Industry & Environment: IEA eyes 40%-50% methane emissions cut from oil, gas sector at no net cost

 

Methane Emissions
Methane Emissions

About 40% to 50% of current methane emissions from the oil and gas sector worldwide could be avoided at no net cost, a new analysis by the International Energy Agency concludes.

 

A commentary released Monday previews the group’s World Energy Outlook 2017, to be released November 14, by offering a glimpse at cost curves IEA developed to examine potential methane emissions reductions and the costs and revenues associated with mitigation globally.

“The role that natural gas can play in the future of global energy is inextricably linked to its ability to help address environmental problems,” said Tim Gould, head of the WEO energy supply outlook division, and Chistophe McGlade, WEO senior analyst, in the commentary released Monday.

They find gas has a clear edge over other fossil fuels when it comes to air pollutants and CO2 emissions from combustion. On average, they find that “gas generates far fewer greenhouse gas emissions than coal when generating heat or electricity, regardless of the time frame considered.”

But they acknowledge uncertainties around the extent to which methane emissions along the gas value chain negate those climate advantages — and assert the environmental case for gas going forward depends on ensuring that its emission intensity is as low as practicable.

Using newly developed “marginal abatement cost curves,” they estimate it is technically possible to avoid about three-quarters of the 76 mt of methane emissions estimated in 2015 from oil and gas operations.

The analysis notes that there is often potential to sell captured methane, in some cases allowing mitigation to occur while still generating profit.

And implementing only the cost-effective abatement measures in the central scenario that the WEO examined would cut temperature increases by 2100 by 0.07 degree Celsius, Gould and McGlade said.

“This is broadly equivalent to the CO2 emissions that would be saved by immediately shutting all existing coal-fired plants in China,” they said.

Their analysis finds mitigation costs tend to be the lowest in developing nations in Asia, Africa and the Middle East.

In North America, IEA estimates that around 20% of total oil- and gas-related methane emissions could be eliminated using technologies with negative or no overall costs, McGlade added in an email. There was no specific breakout for the US.

“The first thing that it is significant is that the IEA is flagging reduction of oil and gas methane as a critical path issue for the global oil and gas industry,” Mark Brownstein of the Environmental Defense Fund said. “No matter where you are in the world this is an incredibly cost-effective thing to do, and an incredibly necessary thing to do.”

While the industry markets gas as a clean, low-carbon fuel, he said, “the benefits that they claim are being undermined by the methane emissions that go unaddressed.”

Howard Feldman, American Petroleum Institute senior director for regulatory and scientific affairs, said the commentary recognizes the benefits of natural gas in reducing GHG emissions as well as critical pollutants such as sulfur dioxide and nitrogen oxide.

But he stressed the industry has already made progress in the US in cutting methane emissions at the same time natural gas production has increased dramatically.

A rule in the US targeting methane emissions from existing wells is not needed because the industry already has strong incentives to capture those emissions and is moving in that direction, Feldman added.

The IEA commentary points to some signs of progress, singling out the downward trend of emission intensity in the US in recent years.

But it argues that achieving mitigation measures “will require a step change in ambition, in an area where few countries have specific mitigation frameworks in place.”

Among holdups, it suggested, are a lack of awareness, competition for capital within companies, payback periods that may be too long to trigger investments, and split incentives, for instance if the owner of equipment does not directly benefit from reducing leaks.

In the US, Trump administration efforts to pull back Obama administration rules on methane emissions in the oil and gas sector have thus far been held up in court.

–Maya Weber, maya.weber@spglobal.com
–Edited by Jason Lindquist, jason.lindquist@spglobal.com

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