In an effort to combat climate change and reduce greenhouse gas emissions, the International Energy Agency (IEA) has urged oil and gas companies to allocate a small portion of their earnings towards minimizing methane releases. According to the IEA, an investment of $75 billion from the sector between now and 2030, equivalent to just 2% of their annual net income, could lead to a 15% reduction in direct greenhouse gas emissions from the energy industry by 2030. This significant reduction would lay the foundation for the sector to achieve net zero emissions by 2050, according to the Paris-based agency.
The IEA estimates that approximately $4 billion of the total investment would need to come from listed international producers, with the remaining funds split between nationally owned companies and smaller independent producers. The majority of these independent producers, approximately 60%, are based in North America.
Methane, a potent greenhouse gas, plays a major role in global warming, contributing more to climate change per ton than carbon dioxide. The IEA attributes around 30% of the increase in global temperatures since the Industrial Revolution to methane trapped in the earth’s atmosphere.
The energy sector accounts for 40% of human-caused methane emissions, primarily from oil and gas companies that release it as a byproduct. These companies often intentionally release unnecessary methane or burn it off through flaring. The Biden administration has included plans to charge oil and gas companies for methane emissions in its Inflation Reduction Act, along with allocating nearly $1.6 billion to help reduce methane emissions from these businesses.
The United States and the European Union have also taken steps to reduce global methane emissions, pledging at the COP26 summit in 2021 to implement measures to achieve this goal. The U.S. Methane Emissions Reduction Act Plan includes stricter regulations, increased transparency, and incentives, such as $47 million in funding for research into technologies that can reduce methane emissions.
However, some energy companies in the U.S. have expressed concerns over these measures, as they believe they will increase costs, particularly at a time when President Biden is calling on them to produce more oil in order to stabilize energy prices.
The IEA argues that policymakers should take further action, including banning intentional methane releases unless under emergency circumstances. The agency states that methane abatement in the oil and gas industry is one of the most cost-effective ways to reduce greenhouse gas emissions across the economy. Despite the industry’s record profits in 2022, progress in reducing methane emissions has been slow.
The IEA reported that methane emissions rose for the third consecutive year in 2022, coming close to reaching a record high. Although industry promises to reduce emissions have been made, emissions from the energy sector reached 135 million metric tons in 2022, slightly exceeding the previous year but still below pre-pandemic levels.
To achieve the goal of reducing methane emissions, the IEA projects that $55 billion of the investment would be allocated to upstream production, including exploration and extraction, while $20 billion would target downstream production, such as refining and processing. This investment would enable oil and gas companies to identify and repair leaks quickly, as well as upgrade aging infrastructure that is prone to leaking methane.
Additional steps could involve investing in technology to capture released methane and either use it as an energy source or sell it. The IEA estimates that energy companies could generate around $45 billion in revenue from the sale of captured methane between now and 2030, helping to offset the cost of investment.
However, implementing these efforts may be challenging in poorer nations where nationally run oil companies or small independent producers lack the financial resources or motivation to invest in technologies that mitigate methane emissions, according to the IEA. These nations account for approximately $15 billion to $20 billion of the total $75 billion investment needed, leaving a significant financing gap that would require international collaboration from governments, major energy companies, or charitable organizations.
China and India are currently the world’s largest emitters of methane, including emissions from sectors beyond energy, such as agriculture. The United States ranks third, followed by Russia, Brazil, and Indonesia.
To contact the author of this article, please email [email protected].
Disclaimer: This article is a revised version and is not directly sourced from the original content.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.