Cutting Methane Emissions from Oil and Gas: U.S. and EU Cooperation
This transcript is from a CSIS event hosted on July 12, 2023. Watch the event recording here.
Ben Cahill: Welcome, and thank you so much for joining us today. I’m Ben Cahill. I’m a senior fellow in the Energy Security and Climate Change Program here at CSIS, and I’m really pleased to be joined by our two guests today. Matthew Baldwin is deputy director general in the Directorate-General for Energy at the European Commission and Richard Duke is deputy special envoy for climate at the U.S. State Department.
We’ll move to some opening comments from Rick and from Matthew in a moment. But first, let me set the stage of it.
Those joining us today are probably aware of the importance of methane emissions. Methane accounts for up to 30 percent of global warming in the industrial era. It has more than 80 times the warming potential of CO2 in its first 20 years in the atmosphere, and in the past few years methane has climbed up the international climate agenda.
Some 150 countries have now joined the Global Methane Pledge – that’s a collective commitment to lower methane emissions by 30 percent by the year 2030 – and much of the focus is on the oil and gas industry.
Rapid advances in methane detection are enabling progress on methane measurement and abatement, and oil and gas companies are setting more ambitious targets to cut flaring and venting and eliminate leaky equipment.
On the policy front there are important regulations on the way in both the United States and the European Union. In the U.S., the Environmental Protection Agency is finalizing new rules on methane regulations in the oil and gas sector as well as new rules related to the methane fee in the Inflation Reduction Act, and EU methane legislation is working its way through the legislative process.
So, there’s a lot happening, and we’re delighted to welcome these two policymakers to talk about U.S. and EU cooperation on methane reductions.
For those who are joining online we encourage you to submit questions using the ask live questions button on the screen and we’ll reserve a bit of time at the end of the discussion to turn to those questions.
So now, without further ado, I’d like to turn the floor to Rick Duke from the State Department for some opening comments. Rick, thank you so much for joining us today and the floor is yours.
Rick Duke: Thank you, and thanks to CSIS for organizing this really important and timely discussion.
Cutting methane emissions by the end of this decade is key to keeping warming to 1.5 degrees C and avoiding dangerous tipping points in the global climate system, and at COP-26 in Glasgow the United States and the European Union together launched the Global Methane Pledge, a collective commitment to reduce global anthropogenic methane emissions at least 30 percent by 2030 from 2020 levels.
And as you’ve already noted, as of last year’s COP in Sharm-el-Sheikh, Egypt, a hundred and fifty countries have joined the pledge and that means that we have the world’s attention as required on this issue and we have tremendous work to do in seven short years to deliver on the promise of this pledge.
So, we need to accelerate implementation of methane reduction projects and policies to, first, stop the record year-on-year growth in methane emissions in recent years and then start to deliver these reductions that we require to keep a safer 1.5 degrees Centigrade future within reach.
And the oil and gas sector must play a leading role in achieving the fastest and deepest reductions of methane. Methane is the fastest mitigation strategy that we have for climate bar none and oil and gas methane reductions are the fastest strategy within that overall objective of delivering on the Global Methane Pledge reduction target.
The International Energy Agency estimates that over 70 percent of methane emissions can be cut in the oil and gas sector and nearly half of these emission reductions can be avoided at no net cost.
Achieving the full methane mitigation potential in the oil and gas sector could eliminate .1 degrees Centigrade of warming by midcentury and, really, that’s equivalent to zeroing out the emissions of every car and truck in the world on that time scale and there’s nothing that compares in its speed and impact in the near term.
Now, obviously, eliminating energy CO2 emissions by midcentury is core to stabilizing long-term climate. But in terms of our near-term overshoot and near-term warming trajectory, nothing compares to this opportunity, and we have to seize it together, particularly given its low cost.
Targeted action to cut methane emissions in the oil and gas sector are, of course, parallel to and complementary to the energy transition. But let me say a bit more about that. To achieve global 1.5 degrees aligned emission reductions we have to reduce oil and gas demand by shifting toward renewable and zero-carbon energy sources, scaling up zero-emission vehicles, and decarbonizing industry. But these measures, even if fully implemented, will not reduce methane emissions quickly enough to stay aligned with 1.5 degrees C.
