IEA: Fraction of bumper profits during 2022 can slash oil & gas sector’s methane emissions
As the global energy crisis took the world by storm, tighter supplies and higher oil and gas prices have been in evidence, with energy security taking precedence. In its assessment of emissions from across the sector, the International Energy Agency (IEA) has outlined that methane emissions remained stubbornly high in 2022, even as soaring energy prices made actions to reduce them cheaper than ever.
During 2022, price volatility became the norm, which led to record-high profits for energy companies, as illustrated by the quarterly and annual results provided by Equinor, TotalEnergies, BP, Shell, Chevron and ExxonMobil. However, a combination of high energy prices, security of supply concerns and economic uncertainty were not enough to drive down methane emissions.
According to a new IEA analysis, the global energy industry was responsible for 135 million tonnes of methane released into the atmosphere in 2022, only slightly below the record highs seen in 2019. Currently, the energy sector accounts for around 40 per cent of total methane emissions attributable to human activity, second only to agriculture.
The IEA’s latest update of its Global Methane Tracker shows that the oil and gas sector could slash emissions of potent greenhouse gas using only a fraction of its bumper income from the energy crisis. While methane is responsible for around 30 per cent of the rise in global temperatures since the Industrial Revolution, it dissipates faster than carbon dioxide but it is a much more potent greenhouse gas during its short lifespan.
Bearing this in mind, IEA believes that cutting methane emissions is one of the most effective ways to limit global warming and improve air quality in the near term. This year’s report also includes methane emissions from coal mines and measures to cut them by half.
Based on IEA’s findings, methane emissions from oil and gas alone could be reduced by 75 per cent with existing technologies. This highlights a lack of action on an issue that is “often very cheap to address,” says the International Energy Agency while pointing out that less than 3 per cent of the income accrued by oil and gas companies worldwide last year would be required to make the $100 billion investment in technologies needed to achieve this reduction.
Dr Fatih Birol, IEA Executive Director, remarked: “Our new Global Methane Tracker shows that some progress is being made but that emissions are still far too high and not falling fast enough – especially as methane cuts are among the cheapest options to limit near-term global warming. There is just no excuse. The Nord Stream pipeline explosion last year released a huge amount of methane into the atmosphere. But normal oil and gas operations around the world release the same amount of methane as the Nord Stream explosion every single day.”
The International Energy Agency claims that stopping all non-emergency flaring and venting of methane is the most impactful measure countries can take to rein in emissions, as around 260 billion cubic metres (bcm) of methane is currently lost to the atmosphere each year from oil and gas operations. The IEA’s report underlines that three-quarters of this could be retained and brought to market using tried and tested policies and technologies, as the captured methane would amount to more than the European Union’s total annual gas imports from Russia prior to the invasion of Ukraine.
Since satellites are providing “an ever-clearer picture” of methane emissions while greatly increasing the world’s knowledge of emission sources, the IEA underscores that the Global Methane Tracker incorporates their latest readings along with data from other science-based measurement campaigns. More than 500 super-emitting events were detected in 2022 by satellites from oil and gas operations and a further 100 were seen at coal mines.
“The untamed release of methane in fossil fuel production is a problem that sometimes goes under the radar in public debate. Unfortunately, it’s not a new issue and emissions remain stubbornly high. Many companies saw hefty profits last year following a turbulent period for international oil and gas markets amid the global energy crisis. Fossil fuel producers need to step up and policymakers need to step in – and both must do so quickly,” added Birol.
Furthermore, the IEA’s report highlights the most effective ways to limit coal mine methane emissions in addition to reducing consumption of coal, as deploying mitigation measures should be a priority, especially given the risk that coal demand remains high in the coming years.
The IEA has developed a new regulatory roadmap and toolkit to guide actions by policymakers and companies seeking to reduce coal mine methane emissions, which sits alongside similar publications on oil and gas released in previous years that have become the go-to source for policymakers and regulators looking to develop new and impactful methane regulations.
The Global Methane Pledge – launched in November 2021 at the COP26 in Glasgow – which marked an important step forward by bringing governments together on this issue, now has around 150 participants that have collectively committed to reduce methane emissions from human activities by 30 per cent by 2030, including emissions from agriculture, the energy sector and other sources.
The International Energy Agency emphasises that countries, which joined the pledge, currently account for 55 per cent of total methane emissions from human activities and about 45 per cent of methane from fossil fuel operations. Therefore, IEA believes that it will be critical for participants to formulate pragmatic strategies and measures to reduce their own emissions and to engage with countries that have not yet joined the pledge.
Is EU’s last chance to meet Global Methane Pledge commitments approaching?
Meanwhile, Environmental Defense Fund Europe (EDFE), a non-governmental organisation looking for ways to clean the air, decarbonise shipping and reduce methane pollution, recently confirmed for Offshore Energy that a crucial European Parliament (EP) Committee vote on the final draft of methane regulation is scheduled for 1 or 2 March 2023. This comes after some EU energy ministers voted in December 2022 to weaken it.
Ahead of the EP’s vote, a spokesperson for the Environmental Defense Fund Europe recently underscored that the EU “absolutely has to find its teeth on this,” as it could significantly enhance energy security. This is in line with S&P Global estimates, indicating that by reducing preventable losses in six key export regions, almost 60 per cent of Europe’s pre-war annual imports from Russia could be captured and bought to market.
Based on EDFE’s findings, the EU needs to step up methane regulation, as it is the world’s largest natural gas importer. With 90 per cent of its supplies coming from outside its borders, the EU plays “a huge role in driving methane emissions globally and it’s vital that regulation covers imports,” explained the spokesperson.
Moreover, EDFE’s spokesperson claims that reducing methane wasted by the oil and gas industry – through leaks, venting, and flaring – is low hanging fruit and “the quickest, cheapest, and most effective way to slow global warming.” While existing tech can cut emissions in half by 2030, EDFE says that fully deploying these solutions could avoid 5 degrees Celsius of warming by end of the century.
The Environmental Defense Fund Europe points out that methane emissions from the energy sector are about 70 per cent higher than official data shows, thus, the lack of reliable data has hindered efforts to reduce methane emissions in the oil and gas sector.
In terms of energy security, over half of the EU’s gas needs in 2021 could have been covered by capturing methane emissions from the global oil and gas industry, according to EDFE. Additionally, methane saved from leaks could amount to 600 kt of methane per year, which represents the annual consumption of gas in almost 1 million French homes.