will eventually destabilize many gas hydrates, but are unsure about the timing and the amount of methane emissions that would be released from the deeply buried hydrates (EPA, 1993b).

Permafrost. Small amounts of methane are trapped in permafrost, which consists of permanently frozen soil and ice. (To be classified as permafrost, the ice and soil mixture must remain at or below 0° Celsius yearround for at least two consecutive years.) Due to the large amount of existing permafrost, the total amount of methane stored in this form could be quite high, possibly several thousand Tg (EPA, 1993b). This methane is released when permafrost melts. However, no estimates have been made for current emissions from this source.

Wildfires. Wildfires are primarily caused by lightning and release a number of greenhouse gases, including methane which is a product of incomplete combustion. However, no estimates are available for methane emissions from this source.

2.2 Anthropogenic Methane

Emissions

Methane emissions from anthropogenic sources account for 70 percent of all methane emissions and totaled 2,150 MMTCE (375 Tg) worldwide in 1990 (IPCC, 1996a). The leading global anthropogenic methane sources are described below in descending order of magnitude. The two leading sources of anthropogenic methane emissions worldwide are live

Exhibit 1-3: U.S. Methane Emissions

U.S. Greenhouse Gas Emissions in 1997 Weighted by Global Warming Potential

Methane 10%

Nitrous Oxide 6%

HFCs, PFCs, SF, 2%

stock enteric fermentation and rice production. By contrast, in the U.S., the two leading sources of methane emissions are landfills and natural gas and oil systems (see Exhibit 1-3). In 1997, the U.S. emitted 179.6 MMTCE (31.4 Tg) of methane, about 10 percent of global methane emissions for that year (EPA, 1999). The U.S. is the fourth-largest methane emitter after China, Russia, and India (EPA, 1994).

Enteric Fermentation. Ruminant livestock emit methane as part of their normal digestive process, during which microbes break down plant material consumed by the animal into material the animal can use. Methane is produced as a by-product of this digestive process, and is expelled by the animal. In the U.S., cattle emit about 96 percent of the methane from livestock enteric fermentation. In 1994, livestock enteric fermentation produced 490 MMTCE (85 Tg) of methane worldwide (IPCC, 1995), with the emissions coming from the former Soviet Union, Brazil, and India (EPA, 1994). EPA estimates that U.S. emissions from this source were 34.1 MMTCE (6.0 Tg) in 1997 (EPA, 1999). Under EPA's baseline forecast, livestock enteric fermentation emissions in the U.S. will increase to about 37.7 MMTCE (6.6 Tg) by 2020 (Exhibit 1-4). The projected increase is due to greater consumption of meat and dairy products.

Rice paddies. Most of the world's rice, including rice in the United States, is grown on flooded fields where organic matter in the soil decomposes under anaerobic conditions and produces methane. The U.S. is not a

Source Breakdown of 1997 U.S. Methane Emissions

Carbon Dioxide 82%

Total 1,814 MMTCE

Source: EPA, 1999.

major producer of rice and therefore emits little methane from this source. Worldwide emissions of methane from rice paddies were 345 MMTCE (60 Tg) in 1994 (IPCC, 1995), with the highest ermissions coming from China, India, and Indonesia (EPA, 1994). EPA estimates U.S. emissions from this source at 2.7 MMTCE (0.5 Tg) in 1997 and expects emissions to remain stable in the future (EPA, 1999).

Natural Gas and Oil Systems. Methane is the major component (95 percent) of natural gas. During production, processing, transmission, and distribution of natural gas, methane is emitted from system leaks, deliberate venting, and system upsets (accidents). Since natural gas is often found in conjunction with petroleum, crude petroleum gathering and storage systems are also a source of methane emissions. In 1994, natural gas systems worldwide emitted 230 MMTCE (40 Tg) of methane and oil systems emitted 85 MMTCE (15 Tg) of methane (IPCC, 1995). EPA estimates that 1997 U.S. emissions were 33.5 MMTCE (5.8 Tg) from natural gas systems and 1.6 MMTCE (0.27 Tg) from oil systems (EPA, 1999). EPA expects emissions from oil systems to remain near 1997 levels through 2020. The baseline emission forecast is 38.8 MMTCE (6.8 Tg) from natural gas systems in 2020 (Exhibit 1-4). The increase results from higher consumption of natural gas and expansions of the natural gas system.

