ve set.

News and policy

• What’s in a name?: A recent poll conducted by Heatmap and Embold Research that surveyed 2,000+ Americans found that people are three times more likely to support electricity generation from natural gas than they are from “methane” gas, even though those two generation sources are largely the same.

• Pushback on the EPA: The American Petroleum Institute filed a petition in federal court for the EPA to revise specific components of its new fees on fugitive methane emissions from oil and gas operations. Specifically, API is looking for potential exemptions for oil and gas equipment that’s only used temporarily, as well as more guidance on approving new methane leak detection technologies. Holistically, challenges to the rules could slow implementation and enforcement.

• More underreporting of methane (from landfills): A new report found that methane emissions from U.S. landfills regularly exceed EPA limits.

• Back to Earth for plant-based meat: Beyond Meat saw its sales fall (again) 18% year-over-year in its most recent quarter, signaling continued struggles for the plant-based meat industry. With declining sales numbers, it’s difficult to see plant-based meat alternatives taking a meaningful bite out of global demand for beef, making the need for other ways to reduce methane emissions from livestock all the more critical. 

• It’s getting hot in here: 77% of climate scientists surveyed recently see global temperatures rising by 2.5° C or more, a threshold representative of about twice as much warming as the world has already experienced since the Industrial Revolution. That much warming is also well above basically all climate targets and cements the opportunity inherent to reducing super pollutants to achieve faster warming reductions.

• Turning back the clock: The U.S. House of Representatives repealed an Obama-era rule limiting methane emissions from oil and gas drilling on federal lands, with the Senate expected to vote next. This comes amidst continuing efforts by Republican lawmakers to roll back regulations on the energy industry. 

• Methane mitigation creates jobs: New federal guidelines to reduce methane emissions from oil and gas wells could add tens of thousands of jobs across Kentucky, Ohio, Pennsylvania, and West Virginia, both to decommission unused wells and reduce emissions at active sites. Significant federal government funding exists to support these efforts, underscoring opportunities to pair emissions abatement with economic growth.

Notable raises

Rize, based out of Singapore, raised $14M in Series A funding to help rice farmers implement farming practice changes that reduce methane emissions from rice cultivation. Breakthrough Energy Ventures, GenZero, Temasek, and Wavemaker Impact invested.

AIPERIA, based out of Würzburg, Germany, raised an $8M Series A to manage supermarket, restaurant, and food service providers’ inventories to reduce food waste. ETF Partners and LBBW VC co-led. Food waste is a major contributor to methane emissions from landfills.

AgriWebb, based out of Surry Hills, Australia, raised $7.2M in equity funding for its beef cattle management platform which is targeted at unlocking data for operators to reduce emissions in their supply chain. The platform is already used to manage 23M+ cattle across 18 countries.

Odds and ends

Methane from agriculture is the largest source of anthropogenic emissions. This week we are attending the 2024 State of the Science Summit at UC Davis on Reducing Methane from Animal Agriculture, where we will hear from leading experts in methane mitigation and animal science on the state of solutions to reduce methane emissions while continuing to create positive economic and animal health outcomes. We’re excited to report back in the next edition of The Overview on what we learned.

Thanks for reading the third edition of The Overview. If you are a methane or super pollutant focused company or want to connect on methane or our investment work, please reach out at [email protected].

– Team Overview