More pressures for the oil and gas sector. Oil and gas are currently responsible for just under 15% of total energy-related greenhouse gases (GHGs) and their use generates another 40% of emissions. Now the entity sets the standard for gas and oil to lower its emissions at a million-dollar cost.
According to a latest report released by the IEA, an initial spending of more than $543.6 billion ($600 billion) will have to be disbursed to halve the intensity of emissions from global operations by 2030. Lower this 50 % means 15% of the net income that this industry received during the last fiscal year of 2022. Of the total, 65% were capital expenses and 35% were operating costs. The Agency indicates that this investment is part of the ‘Net Zero Emissions by 2050 Scenario’ (NZE- Net Zero Emissions Scenario for 2050) which implies a transformation of the global energy system.
This expense will have to be assumed in the next seven years. The production, transportation, and processing of oil and gas resulted in 5.1 billion tons (Gt) of CO2 in 2022. These scope 1 and 2 emissions (directly produced by the burning of fuels by the issuer and indirectly generated by the electricity consumed and purchased by the issuer) are responsible for that 15% of the total GHG. Addressing these scope 1 and 2 emissions “is one of the most feasible and lowest cost options to reduce total GHG emissions from any activity through 2030.”
Although there is more than one method to reduce these emissions, the IEA focuses on five specific keys that will make it possible to achieve the goals for 2030 and 2050. First, address methane emissions; eliminate all non-emergency burning; electrify upstream facilities; equipping oil and gas processes with carbon capture, utilization and storage (CCUS), and expanding the use of hydrogen from low-emissions electrolysis in refineries.
Investments vary on a case-by-case basis. For example, for methane emissions, the estimated investment to reduce its emissions in the coming years is an initial expenditure of 75,000 million dollars (67,891 million euros in exchange) between 2022 and 2030 to achieve emission reductions in the Net Zero Emissions Scenario. For the second key, an investment of another 70,000 million dollars is foreseen; that is, just over 63,839 million euros for the next seven years.
To electrify the upstream facilities (the exploration and production sector) they seek to move more than 235,200 million euros, of which 10% is for connections to the grid, 35% is to buy electricity from the grid and 50% is to develop decentralized hybrid solar photovoltaic, wind and battery storage systems. To reach CCUS implementation levels, another $100 billion will be cut, primarily for capital costs.
Finally, to expand the use of low-emission electrolysis in refineries will entail an expense of 80,000 million dollars, divided between capital expenses for electrolyzers and new renewable capacity to produce hydrogen on site (35%), and operating costs and purchases of hydrogen. by low emission electrolysis to external suppliers (65%). To achieve this last milestone, according to the IEA, it is necessary to include policies that create a well-functioning market and can be achieved through economic incentives or with regulatory restrictions.