GLOBAL - The leakage of greenhouse gas methane is clouding the climate benefits resulting from the expansion of the shale gas industry, according to Scottish Widows Investment Partnership (SWIP).

In the US, cheap shale gas is closing down coal power generation. According to the US Energy Information Administration (EIA), coal generation has fallen by 19% in the last 12 months, while gas is up 38% - meaning the switch is equivalent to all the electricity generated by US wind and solar.

If this trend continues as expected, it could be good news for climate change, according to SWIP, because gas power stations produce 50% less carbon emissions than coal power stations.

Large shale gas reserves also exist in China, creating even more potential climate benefit from a coal-gas switch in the world's biggest carbon emitter.

But the climate benefits of the US dash for gas are in doubt because of the large amount of methane that leaks or is vented during gas production, processing and distribution.

The climate impact of methane is heavily front-loaded, meaning that while switching to gas reduces warming in the long term, it does not help much for several decades, SWIP's analysis of recent peer reviewed research concludes.

Craig Mackenzie, head of sustainability at SWIP, said: "We need to reduce the climate impact of our emissions now in order to gain more time for societies to adapt, and to avoid short-term tipping points. By failing to control methane, the gas industry is letting much of the benefit of switching from coal to gas slip away.
 
"Our research indicates that technologies exist to eliminate most methane emissions from natural gas production quickly and at low cost, but these technologies are not widely used.

"As a major shareholder in the oil and gas sector, SWIP wants to see the industry taking rapid action to eliminate methane emissions. It is in the industry's strategic interest to fix this problem now."
 
SWIP is working with other investors to engage with oil and gas companies to encourage implementation of best practice methane control technologies.

The asset manager is also asking regulators around the world what action they can take to improve methane control.

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