IEA (2019), Tracking Fuel Supply, IEA, Paris https://www.iea.org/reports/tracking-fuel-supply-2019
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.
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.
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.