Biomass Burning. Biomass burning releases greenhouse gases, including methane, but is not a major source of U.S. methane emissions. In 1994, biomass

buming produced 230 MMTCE (40 Tg) of methane worldwide (IPCC, 1995). EPA estimates that US. emissions from this source were 0.2 MMTCE (0.03 Tg) in 1997 and that emissions will remain stable through 2020 (EPA, 1999).

Landfills. Landfill methane is produced when organic materials are decomposed by bacteria under anacrobic conditions. In 1994, landfills produced 230 MMTCE (40 Tg) of methane worldwide (IPCC, 1995). EPA estimates that U.S. emissions from this source were 66.7 MMTCE (11.6 Tg) in 1997 (EPA, 1999). The baseline forecast is 41.1 MMTCE (7.2 Tg) from US. landfills in 2020 (Exhibit 1-4). Landfill methane is the only U.S. source that is expected to decline in the baseline over the forecast period. This decline is due to the implementation of the New Source Performance Standards and Emissions Guidelines (the Landfill Rule) under the Clean Air Act (March 1996). While the Landfill Rule controls greenhouse gas emissions that form tropospheric ozone (smog), it also will lead to lower methane emissions. The Landfill Rule requires large landfills to collect and combust or use landfill gas emissions.

Coal Mining Methane is trapped within coal seams and the surrounding rock strata and is released during coal mining. Because methane is explosive in low concentrations, underground mines install ventilation systems to vent methane directly to the atmosphere. In 1994, coal mining produced 170 MMTCE (30 Tg) of methane worldwide (IPCC, 1995). EPA estimates that U.S. emissions from this source were 18.8 MMTCE

(3.3 Tg) in 1997 (EPA, 1999). EPA's baseline estimate indicates that emissions from coal mines could reach 30.4 MMTCE (5.3 Tg) by 2020 (Exhibit 1-4). The increase results from greater coal production from deep mines.

Domestic Sewage. The decomposition of domestic sewage in anaerobic conditions produces methane. Domestic sewage is not a major source of methane emissions in the U.S., where it is collected and processed mainly in aerobic (oxygen rich) treatment plants. In 1994, domestic sewage produced 145 MMTCE (25 Tg) of methane worldwide (IPCC, 1995). EPA estimates that emissions from sewage in the U.S. were 0.9 MMTCE (0.2 Tg) in 1997 and expects emissions to increase only slightly by 2020 (EPA, 1999). This increase will be due primarily to population increases. Livestock Manure Management. The decomposition of animal waste in anaerobic conditions produces methane. Over the last eight years, methane emissions from manure have generally followed an upward trend. This trend is driven by: (1) increased swine and poultry production; and (2) increased use of liquid manure management systems, which create the anaerobic conditions conducive to methane production. In 1994, manure management produced 145 MMTCE (25 Tg) of methane worldwide (IPCC, 1995). EPA estimates that U.S. emissions from this source were 17.0 MMTCE (3.0 Tg) in 1997 (EPA, 1999). Emissions from livestock manure in the baseline are projected to increase to 26.4 MMTCE (4.6 Tg) by 2020 (Exhibit 1-4) mainly due to increases in livestock population and milk production.

3.0 Options for Reducing

Methane Emissions

One of the key elements of the U.S. Climate Change Action Plan (CCAP) is the implementation of costeffective reductions of methane emissions through voluntary industry actions. Because methane is a valuable energy resource, recovering methane that normally would be emitted into the atmosphere and using it for fuel reduces greenhouse gas emissions. The methane saved from these voluntary actions often

pays for the costs of recovery and also can be costeffective even without accounting for the broader social benefits of reducing greenhouse gases (GHG).

