Examining the immediate steps the oil and gas industry needs to take to significantly reduce its emissions footprint, the Emissions from Oil and Gas Operations in Net Zero Transitions report aims to inform discussions in the run-up to the COP28 Climate Change Conference in Dubai in November 2023.

The production, transport and processing of oil and gas emitted the equivalent of 5.1bn tonnes of CO₂ in 2022, according to the IEA. Known as Scope 1 and Scope 2 emissions, these currently account for nearly 15% of energy-related greenhouse gas (GHG) emissions. The end-use burning of oil and gas (Scope 3 emissions) accounts for very much more.

In its ‘Net Zero Emissions by 2050 Scenario’, the emissions intensity of the production, transport and processing of oil and gas falls by 50% by the end of the decade. Combined with the reductions in oil and gas consumption in this scenario, this would result in a 60% reduction in Scope 1 and Scope 2 emissions from the sector to 2030.

Noting that the oil and gas industry has ‘the ability and resources’ to cut emissions ‘quickly and cost effectively’, the report identifies five key levers to achieve this reduction, including tackling methane emissions; eliminating all non-emergency flaring; electrifying upstream facilities with low-emissions electricity; equipping oil and gas processes with carbon capture, utilisation and storage (CCUS); and expanding the use of low-emissions hydrogen in refineries. No offsets are used to achieve the reductions in emissions in the NZE Scenario.

According to the IEA, about $600bn of investment is required this decade to achieve such a cut in production emissions. However, the Agency notes that ‘this is only a fraction, 15%, of the record windfall income that oil and gas producers accrued in 2022’. Many of the measures could also generate additional income streams by avoiding the use or waste of gas, meaning they could quickly recoup the upfront spending required. For facilities implementing these measures, the average cost of producing oil and gas would increase by less than $2/boe, calculates the IEA.

‘Tackling methane emissions is the most important measure to limit emissions from the industry’s operations,’ says the IEA. ‘It is also one of the most cost effective and impactful measures to cut Scope 1 and Scope 2 emissions across the economy and limit near-term global warming.’ Earlier this year, the IEA released the latest update to its Global Methane Tracker, which found that methane emissions remained stubbornly high in 2022 despite the headwinds of the global energy crisis.

Oil and gas companies accounting for just under half of global oil production today have announced plans to reduce Scope 1 and 2 emissions from their operations. These ‘vary markedly in their scope and timelines for implementation’, says the IEA, with only a fraction of these commitments matching the pace of decline seen in its NZE Scenario and most planning to use offsets to achieve their targets.

‘Forward-leaning companies need to recognise the need to move faster than the global average reduction in emissions,’ states the IEA, calling for ‘a far broader coalition’ and ‘much more ambitious targets’ in order ‘to achieve meaningful reductions across the oil and gas industry and beyond’.

It should be noted that tackling direct Scope 1 and Scope 2 emissions is only a small fraction of the battle to decarbonise the energy sector, with most of the oil and gas industry’s environmental impact coming from Scope 3 emissions, ie those created through the end use of the oil and gas produced. However, at present, quantifying and tackling these emissions is outside the control of the oil and companies, which means that most leave Scope 3 emissions outside their decarbonisation targets.