On Monday, “intelligent commodities” pioneer Xpansiv, together with energy and commodity data provider S&P Global Platts, announced a first-of-its-kind benchmark certification for methane performance in U.S. natural gas production. These so-called Methane Performance Certificates (MPCs) will allow U.S. natural gas producers to sell financial instruments representing zero methane emission natural gas production.
Natural gas is often presented as a less carbon-intensive alternative to coal or oil, but its production and transport can still generate large volumes of methane gas, a significantly more potent greenhouse gas than carbon dioxide. MPC’s provide a tradable instrument for achieving lower methane intensity–a measure of methane emissions as a percentage of natural gas produced, with each MPC equivalent to 1 MMBtu of zero-emission gas–thus creating a market for lower-impact gas production.
Dawn of the MPC
In order to create the MPC, Xpansiv had first to create Digital Natural Gas (DNG) units, which are digital representations of the complete physical and energy profile of natural gas, creating a blockchain-based chain of provenance back to a specific source, verified using third-party standards, protocols and certifications. The MPC’s are then recorded on Xpansiv’s digital registry, which is based on the methane-emissions intensity of the gas produced, providing a fungible Methane Performance Certificate that both incentivizes and provides a clear price signal for lower-carbon natural gas production.
Earlier this month, S&P Global Platts launched a daily price benchmark for MPC’s, both in dollars per MPC and in dollars per metric ton of carbon dioxide equivalent. The new MPC assessment is based on actual bids, offers and transactions in the open market, including exchange data, as well as information gleaned from the over-the-counter market. As of last Friday, October 15, Platts assessed MPCs at $0.39 per MPC or $6.29 per metric ton of carbon dioxide. (MtCO2e).
“Grounded in real-time, metered production data and available ambient monitoring, the MPC becomes part of an immutable and auditable data set for natural gas production,” said Xpansiv’s Head of XRegistries, Andrew Pisano. “It allows the market to reward producers with low methane leakage by creating a clear market price related to methane release. We are pleased to support natural gas market participants on their path to reach their ESG targets and climate commitments.”
First deal on record
The first MPC is to be transferred between Canadian sustainable natural gas manufacturer Pacific Canbriam Energy and industrial gas customer Skeena Bioenergy, which produces and exports wood pellets to the U.K., EU, and Japan, displacing coal in electricity generation.
“Skeena Bioenergy has decided to make commodity procurement decisions based on higher standards for fugitive emissions, so reducing the lifecycle impact of its wood pellets,” said Skeena President Roger Keery. “This process provides incentives to producers to meet higher standards, employ best practices, and improve transparency. It’s an important step forward to lower our GHG footprint.”
MPCs can be registered, issued, transacted, and retired in accordance with Xpansiv’s Digital Fuels Program to eliminate double counting. Xpansiv’s DF Registry maintains a complete record of the MPC and its associated environmental claims, ensuring data quality and enhanced data management.