There is no climate substitute for immediate action to cut methane from oil and gas without which we cannot keep 1.5 degrees C within reach, and we’ll struggle with well below 2 degrees C, frankly.
It’s also important for the oil and gas sector to cut their broader scope one and scope two emissions beyond methane, so including the CO2 emissions in the value chain. Scope one and scope two emissions from the oil and gas sector overall inclusive of methane and CO2 account for 15 percent of all energy sector greenhouse gas emissions across the whole global economy, according to IEA, and that exceeds the economy wide emissions of every country except China and the United States.
Emissions intensity from oil and gas production and processing and distribution can be cut in half by 2030, largely, driven by methane reductions but also using renewable electricity for extraction, improving efficiency of operations, and scaling up carbon capture and utilization, and all these measures are essential to reduce the impact of the oil and gas sector in the near term and to complement the energy transition, which we, of course, are committed to accelerating alongside the European Commission and so many others.
Methane reduction measures, though, it’s important to note are not just climate solutions. They’re also global energy security measures. Two hundred and sixty billion cubic meters are wasted every year in the oil and gas sector due to flaring, venting, and leakage, and if this were captured it would be the third largest producer of gas in the world.
So, capturing this gas can bring valuable resources to market in the near term and reduce the need for new exploration elsewhere during the energy transition.
I should also note that there are major public health and agricultural productivity gains that come from reducing methane and thereby reducing tropospheric or ground level ozone formation, which is already the largest source of air pollution in much of the world like right here in Washington, D.C., excepting the occasional Canadian wildfire smoke, and emerging as the more dominant form of air pollution in countries like China as they clean up their air from particulate matter. And so there are these substantial co-benefits to this action that should be considered.
President Biden launched the Global Methane Pledge energy pathway at the Major Economies Forum in June of 2022 with the goal of seizing this prize of fossil energy methane reductions and since then we’ve seen a lot of action.
So, the U.S. the EU, Canada, and Australia are all finalizing strong regulations to cut emissions from this sector – of methane from the oil and gas sector. Colombia and Nigeria last year became others taking the same set of steps in their respective regions, leading the charge, and we hope that others will step up soon.
On broader implementation, let me just note that we’re seeing investments happen as well and we’re working very hard to encourage that and support it. In Mexico, the seventh largest flarer of gas in the world, which flares, vents, or leaks 30 percent of its gas production, President Lopez Obrador committed to develop an implementation and investment plan to eliminate routine flaring and venting in Mexico’s oil and gas sector.
Our agencies are working closely with Pemex, the national oil company in Mexico, to make this a reality and our Export-Import Bank has already approved a loan guarantee to help with reducing flared gas in Mexico and we are seeking to scale that as rapidly as feasible.
In Turkmenistan, the fourth largest emitter of methane from the oil and gas sector in the world and responsible for the world’s largest super emitter events, we’re cooperating to deploy early leak detection and repair solutions and to develop a methane reduction investment plan to control emissions in their sector, and we’re working across the board in other key players in the oil and gas sector.
There is substantial activity happening on the trade side as well with major importers of oil, gas, and coal working together under a joint declaration from energy importers and exporters on reducing greenhouse gas emissions from fossil fuels that we announced with the European Commission, the – Japan and other countries at COP-27 in Egypt and this group seeks to create an international market for fossil energy that minimizes these methane and CO2 emissions from the fossil value chain as much as possible during the energy transition, which, again, we seek to accelerate across the board including in our own economies.
These countries in this discussion already account for over half of global gas import volumes and a third of global gas production, and the U.S. has been working with over a dozen countries to develop related measurement, monitoring, reporting, and verification in support of this joint declaration.
We’ve also been tracking with great interest and hope to hear in a minute more about the European Union’s draft methane regulations and we encourage all major fossil energy importing countries to strengthen policies to measure and mitigate emissions associated with their imported fossil fuels, and our leading companies know that they can compete in this emerging marketplace on the basis of the cleanest gas in the world.
Lastly, the U.S. and the EU are also supporting the creation of new systems to leverage satellite data to accelerate methane mitigation, including through the International Methane Emissions Observatory and its Methane Alert Response System, or MARS, if you’ll pardon the acronym, which is already issuing detections and supporting emission reductions in practice.
