©OECD/IEA2017 ©OECD/IEA2017

Oilandgasmethaneemissionsandtheenvironmentalcasefornaturalgas

TimGouldandChristopheMcGlade

©OECD/IEA2017

WEO-2017fuelfocusonnaturalgas

n FollowsonfromfocusonrenewablesintheWEO-2016Ø ThefullfocuswillbelaunchedaspartoftheWEOon14November

n Coversallaspectsoftheoutlookfornaturalgas:Ø Projectionsfordemand&supplyto2040,costs&inter-fuelcompetitionØ HowtheriseofLNGisreshapinginternationalgastrade,investment&gassecurityØ Gasinachangingenergyworld&theenergytransition

n Clearthatfutureroleofgascloselylinkedtoitsabilitytohelpaddressenvironmentalproblems

n Broadconsensusovercombustionemissionsofgas:significantuncertaintyovermethaneemissionsfromoilandgasoperations

n Aimofthemethaneemissionsanalysistoinvestigatethesourcesofthisuncertaintyandexplorewhatactionscanbetaken

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Combustionemissionsfromgasarelow

Shareofgasintotalenergy-relatedemissionsofairpollutantsandCO2,2015

Comparedwithothersources,naturalgasmakesonlyaminorcontributiontowardstoday’semissions

20% 40% 60% 80% 100%

Carbondioxide

Nitrogenoxides

Sulfurdioxide

Particulatematter

Gas Coal Oil Bioenergy Non-combustion

31Mt

79Mt

108Mt

32Gt

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Theenergysectorisresponsibleforaquarterofannualmethaneemissions

Sourcesofmethaneemissions,2012

Attributingmethaneemissionstospecificsourcesisdifficult,buthumanactivityislikelytoberesponsibleforthemajorityofthe570Mtemissionsin2012

3%

Wetlands30%

9%Agriculture

24%

Waste11%

BiomassburningBiofuels

Fossilfuels20%

Anthropogenicsources Naturalsources

Source:Saunois etal.(2016)

3%3%

Other

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EmissionscomefromawidevarietyofsourcesalongtheoilandgasvaluechainsRegionalandsectoralbreakdownofmethanefromoilandgasoperations,2015

Naturalgasoperationsaccountforaround55%ofourestimated76Mtmethaneemissionsin2015,withEurasiaandtheMiddleEastthelargestemittingregions

Eurasia25%

MiddleEast22%

NorthAmerica17%Africa

13%CentralandSouth

America11%

AsiaPacific9%

Europe3%

Byregion

Gasupstream37%

Gasdownstream19%

Flaring4%

Oildownstream0.3%

Oilupstream41%

Bysector

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Thelifecycleemissionsofgasarelowerthancoal

Greenhouse-gasemissionintensityofnaturalgascomparedwithcoal

TheglobalaverageemissionintensityofgasislowenoughforgastoresultinfewerGHGemissionsthancoalregardlessofthetimeframeconsidered

2%

4%

6%

8%

0 20 40 60 80 100 120CH4 conversiontoCO2

Coalbetterthangas

Gasbetterthancoalforelectricityonly

Gasbetterthancoal

GWP100fromIPCC(2014)

GWP20fromIPCC(2014)

Methane

leakagerate

Averageglobalgasemissionintensity

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ThreequartersofcurrentoilandgasmethaneemissionsaretechnicallyavoidableGlobalmarginalabatementcostcurveforoilandgasmethaneemissions,2015

Itistechnicallypossibletoreducethe76Mtcurrentoilandgasemissionsby58Mt;half(38Mt)canbeavoidedusingapproacheswithpositivenetpresentvalues

NorthAmericaEuropeMiddleEastAsiaPacificLatinAmericaAfricaEurasia

-10

-5

0

5

10

60Mt

0 10 20 30 40 50

USD/MBtu

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JustimplementingmeasureswithnonetcostwouldyieldhugebenefitsfortheclimateMethaneemissionsintheNewPoliciesScenariowithandwithoutabatementmeasures

Implementingmeasureswithpositivenetpresentvaluesreducesmethaneemissionstoaround50Mtin2040,55%lowerthantheywouldhavebeenotherwise

10

20

30

40

50

60

70Milliontonnes

2015 2020 2025 2030 2035 2040

GasOil

2015 2020 2025 2030 2035 2040

Emissionswithnoabatement Reductionsduetoabatementmeasures

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Conclusions

n Methaneemissionsalongthevaluechainthreatensomeoftheemissionsadvantagesnaturalgasholdsovertheotherfossilfuels

n GasgeneratesfarfewerGHGemissionsthancoalwhengeneratingheatorelectricityregardlessofthetimeframeconsidered

n Over75%ofthecurrent76Mtemissionscanbetechnicallyavoided;around40-50%canbemitigatedatnonetcost

n Thesemeasureswouldhavethesameimpactonclimatechangeasimmediatelyshuttingallexistingcoal-firedpowerplantsinChina

n Achievingthesereductionsrequiresastep-changeinambition;fewcountrieshavespecificmitigationframeworksinplace