The three legs of our low-carbon stool [Gas in Transition]
Through the last half-decade of post-Paris discourse – I hesitate to call it a debate, because there has been precious little informed discussion between opposing sides – what has slowly emerged is that our 1.5°C future will be shaped by the confluence of three broad initiatives: the electrification of everything that can be electrified, the creation of new zero emission fuels, and the removal of carbon – either pre- or post-combustion – from everything else.
The International Energy Agency (IEA), which has become the de facto arbiter of all things climate-related, morphing from its original role of ensuring oil security in industrialised countries held hostage by the OPEC cartel, has offered us a roadmap to net-zero which declares no new oil and gas investments can be tolerated. But then, in almost the same breath, it says that oil and gas will still be with us in 2050, although at levels 25% and 50% less, respectively, than they are now.
Having begrudged the possibility that oil and gas will be with us for some time to come, IEA head Fatih Birol never passes on the opportunity to excoriate producers to do more. The latest occasion came January 13 in Paris as he released a glowing review of the climate battle being waged by Canada’s federal policy-makers and the steps Canadian prime minister Justin Trudeau is taking to transform the Canadian energy system.
“In my view, not only the oil and gas producing countries, but oil and gas companies have to transform themselves. No company will be unaffected from the clean energy transitions and I very much hope to see that the oil and gas companies become the part, maybe even a driver, of the clean energy transitions, because they have a lot of expertise with managing major engineering projects and many of them have deep pockets.”
Canada, the IEA review of the country’s energy policies says, is doing its part to create that three-legged stool: it has an ambitious carbon-pricing scheme that can incent carbon removal, it has clean fuel regulations that it hopes will yield low- or zero-carbon fuels, and it has measures in place to decarbonise the transport sector.
The transport sector accounts for about a quarter of Canada’s 730mn mt/year of greenhouse gas (GHG) emissions, on par with those that are contributed by the oil and gas sector. To bring those contributions down, Ottawa has mandated that all new light-duty cars and passenger trucks sold by 2035 will be zero emission vehicles (ZEVs), advancing its original target by five years.
Canada is also among the global leaders in carbon capture, utilisation and storage (CCUS), hosting four of the 26 capture projects operating around the world. Before the summer, it hopes to introduce an incentive tax structure to bring more equity investment into new projects.
And Vancouver-based Carbon Engineering, which achieved a spot on the 2022 Global Cleantech 100 list, is developing direct air capture (DAC) technology designed to remove up to 1mn mt/yr of CO2 from the atmosphere.
Although the IEA cites these and other initiatives in praising Canada’s climate leadership, it’s not alone around the world in developing legs for the stool.
In China, the world’s largest fleet of natural gas vehicles – an estimated 7.3mn – stands to be usurped by one of the fastest growing fleets of electric vehicles on the planet. From a standing start in 2010, when only about 20,000 battery electric, plug-in hybrid and fuel cell vehicles were on the road in China, the fleet of so-called “new energy vehicles” reached 5.92mn by the end of 2020, even as the fleet of NGV passenger vehicles was shrinking.
Another leg is being shaped by an international cohort of LNG importers, who have crafted a framework for standardising how cargoes of the super-chilled natural gas – considered by many fossil fuel opponents a major villain responsible for methane emissions – can be tagged as “carbon neutral”.
Although carbon neutral LNG comprises but a near-invisible fraction of global LNG trade – a mere 30 cargoes have been traded since 2019 – interest in reducing the footprint of LNG is high, among both exporters and importers.
On the upstream end of the gas value chain, certification work is underway to verify the emissions impact of natural gas production destined for liquefaction, and at the terminals, LNG producers are working to lower emissions associated with liquefaction process, including employing renewable electricity and deploying CCS capabilities.
Most of those efforts are directed at Scope 1 and 2 emissions; Scope 3 emissions must be dealt with using GHG offsets, but the IEA has concerns about the transparency of those mechanisms. In November 2021, the International Group of Liquefied Natural Gas Importers unveiled a new standard it had developed for monitoring, reporting and verifying Scope 3 emissions, addressing many of the IEA’s concerns.
Finally, in the US Permian basin, decarbonisation initiatives appear to be ramping up, led by super-major ExxonMobil with its announcement in December that it would push for net-zero emissions from its operated assets there by 2030.
Across the basin, producers are targeting the elimination of routine flaring – a major source of methane emissions – by the middle of this decade.
When intact, a three-legged stool can be perfectly stable, but take away one of those three legs and you have a decidedly different situation on your hands. A net-zero future has much the same characteristics: as an aspiration, it’s wonderful; take away the role of fossil fuels in reaching that goal, however, and the stool will surely tip over.