Beginning in the early 1990s, EPA launched five voluntary programs to promote cost-effective methane emission reductions:

➤ AgSTAR Program works with livestock producers to encourage methane recovery from animal waste;

> Coalbed Methane Outreach Program (CMOP) works with the coal and natural indusgas tries to collect and use methane that is released during mining;

➤ Landfill Methane Outreach Program (LMOP) works with states, municipalities, utilities, and the landfill gas-to-energy industry to collect and use methane from landfills;

Natural Gas STAR Program - works with the companies that produce, transmit, and distribute natural gas to reduce leaks and losses of methane; and

➤ Ruminant Livestock Efficiency Program (RLEP) - works with livestock producers to improve animal nutrition and management, thereby boosting animal productivity and cutting methane emissions.

Under these voluntary programs, industry partners voluntarily undertake cost-effective efforts to reduce methane emissions. EPA works with partners to quantify the results of their actions and account for reductions in historical methane emission estimates. One of the principal benefits of these voluntary programs is the sharing of information between government and industry and within industry on emissions, and emission reduction opportunities and associated costs. These programs have contributed significantly to EPA's understanding of the opportunities for emission reductions.

Many of these opportunities involve the recovery of methane emissions and use of the methane as fuel for electricity generation, on-site heat uses, or off-site sales of methane. These actions represent key opportunities for reducing methane emissions from landfills, coal mines, and livestock manure management. Other op

tions may include oxidizing or burning the methane emissions. Catalytic oxidation is a new technology potentially applicable at coal mines; flaring is an option available at landfills and other sites.

The natural gas industry offers the most robust array of emission reduction options. The Natural Gas STAR Program has identified a number of best management practices for reducing leaks and avoiding venting of methane. In addition, partners in the program have employed a number of other strategies for reducing emissions. These strategies are described in the chapter on natural gas systems.

Conversely, few technology-specific reduction options have yet been identified for the ruminant livestock industry, where methane production is a natural byproduct of enteric fermentation. The principal options are improving the efficiency of feedlot operations and animal feeds for ruminant livestock. Better feeds and animal management can increase yields of meat and dairy products relative to methane production.

A principal benefit of the various voluntary programs is abundant information developed on the efficacy of the emission reduction options and the costs of implementing these options. EPA uses this information to estimate the costs of reducing emissions. Partners in the various voluntary programs are already undertaking emission reduction efforts because they have been found to be cost-effective. While some of the emission reduction options are cost-effective in some settings, they are not in others, e.g., methane recovery and use may be more cost-effective at large coal mines and landfills than at small ones. In the next section the economics of decision making in the implementation of reduction options is discussed.

4.0 Economic Analysis of Reducing U.S. Methane Emissions

This report presents the results of extensive benefitcost analyses conducted on the opportunities (technologies and management practices) to reduce methane emissions from four of the five major U.S.

sources: landfills, natural gas systems, coal mining, and livestock manure. The analyses are conducted for the years 2000, 2010, and 2020. EPA selected these sources because well-characterized opportunities exist for cost-effective emission reductions. The results are in terms of abated methane (emission reductions) that can be achieved at various values of methane. The total value of methane is the sum of its value as a source of energy and as an emission reduction of a GHG.

Methane has a value as a source of energy since it is the principal component of natural gas. Therefore, avoided methane emissions in natural gas systems are valued in terms of dollars per million British thermal units ($/MMBtu). Similarly, methane also can be combusted to generate electricity and is valued in dollars per kilowatt-hour (S/kWh). The value of potential methane emission reductions is calculated relative to carbon equivalent units using methane's 100-year global warming potential (GWP) of 21 (IPCC, 1996a). The value of abated methane, as well as other GHGs, can thus be stated in terms of dollars per metric ton of carbon equivalent (S/TCE). Throughout the analysis, energy market prices are aligned to SO/TCE. This value represents a scenario where no additional price signals from GHG abatement values exist to motivate emission reductions; all reductions are due to responses to market prices for natural gas. As a value is placed on GHG reductions in terms of $/TCE, these values are added to energy market prices and allow for additional emission reductions to clear the market.

