Insights from Energy Week’s panel on flaring, venting and leaking

Yesterday, Capterio’s CEO, Mark Davis, chaired a panel at International Energy Week (the largest energy conference in the world) on flaring, venting and leaking. Mark was joined by panellists Harshit Agrawal (World Bank), Sonna Sathiamoorthy (bp), Georges Tijbosch (MIQ) and Andrew Howell (EDF). Fantastic to have such a rich discussion on this important topic.

Part 1: The core facts

The discussion focussed on gas “flaring” – and its sisters “venting” and “leaking”, which are significant sources of waste from the oil and gas system industry.  To put a figure on it, it’s 260 BCM, or up to 7 billion CO2-equivalent tonnes per year. Of this:

• Flaring in 2020 was 142 BCM (according to the World Bank) – that’s half the gas consumed to Europe.  And it’s 260 million tonnes of CO2 emissions

• But flares also produce methane from inefficient/incomplete combustion (and in our calculations, we use the assumption from the IEA of 8% “methane slip”). And since methane is much more 29.8-82.5x potent than CO2 (over a 100- and 20-year time period respectively), the total CO2-e emissions from flaring are 500-900 million tonnes

• Venting and leaking – according to the IEA’s 2022 Methane Tracker – add an addition 106 BCM – and that’s up to 5.8 billion CO2e tonnes

So put together, flaring venting and leaking totals 6.8% of all consumed gas.  It’s also 12-26% of the total CO2 emissions of the oil and gas industry (including scope 3).  That’s a pretty staggering figure.

Or, to put these figures in other words, 260 BCM (2.6-6.8 billion CO2-equivalent tonnes) is equivalent to:

• 570 million to 1500 million passenger vehicles
• 1.5x the gas supplied to Europe from Russia
• $140 billion of lost revenue per year, at $15 per mmbtu
• 175 GW of continuous electricity (at 55% conversion efficiency) or 1500 TWh, which is 6% of global power, which would replace 16% of all power generated by coal
• $130-340 billion in carbon taxes, at $50 per tonne of CO2

Click here if you want to read a “101” on all-you-need-to-know about gas flaring (including a breakdown by country and list of the key solutions). And here’s the key chart (which has been updated to reflect the new data from the IEA methane tracker, out last week):

But the good news … that much of these emissions can be abated today with proven technology.  Such projects lower emissions, improve health, create value and accelerate the energy transition.

Part 2: How to fix it

As the panellists highlighted, we need to act quickly, and progress on 5 key levers will help:

• Firstly – we need increased leadership and commitment.  Great to see so many net zero commitments, Global Methane Pledge, 100 signatories to “zero routine flaring” by 2030. But good intentions are not enough – the numbers for flaring and methane are rising (see also this Nature paper on methane out this month). Flaring is significantly under-represented in the NDCs and, despite many good statements, many companies and countries are simply not doing enough.
  
• Secondly we need better data transparency and reporting:  Our world is seeing an avalanche of measurement – from the field, aerial, drone, satelitte. Flaring data is pretty good quality (see also FlareIntel which has a public good flare tracker, and the data reported by the World Bank)-  although many companies choose not to want to know. Methane data is more challenging – with limits on spatial and temporal resolution – and greater uncertainty – but this is a rapidly moving space. Reporting on gas flaring is very intransparent (see the EDF paper “Emissions Omission“, or the Capterio paper “why we need clearer ESG metrics on gas flaring“), but as Andrew Howell from EDF noted, investors are becoming increasingly interested in these data and are starting to ask tough questions and hold companies to account.
  
• Thirdly: we must unlock barriers to change: Lack of data is one factor, sometimes economics can be.  But we also need to find new ways of bringing key capabilities and critically, to unlock financing (and lower the cost of capital) – especially in a world where the public support for fossil investment is declining. Click to see the Capterio “flaring perception survey” research results to get a sense of the perceptions – but the reality is that we need to invest – we argue $10-15 billion per year at least – to fix this by 2030. In a world where investment in fossils is difficult to achieve we need to think differently, and deploy new models, as Harshit said.
   
• Fourthly, deploy and scale solutions and best practices: There are a range of solutions – and we need to embrace all credible technologies. There are a range of solutions (gas to power, gas to pipe, gas to “virtual pipeline”, etc. (and as Sonna pointed out, bp, amongst others, is deploying solutions across it’s portfolio), and this paper “celebrating successful flare capture projects” gives examples of each. Furthermore, the World Bank collaborated with IPIECA to release a Flaring Management Guidance best practice document, and the World Bank maintains a list of leading advanced technology. Delivering these solutions, however, will likely need new incentives, new operating models and more. It was great to see, from Sonna, a video on the new methane-from-flaring toolkit which will be released soon.
  
• Fifth, there is role for regulation, policy and the consumer.  Regulations are key, and there are upcoming regulations in the EU and in the US and others, but we can’t wait for regulation to catch up.  And we do need to facilitate consumer choice … and create differentiated products/markets with carbon pricing and certification. Groups like MIQ (a non-profit JV between RMI and SYSTEMIQ) are already leading the way with clear standards around gas, and – as Georges noted – are currently certifying 2.5% of the global gas market, with plans to expand outside of the US soon. New indexes, such as the World Bank’s “Imported Flared Gas” (IFG) index, drive transparency into which countries are buying “good” vs “bad” oil and therefore promote shared accountability (as Harshit noted). Research by Capterio on the role of a possible EU CBAM on imported oil and gas highlights the scale of the potential cost to high-flaring countries.

What’s exciting about this agenda is that fixing flaring, venting and leaking is within our gift – it’s the scope 1 emissions of the oil and gas industry. We need to move fast to make it happen. Fortunately, it’s more like plumbing than rocket science – so … let’s get going!

Thank you to the leadership of Energy Week for hosting this event, and to the sponsors and partners for making it happen, especially to Yewande Abiose and Vicki Naidu.