From the Editor: Now the heavy lifting begins [Gas in Transition]
In the wake of COP26 in gusty and gloomy Scotland, and ahead of COP27 next year in the decidedly more climate-friendly Egyptian resort town of Sharm El-Sheikh on the shores of the Red Sea, the global oil and gas industry is going to have to find more immediate emission reduction solutions than those it has been pursuing thus far.
Judging from the wording of the Glasgow Climate Pact which emerged from COP26, ‘net-zero by 2050’ is simply not good enough to keep global temperatures from warming beyond the 1.5ºC target established in the Paris Agreement. The goalposts have been moved again, and now major, substantive atmospheric CO2 reductions are needed by 2030, or even earlier, some environmental NGOs claim.
The most obvious way for oil and gas companies to reduce emissions is to at least pivot away from oil, the most carbon-intensive of the fossil fuels, and some major producers appear to be moving – somewhat reluctantly – in that direction. But major IOCs declaring they will no longer produce oil only opens the door for less climate-conscious producers – mainly NOCs in countries with less stringent environmental regulations – to fill the void.
One of those might be Russia, but in recent months that autocracy has been at least talking the decarbonisation talk, even if it hasn’t yet gotten up to walking that particular walk.
Appearing virtually at COP26, Russian president Vladimir Putin extolled on the importance of carbon neutrality, which he claimed Russia hopes to achieve by 2060 – a full decade beyond most global net-zero by 2050 targets. But Russia’s carbon mitigation plan appears to rely heavily on its natural carbon sinks – nearly 50% of the country is heavily forested, although in recent summers it has been beset by the same escalation in wildfires that has plagued other forested northern geographies, particularly western Canada and parts of the US.
The methane menace
Although not directly a decarbonisation initiative, cutting methane emissions – one of the most potent of greenhouse gases – is widely seen as a clear path for oil and gas producers to reduce their climate impacts.
At COP26, more than 100 countries signed on to the EU/US-led Global Methane Pledge, which targets a 30% reduction in methane emissions by 2030, and their eventual complete elimination. Technology to cut emissions by 75% is already available, and more than half of this reduction can be achieved at virtually no cost, according to the International Energy Agency.
The shortest path to lower methane emissions is by reducing flaring. Worldwide, 34 countries and 49 companies have endorsed the World Bank’s Zero Routine Flaring by 2030 initiative, which was launched in 2015. But seven countries – Russia, the US, Iraq, Iran, Algeria, Venezuela and Nigeria – have consistently been the top flaring countries, and only the US has made any significant progress in reducing flaring, to about 11.3bn m3 in 2020 from more than 16bn m3 the year before.
Others have had varied success. Russia’s flared volumes nearly doubled between 2016, when it endorsed the initiative, and 2019, but it managed to reduce flared volumes in 2020 to 21.4bn m3 from 23.2bn m3 in 2019. Iraq has reduced flaring only to 16.8bn m3 in 2020 from 17.8bn m3 in 2017, while Nigeria has managed to cut its flaring over the same period to 6.5bn m3 from 7.6bn m3.
It’s clear that various technologies – to reduce venting and flaring of methane, to capture CO2 from power generation, to generate cleaner blue hydrogen – exist for the industry to make serious inroads into reducing emissions.
And since Paris, governments and many major producing companies have boldly stated their net-zero ambitions, many of which they say will use these and other, yet to be commercialised, technologies.
But what has been missing, to the disdain of environmental NGOs who claim industry and governments are talking the talk but not walking the walk, are clear strategies and initiatives to really achieve those ambitions.
Canada’s federal energy regulator, unimaginatively named the Canada Energy Regulator (CER), alluded to this in its Canada’s Energy Future 2021 (EF2021) report, which presents supply and demand projections out to 2050.
Canada will fall short
The report lays out a couple of scenarios for how supply and demand might evolve over the next 30 years, but neither of them, the CER concludes, end with Canada reaching net-zero by 2050.
“Over 82% of Canada’s GHG emissions are from energy producing and consuming processes,” EF2021 says. “To achieve net-zero emissions by 2050, transformational changes are required to the way Canadians produce and consume energy. The pathway to achieving net-zero will likely require a greater level of change than we model in EF2021 or previous reports in the Canada’s Energy Future series.”
Although paths to net-zero for all parts of the Canadian energy system aren’t laid out in EF2021 – presumably those could come in future reports – the CER does propose such a path for the country’s electricity system, demand from which is projected in the CER’s Evolving Policies scenario to climb by 44%, to 245 TWh, by 2050. Half the increase will come from increased electrification in the industrial, commercial and residential sectors, and half will come from electric vehicles and hydrogen production.
Canadian electricity production is already clean: low- and non-emitting generation accounts for about 82% of the total today, and by 2050 that share will rise to 95%. Combining bioenergy with CCS (BECCS), the CER says, can deliver much of the remaining 5% by reducing CO2 emissions intensity to net-negative territory.
“While significant emissions reductions are achieved, none of the scenarios, except BECCS, see the overall electricity sector reaching net-zero.”
Reaching net zero is technically – and perhaps even financially – possible. Getting there, however, is going to require a concerted effort on the part of governments and producers to structure detailed programmes using proven technologies and setting achievable milestones. It won’t be reached by sprinkling fairy dust across the landscape and repeating the same pattern of virtue-signaling that has been going on since Paris.