So that’s an exciting real-world action that we’re doing jointly with the European Union and partners and is an example of this serious commitment that we have together on this agenda.
And, finally, the U.S. is mobilizing its resources across the government. So, from the Environmental Protection Agency to the Department of Energy to PHMSA, our pipeline agency, and the State Energy Resources Bureau our investment agencies are also eager to support development and investment in methane reduction projects including through Export-Import Bank, Development Finance Corporation, and on the front end the U.S. Trade and Development Agency.
And this is at a time where our interim guidance is very clear. We’re not in the business of supporting with concessional support new oil and gas development generically, with rare exception, but we are committed to and eager to invest in flaring, venting, and leakage reduction with its energy security benefits, with its climate benefits, and for that matter with its public health and even agricultural productivity benefits, as I’ve noted briefly.
So, lots happening. Very exciting time on this agenda and we’re thrilled to be working so closely with the European Commission partners on it.
Mr. Cahill: Rick, thank you so much for those opening comments. Lots to chew on there.
I think you did a great job of laying out some of the reasons why there’s so much attention to methane because of the near-term potential to implement these cost-effective solutions, and I’m definitely interested in some of the international dimensions of this you mentioned like aid for support – aid and support for countries like Turkmenistan and Mexico. Hopefully, we’ll have time to get into some of the details.
But for now, let me turn to Matthew Baldwin from the European Commission. Matthew would love to hear from you about efforts in the European Union on this front.
Thank you very much indeed, Ben, and really a pleasure to listen to Rick, and I can reduce the amount of things I want to say because I underlined everything he said about the importance of tackling methane emissions and all the different efforts that are going on.
And, Rick, I’m late on the scene to this game but I really want to thank you for you’ve done – everything you’ve done personally for leading these efforts. And, Ben, I’d like to thank you for all your careful analysis of us. I feel uncomfortably like today you’re going to be marking our homework in person rather than just in writing, which is so often the case.
Mr. Cahill: (You’re OK?), I promise.
But your reports really add a lot of value. Particularly, I like it when you criticize the American efforts and support ours. (Laughter.) Thank you very much anyway for this invitation.
Look, I’m just standing back a bit from everything that Rick has said. I think our efforts to tackle methane have been given added poignancy by this crazy Russian invasion and its impact on the world energy scene, which has scrambled so many things up, and I think it’s worth underlining that natural gas remains in our energy mix as a transition fuel.
I mean, the curve is sharpened downwards because we’re taking all that Russian gas out of our systems. But the fundamental need to make that gas provision as clean as possible to stay in line with what we’ve agreed in the Paris – the Paris Accords is fundamental and it does involve exactly as Rick has said, moving more quickly forward, convincing more to join us in that path and the different dimensions of it.
And I think after the horrendous year we’ve had in the European Union but not just in Europe, globally, in terms of our energy provision the short-term market tightness remains. But it’s not always going to be the case and, you know, many people lost a lot of money predicting trends in the oil and gas sector.
But a lot of people are predicting from ’25-’26 the markets will loosen a bit and we and other major energy purchasers will be in a position to choose comparatively clean gas and gas exporters to support what we’re trying to do in terms of the transition to cleaner energy imports and to do that, of course, we need to know which gas is cleaner and so the measurement of all of this is so important.
And so as we reduce our fossil fuel demand these fossil fuels will need to get cleaner. They can get cleaner, and I hear loud and clear from most of the oil and gas companies that they want to be able to comply with certain standards to continue accessing our markets in the future.
You both touched briefly on what we’re doing in the EU and we’re looking very – with great interest at everything, Rick, that you’re doing in the U.S., of course. We’ve been playing our role at both the European and the global effort to try to lead to reduce methane emissions in all fuels.
We’ve got this very ambitious regulation on the table to reduce methane emissions. As you said, Ben, it’s working its way through our legislative processes. To know our legislative processes is to love them.
I know that’s the case with the parliament and the council, and we’ll be picking up the pace of that work in the autumn through our trilogues. The core of what we’re trying to achieve is to really ensure accuracy of information provided on methane emissions and more transparency for importers.
