The International Energy Agency (IEA) has said that 2% of oil and gas profits can finance emissions reduction in operations.
The agency stated this in a recent report addressing the ways to reduce emissions in oil and gas operations.
The IEA report stated that globally, oil and gas companies earned record profits in 2022 and the industry’s net income doubled to nearly $4 trillion and just 2% of this would be sufficient to provide all the spending in methane emissions reduction measures across the supply chain.
In the cited report, it was highlighted that oil and gas companies around the world need to adopt a more proactive corporate policy to increase investments in methane emissions abatement. It also stated that oil and gas companies were faced with two options; significantly reduce their methane emissions or phase out oil and gas operations faster than anticipated to limit the global temperature rise to 1.5 °C.
However, attendees maintained that oil and gas will be needed for many decades to come during the 8th International Seminar organized by the Organization of Petroleum Exporting Countries (OPEC) in Vienna, Austria last week.
In fact, during his welcome address, the OPEC Secretary General, Haitham al Ghais stressed the importance of oil in the global energy mix and the industry’s primary role in reducing carbon emissions.
He also spoke about OPEC’s efforts to achieve market stability, reduce the environmental footprint, and move towards a sustainable and comprehensive energy transition. According to him, the oil and gas industry wants an emissions-free future, so, harnessing technologies that can do this will be a major focus of companies who attended the seminar.
How oil and gas companies can reduce emissions realistically
In the cited IEA report, oil and gas companies were advised to make sufficient capital available for investments in methane abatement through direct financing by commercial banks and private capital funds, or through securities listed on capital markets that are tied to sustainability performance.
- According to the report, investors and insurers can establish methane performance requirements for future lending, request disclosure improvements to promote emissions reporting transparency, and set up underwriting standards that include methane reductions.
- Also, the report stated that methane abatement regulations and policies, including limits on flaring and venting, measurement, and reporting requirements, are essential to drive down methane emissions.
- The report stated further that public financing, whether directly from governments or through multilateral development banks or philanthropic funds, can help catalyze private investments and fill in gaps where private sources of finance may not be willing or able to invest at the levels needed.
The report notes that public financing can also help regulators in low- and middle-income countries develop the capacity needed to draft, adopt, and implement new and enhanced regulation