S&P Global Platts & Xpansiv Launch Methane Benchmark

22 October 2021

S&P Global Platts, an independent provider of information and benchmark prices for the commodities and energy markets, and Xpansiv, the global marketplace for ESG commodities, have launched a new benchmark for methane performance in natural gas production in the United States. Methane Performance Certificates (MPCs) allow a US producer to sell instruments representing zero methane emission natural gas production.

Increased scrutiny of the upstream carbon intensity associated with the production of fossil fuels has prompted investors, consumers, and producers to seek new ways to reduce their carbon footprint, resulting in growing demand for "low-carbon" fuels.  

The production and transportation of natural gas, often touted as an alternative to coal or oil, can emit large volumes of methane — a substantially more potent greenhouse gas (GHG) than carbon dioxide. Methane intensity is the measure of methane emissions as a percentage of natural gas produced. MPCs provide a tradeable instrument for achieving a lower intensity, unlocking the market value of reducing the impact of gas production. Each MPC represents 1 MMBtu of gas produced with zero methane emissions.

Xpansiv applies third-party standards, protocols, and certifications to continuously metered data to create Digital Natural Gas (DNG) units, which are digital representations of the complete physical and energy profile of natural gas, providing a provenance chain back to a specific source. MPCs are, in turn, recorded on Xpansiv's digital registry based on the methane-emissions intensity of the produced gas, providing the marketplace with a fungible Methane Performance Certificate product that establishes an incentive and clear price signal for lower carbon-intensive natural gas production.

On October 4, S&P Global Platts launched a daily price benchmark of Methane Performance Certificates in dollars per MPC ($/MPC) and dollars per metric ton of carbon dioxide equivalent ($/mtCO2e) in order to bring transparency to this new market. The new MPC assessment reflects bids, offers, and transactions in the open market, including data from exchanges, as well as information heard in the over-the-counter market. On October 15, Platts assessed MPCs at 3.9cents/MPC or $6.29/mtCO2e.

As part of the inaugural launch, the first MPC will be transferred between Pacific Canbriam Energy and industrial gas customer Skeena Bioenergy Ltd, a manufacturer of wood pellets exported to the UK, EU, and Japan, displacing coal in electricity generation.

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.

Courtesy of S&P Global Platts.