November 22 - Last week, the European Union unveiled a pioneering regulation aimed at mitigating climate change. This proposed new methane performance standard will introduce penalties akin to a carbon import tax for producers who fail to demonstrate exceptionally low methane emissions.
By 2027, suppliers exporting to the EU will be mandated to present reliable measurements of their methane emissions. This is in anticipation of import penalties that will come into effect in 2030. The regulation imposes even stricter requirements on domestic producers within the EU, over whom the EU has more direct control.
Currently, imports account for 80% of Europe’s oil and gas, and they are the EU’s Achilles’ heel when it comes to its green ambitions. Despite the EU's proactive stance on climate change initiatives, member countries are consuming some of the most polluting hydrocarbons, which are approximately 40% worse in emissions than the global average. These imports are not only environmentally detrimental due to significantly higher embedded emissions from flaring, venting and leaks, they also exhibit a greater emissions intensity compared with other major importers, like India, China, or Japan.
Europe's reliance on high-emission intensity oil and gas imports is influenced by its choice of supplier countries, among them the highest intensity emitters include Libya, Kazakhstan, Iraq, the United States (for oil), and Algeria, Russia, the United States, Nigeria, Azerbaijan and Egypt (for gas). These nations collectively squander approximately 130 billion cubic metres of gas annually through flaring, venting and leaks, much of which could be avoided. This wastage is significant, equating to almost all of the EU's former imports from Russia and resulting in 3.3 billion tonnes of CO2 emissions.
A tanker of U.S. sour crude moored at Germany's port of Rostock, Germany. REUTERS/Andreas Rinke Acquire Licensing Rights
In stark contrast to Norway, which has notably low emissions intensity (and the United Kingdom is not far behind), these supplying nations often suffer from lax environmental policies, ineffective legislation, and regulators failing to enforce penalties. Given that most producers, predominantly unlisted national oil companies or their joint ventures with listed companies, are not addressing their emissions voluntarily and existing regulations prove ineffective, the European Union's intervention in this matter is not only necessary but also justified.
At first glance, the EU’s regulations look like they could pose a material threat to producing countries, whilst generating cost increases for importing nations, especially Italy, Spain and Greece. Producing countries would likely face import penalties totalling $2-$3 billion annually, just as the demand for their products decreases as the EU accelerates its energy transition. Consequently, EU buyers might prefer to seek better alternatives, leaving these countries disadvantaged in a competitive market.
However, the impact on consumer prices may be less severe than expected. Capterio’s analysis identifies that the new regulations will add only about a dollar per barrel to the cost of an oil barrel, and perhaps 10 cents per million British thermal units (mmbtu) for gas. Research by energy consultancy Rystad reached a similar conclusion.
More importantly, these regulations present a significant opportunity for exporters.
Rather than merely absorbing methane penalties, the EU regulation should encourage producers to redirect these funds to investments that reduce gas flaring, venting and leaking. As the International Energy Agency (IEA) frequently points out, these projects often offer attractive commercial returns at no net cost, thereby transforming a regulatory challenge into a profitable investment opportunity.
Capterio’s analysis identifies that the new EU regulations will add only about a dollar per barrel to the cost of an oil barrel, and 10 cents per million British thermal units (mmbtu) for gas. REUTERS/Phil Noble Acquire Licensing Rights
By investing at home to clean up their act, exporting countries will generate several wins. First, countries can enhance the competitiveness of their energy exports, helping them to retain and gain market share, and secure export revenues. Second, countries will bolster their energy security, eliminating the irrational need for traditional gas exporters like Egypt or Iraq to have to import gas from their neighbours at double the price, and create jobs in the process. Lastly countries can improve their investment appeal, decarbonise their economies, and accelerate their own energy transitions.
The new EU regulations mark a critical turning point for producing countries. With the growing satellite monitoring of flaring, methane and CO2, there's increasingly no place to hide. So the message is clear: rather than “active deflection” or “strategic denial”, high-emitting producing countries should embrace their reality, identify, mature and deliver opportunities, and decarbonise.
Since serious financing is required, multilateral development banks should not shy away from getting involved, noting methane reduction projects are particularly cheap ways to abate emissions. This is a moment for these nations to transition from lofty ambitions to tangible actions, driven by both economic and environmental imperatives.
Capterio and the Atlantic Council will be holding a Countdown to COP28: A critical moment to slash methane emissions, on 30 November for those who would like to learn more.
"oil" - Google News
November 23, 2023 at 12:20AM
https://ift.tt/0Wdqzji
Comment: Europe's ban on dirty methane imports will be good for oil and gas producers as well as the planet - Reuters
"oil" - Google News
https://ift.tt/jrFG59i
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Comment: Europe's ban on dirty methane imports will be good for oil and gas producers as well as the planet - Reuters"
Post a Comment