NO2 reduction with methane under lean conditions is studied as a part of a two-stage scheme where NO is first oxidized to NO2 over an oxidation catalyst and NO2 is subsequently reduced to N-2 over a reduction catalyst. Pd supported on a sulfated monoclinic zirconia support was observed to have good activity for the reduction of NO2 with CH4 under lean conditions, giving N-2 yields over 60% over a broad temperature range below 450 degrees C. Sulfate groups are shown to be thermally stable below the calcination temperature.