A benefit-cost analysis is applied to the opportunities for emission reductions and is defined as:

➤ Benefits. Benefits are calculated from the amount of methane saved by implementing the options multiplied by the value of the methane saved as its use as an energy resource; plus the value of methane as an emission reduction of a GHG, if available;

> Costs (including capital expenditures and operation and maintenance expenses). The costs of implementing specific reduction options are estimated for four of the five major anthropogenic sources. The applied discount rates are particular to each source-specific

analysis and set at eight percent for the aggregate analysis. In the source-specific analyses, different discount rates are used to determine cost-effective reductions.

Because nearly all of the technologies and practices for reducing methane emissions produce or save energy, energy prices are a key driver of the cost analyses. The value of the energy produced or saved offsets to various degrees the capital and operating costs of reducing the emissions. Higher energy prices offset a larger portion of these costs, and in some cases make the technologies and practices profitable."

In the source-specific analyses, energy market prices, in 1996 U.S. dollars, are used to establish whether an option is cost-effective. These prices are established based on the following approaches:

> For landfills, both electricity and natural gas prices are used in the analysis since landfills sell gas directly to consumers or use the recovered gas to generate electricity. For electricity prices, the analysis uses an estimated price of $0.04/kWh to represent the value of electricity close to distribution systems and receiving a renewable energy premium. For natural gas, the price used is $2.74/MMBtu. In this case, the analysis uses the average industrial gas price discounted by 20 percent to adjust for the lower Btu content of landfill gas (ELA, 1997).

Coal mine methane is sold as natural gas to interstate pipelines, used to generate electricity, or used on-site. For natural gas, coal mine methane is valued at $2.53/MMBtu, which is the average delivered price for natural gas in Alabama, Indiana, Kentucky, and Ohio. The electricity generated from coal mines is valued at $0.03/kWh to reflect the greater distance from distribution systems.

> The set of energy prices for natural gas systems depends on where the emissions are reduced. Production emission reductions are valued at the average wellhead price of $2.17/MMBtu; transmission savings are valued at $2.27/MMBtu; and distribution system

savings are valued at $3.27/MMBtu (EIA, 1997).

➤ Livestock manure methane is used to generate electricity for farm use and offset electricity consumption from a utility grid. The analysis uses $0.09/kWh for dairy farms and $0.07/kWh for swine farms. These prices are weighted averages of retail commercial electricity rates based on dairy and swine populations, respectively. The national average price was discounted by $0.02/kWh to reflect the effects of interconnect and demand charges and other associated costs.

In order to incorporate methane emission reduction values into the analysis, various $/TCE values are translated into equivalent electricity and gas prices using the heat rate of the engine-generator (for electricity), the energy value of methane (1,000 Btu/cubic foot), and a GWP of 21. See individual chapters for greater detail.

5.0 Achievable Emission Reductions and Composite Marginal Abatement Curve

The aggregate results of the analyses are presented in this section. Exhibit 1-5 shows estimated total U.S. reductions at various values for abated methane in $/TCE. These reductions are the summation of source-specific results where different discount rates are applied to each source: 8 percent for landfills, 10 percent for livestock manure management, 15 percent for coal mining, and 20 percent for natural gas systems. For 2010, EPA estimates that up to 34.8 MMTCE (6.1 Tg) of reductions are possible at energy market prices or $0/TCE. Consequently, methane emissions could be reduced below 1990 emissions of 169.9 MMTCE (29.7 Tg) if many of the identified opportunities are thoroughly implemented. At higher emission reduction values, more methane reductions could be achieved. For example, EPA's analysis indicates that with a value of $20/TCE for abated methane