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McKinsey reveals required emission reduction volumes for oil & gas industry

Oil&Gas Materials 9 January 2020 16:50 (UTC +04:00)
McKinsey reveals required emission reduction volumes for oil & gas industry

BAKU, Azerbaijan, Jan. 9

By Leman Zeynalova - Trend:

If the world is to come anywhere near to meeting its climate-change goals, the oil and gas (O&G) industry will have to play a big part, Trend reports citing McKinsey & Company with headquarters in the US.

The company said in its report that the industry’s operations account for 9 percent of all human-made greenhouse-gas (GHG) emissions.” In addition, it produces the fuels that create another 33 percent of global emissions.”

To play its part in mitigating climate change to the degree required, the oil and gas sector must reduce its emissions by at least 3.4 gigatons of carbon-dioxide equivalent (GtCO2 e) a year by 2050, compared with “business as usual” (currently planned policies or technologies)—a 90 percent reduction in current emissions, according to McKinsey.

The company believes that reaching this target would clearly be easier if the use of oil and gas declined.

“But even if demand doesn’t fall much, the sector can abate the majority of its emissions, at an average cost of less than $50 per ton of carbondioxide equivalent (tCO2 e), by prioritizing the most cost-effective interventions. Process changes and minor adjustments that help companies reduce their energy consumption will promote the least expensive abatement options,” said the company.

The report shows that the specific initiatives a company chooses to reduce its emissions will depend on factors such as its geography, asset mix (offshore versus onshore, gas versus oil, upstream versus downstream), and local policies and practices (regulations, carbon pricing, the availability of renewables, and the central grid’s reliability and proximity).

“Already, many companies have adopted techniques that can substantially decarbonize operations—for example, improved maintenance routines to reduce intermittent flaring and vapor-recovery units to reduce methane leaks,” said McKinsey.

The company says cutting emissions is not necessarily expensive. “An onshore operator found that about 40 percent of the initiatives it identified had a positive net present value (NPV) at current prices and an additional 30 percent if it imposed an internal carbon price of $40/tCO2e on its operations. One option is to implement initiatives that offset emissions by tapping into natural carbon sinks, including oceans, plants, forests, and soil; these remove GHGs from the atmosphere and reduce their concentration in the air. Plants and trees sequester around 2.4 billion tons of CO2 a year.”

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