Tracking Fuel Supply

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In this report

Oil and gas extraction, processing and transportation were responsible for 5.2 gigatonnes of CO2 equivalent (GtCO2-eq) emissions in 2017 – nearly 15% of global energy sector GHG emissions. Half of these emissions (2.6 GtCO2-eq) are from flaring and from methane released during oil and gas operations. In the SDS, these flared and vented emissions fall to less than 1.2 Gt CO2-eq by 2025. Quantitative emissions reduction targets by some companies and governments are a welcome first step to achieving this level, but an immediate step-change in policy ambition and industry buy-in is needed, along with technological progress on detecting, measuring and avoiding emissions.

Sources of greenhouse gas emissions from oil and gas operations in 2017

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Oil and gas satisfy just under half of global energy demand in 2040 in the Sustainable Development Scenario (SDS). A key component of this scenario is that oil and gas are supplied in a way that minimises adverse social and environmental impacts: immediate and major reductions in flaring and methane emissions are central to this.

Recent quantitative emissions reductions targets set by international oil companies to reduce methane emissions and flaring are a welcome first step towards putting this sector on track with the rapid emissions reductions of the SDS.

Seeking to continuously reduce emissions is as important as setting quantitative limits, as is third-party verification and transparency on data and methods.

In addition, large volumes of methane are emitted from assets operated by companies that have not yet committed to any specific reduction targets.

Progressive companies should seek to build partnerships and expand their emissions reduction criteria to oil and gas produced from joint ventures and non-operated assets.

However, there are limits to what can be achieved by voluntary action. Policies and regulations will therefore be central to reducing methane emissions.

Commitments to methane emissions reductions can be an important addition to Nationally Determined Contributions aligned with the Paris Agreement. Although a key first step is to improve data gathering and reporting, a lack of detailed information on emissions levels should not preclude the introduction of abatement goals. Policies should concurrently seek to encourage operators to take advantage of abatement opportunities.

Policies should be particularly clear and unambiguous on the treatment of associated gas.

Fiscal terms should clarify ownership of associated gas volumes and encourage or require its utilisation: one option would be to approve new oil developments only if they include plans to utilise associated gas.

Financial organisations can also assist by increasing or renewing their willingness to provide funding for emissions reduction technologies in the oil and gas sector.

For flaring, large volumes of gas are often wasted in small-scale operations on an intermittent basis. A core challenge is to provide economically viable solutions to bring the gas to market, especially in offshore operations.

Fuel supply technologies

There are a variety of well-established technologies that can help to reduce flaring and methane emissions from oil and gas operations. There have also been some positive recent developments from both industry and policy-makers seeking to reduce these emissions.

However current technology deployment rates, policy ambition and industry efforts are far from on track with the pace and extent of reductions needed to achieve the Sustainable Development Scenario.

Global methane emissions from oil and gas operations in the Sustainable Development Scenario, 2000-2030

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Methane emissions from oil and gas

Methane emissions from the oil and gas sector reached close to 80 Mt (or 2.4 billion tonnes of CO2 equivalent) in 2017. This is equal to 6% of global energy sector GHG emissions. Emissions remain high despite initial industry-led initiatives and government policies announced recently. Implementing abatement options quickly and at scale remains a real challenge. Policies will be critical to achieve the 75% emissions reduction by 2030 demonstrated in the SDS. Further innovation is needed both to increase understanding of emissions levels and to help reduce the cost of emissions mitigation strategies such as leak detection and repair.

Flaring by region in the Sustainable Development Scenario, 1970-2030

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Flaring emissions

Around 140 bcm of gas was flared in 2017, equivalent to Africa’s gas consumption. This is a slight decrease from 2010 but higher than in 2000. Most flared gas is converted into CO2, resulting in emissions of around 270 MtCO2. Russia, Iraq, Iran and the United States account for almost half of flaring globally. An increasing number of government and industry commitments aim to eliminate flaring by 2030, but most are voluntary. Under the SDS, flaring rates drop rapidly and are all but eliminated by 2025.