Emissions Reduction Strategies Adopted by the Oil and Gas Sector – Analyzing Current Emissions by Oil and Gas Sector and Companies, Future Targets, Reduction Strategies and Carbon Pricing

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Oil and Gas Emissions Reduction Market Overview

The oil and gas sector is responsible for about half of all energy-related emissions. The vast majority are from sold products or scope 3 emissions. Among direct, scope 1 and 2 emissions, the largest portion comes from upstream and downstream operations. Emissions can occur at all stages of the O&G value chain.

To address upstream emissions, common strategies include using renewable energy or carbon capture. On the downstream side, low-carbon hydrogen, electrification of heat processes, utilization of waste heat, and utilization of carbon for fuels can be used. Product emissions can be reduced by reducing the production of fossil fuels, producing renewable fuels like low carbon hydrogen or biofuels, carbon offsets, or carbon capture. The nine most active O&G companies in the energy transition have reported reductions in absolute emissions and emissions intensity in recent years. Carbon pricing is an effective emissions reduction measure that has been endorsed by most major O&G companies.

Emission categories Direct Emission (Scope 1) and Indirect Emission (Scope 2 and 3)
Emission reduction strategies Upstream, Downstream, and Scope 3/Product Emissions
Key countries The US, the UK, EU, Norway, Saudi Arabia, Canada, and the UAE
Leading companies Equinor, Repsol, Shell, ExxonMobil, TotalEnergies, BP, Chevron, ConocoPhillips, and Eni
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Defining Emission Categories

Picture1

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Common Emission Reduction Strategies

Upstream

Powering offshore platforms using cleaner grid power or on-site renewables, like offshore wind farms.

Downstream

Using blue or green hydrogen in refineries and adopting electrification for some heat processes. 

Scope 3/Product Emissions

Decreasing oil and gas sales via divestment of assets or decreasing production.

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Emission Reduction Strategies by Country

The US aims to reduce GHG emissions by half by 2030 compared to 2005 levels and reach net zero by 2050. The Biden Administration has implemented a social cost of carbon, but it is currently facing legal challenges in the US court system. The cost is used to guide policy, including oil and gas leases, and federal spending decisions by incorporating the cost of negative externalities associated with carbon emissions. In addition, 11 states use a social cost of carbon to guide similar decisions at the state level.

Aside from the US, the other countries discussed in the report for emission reduction strategies in the oil and gas sector are the UK, EU, Norway, Saudi Arabia, Canada, and the UAE.

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Leading Companies in Energy Transition

Some of the leading companies in energy transition are Equinor, Repsol, Shell, ExxonMobil, TotalEnergies, BP, Chevron, ConocoPhillips, and Eni.

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Scope

Global oil and gas sector CO2 emissions in 2019

Future CO2 emissions from global oil and gas remaining lifetime of reserves

Emissions reduction targets and strategies of 9 selected oil and gas majors

Global emissions reduction strategies

Reasons to Buy

  • Obtain the most up-to-date information on emissions reduction strategies in major oil and gas producing nations and companies.
  • Understand the origins of different emissions throughout the oil and gas value chain.
  • Assess your competitor’s emissions reduction strategies and develop the most effective plan of action based on the trends in their absolute emissions and emissions intensities.
  • Develop an understanding of the global carbon pricing scene.

Equinor
Repsol
Shell
ExxonMobil
TotalEnergies
BP
Chevron
ConocoPhillips
Eni

Table of Contents

Table of Contents 2

1. Executive Summary 3

2. Sector Emissions Overview

2.1 How much does the sector emit? 4

2.2 Emissions sources across the O&G value chain 5

2.3 Defining Emissions Categories 6

2.4 Benchmarking Company Targets 7

2.5 Where are emissions taking place? 8

3. Strategies and Carbon Pricing

3.1 The methane emissions opportunity 10

3.2 Common emissions reduction strategies 11

3.3 National plans 12

3.4 Carbon pricing worldwide 13

3.5 Internal carbon pricing 14

4. Company Analysis

4.1 Main emissions targets among selected O&G majors 16

4.2 Evaluating emissions targets 17

4.3.1 ExxonMobil 18

4.3.2 BP 19

4.3.3 ConocoPhillips 20

4.3.4 Chevron 21

4.3.5 Eni 22

4.3.6 Equinor 23

4.3.7 Repsol 24

4.3.8 Shell 25

4.3.9 TotalEnergies 26

5. Conclusions 27

Table

Table 1: Emissions reduction policies by country

Table 2: Emissions targets of 9 selected oil and gas majors

Figures

Figure 1: Energy-related GHG Emissions(%), 2021 4

Figure 2: US O&G Emissions by Segment(%), 2020 4

Figure 3: Oil and gas value chain 5

Figure 4: Emissions categories 6

Figure 5: Average emissions by scope of 16 top oil and gas companies(%) 7

Figure 6: Targets of top 28 oil and gas companies, 2022 7

Figure 7: Global Oil and Gas Sector CO2 Emissions(Gt CO2), 2019 8

Figure 8: Future CO2 emissions from global O&G remaining lifetime of reserves(Gt CO2) 8

Figure 9: Net Methane Abatement Cost by Technology($/MMBtu) 10

Figure 10: Emission reduction strategies by sector 11

Figure 11: Map of carbon pricing schemes worldwide 13

Figure 12: Internal Carbon Prices Among Oil & Gas Majors($/ton) 14

Figure 13: ExxonMobil’s Absolute Scope 1 Emissions(Mt-CO2e) and Upstream Emission Intensity(t-CO2e/100 tons production), 2016-2020 18

Figure 14: BP’s Absolute Scope 1 Emissions(Mt-CO2e) and Emission Intensity(g-CO2e/MJ), 2017-2021 19

Figure 15: ConocoPhillips’ Absolute Scope 1 Emissions(Mt-CO2e) and Emission Intensity(kg-CO2e/boe), 2016-2020 20

Figure 16: Chevron’s Absolute Scope 1 Emissions(Mt-CO2e) and Upstream Emission Intensity(kg-CO2e/boe), 2017-2021 21

Figure 17: Eni’s Absolute Scope 1 Emissions(Mt-CO2e) and Carbon Intensity(t-CO2e/kboe), 2016-2020 22

Figure 18: Equinor’s Absolute Scope 1 Emissions(Mt-CO2e) and Upstream Carbon Intensity(kg-CO2e/boe), 2016-2021 23

Figure 19: Repsol’s Absolute Scope 1 Emissions(Mt-CO2e) and Upstream Emission Intensity(t-CO2e/kboe), 2016-2021 24

Figure 20: Shell’s Absolute Scope 1 Emissions(Mt-CO2e) and Net Carbon Intensity(g-CO2e/MJ)), 2017-2021 25

Figure 21: TotalEnergies’ Absolute Scope 1 Emissions(Mt-CO2e) and Upstream Emission Intensity(kg-CO2e/boe), 2015-2020 26

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