We’ve been working very closely with the U.S. on this, particularly Special Envoy John Kerry’s team and Rick and the rest of the guys. We’ve been working very closely internationally. You mentioned the Global Methane Pledge, which we launched together in Glasgow, last year’s joint declaration from energy importers and exporters on reducing greenhouse gas emissions. There’s a host of ideas for how we can go further at this year’s COP.
And so, I really very much agree with what you said, Rick, about the need to build on momentum and build out our alliances in all of this. What we need to see this year is more action, more ambition, from the oil and gas industry.
We’re taking the COP to the UAE – that’s a great place to be looking at these issues – and I think there are positive signals that, indeed, the industry is consistently taking climate-related commitments more seriously. We are ready to support them in their efforts to implement projects to support all policies that can help achieve emissions reductions across the different operations.
We also aim to take steps linked to reducing our methane emissions associated with our own energy consumption here in the European Union and that can spur emissions reductions right across the value chain.
Indeed, on top of what Rick said in terms of international projects we’re looking at a number of interesting projects, particularly in North Africa, under this rubric we call “you collect, and we buy” as a way of bringing home to the industry and to oil- and gas-producing countries just how much wasted gas there is out there. I think you quoted the figure of 250 BCM – the IEA figure – and that is – it’s crazy in this current climate and we need to do something about it.
So, to quickly summarize and to enable us to get on to questions, we see the need to work on these three strands at the same time, on better monitoring, reporting, and verification of methane emissions right along the value chain.
We’re very pleased to be working with Rick’s counterparts, Brad Crabtree over at the U.S. Department of Energy on a group there. We’ve got to – pulling together a really interesting and interested group of countries in taking that work forward and now we’re starting to tackle the substance. I think the technical group is working on that this afternoon.
Secondly, abatement of those emissions wherever they occur and, again, thirdly, using that abatement to enhance our energy security and the interest for energy supplying countries through initiatives such as “you collect we buy.”
As in so many fields, so many other fields of energy, I think it goes without saying that the collaboration of the European Union and the United States in this field is particularly important and it’s very piquant. You are the largest exporter of hydrocarbons. We are the largest importer, respectively.
You brought an extraordinary amount of additional LNG to our shores through the difficult year of 2022, and I think together we have the convening power to help bring everyone to the table and to make progress and we’re looking forward to continue those efforts and even more, Ben, looking forward to your question. Thank you.
Mr. Cahill: Great. Well, thank you so much, Matthew. I appreciate that snapshot of the legislative process in the EU and the way that you identify those three pillars of priorities on methane reductions.
Let me stick with you, Matthew, for a minute. You know, the European Union is not a major oil and gas producing region, but I think from the start of the EU methane strategy in 2020 and then the legislation that the commission proposed back in 2021, you know, one of the key planks of that was always to exercise the European Union’s power as a big buyer.
So, can you talk about how that underpins what you’re trying to do? I know that there’s always been an idea that you should collect better information on the emissions intensity of gas you buy. There are also proposals for an import standard.
Just explain a little bit about how the European Union sees its role in the natural gas market globally and how it can exercise some of that leverage.
Mr. Baldwin: Yeah. I mean, it’s a very good question and, indeed, we’ve had less leverage to really – to drive at those issues, clearly, in the year of 2022 and I hope we’ll be able to get back to that soon. Not because we love exercising leverage for the sake of, because it’s a way of making progress and we make no bones about it. Last year we were scrambling for gas wherever we could get it and we are very grateful for the support we received.
In terms of our – the way we work and the way we try to regulate things, and maybe I could hone back in on what I mentioned earlier in terms of our regulation. I mean, it’s essentially our proposal about requirements in terms of domestic production but it does include provisions on imports, and I think it’d be worth saying a few words about them.
What it requires importers of fossil fuel to the EU to do is to report information regarding whether and how exporter countries and companies are measuring, reporting, and abating methane emissions with a view to establishing a methane intensity profile of those entities.
We’ll publish these profiles in a methane transparency database which is publicly available. We’re also introducing this concept of a global methane emitter monitoring tool, which provides a lot of information on the magnitude and the recurrence and the location of high methane-emitting sources.
All of this will provide us a very clear overall cockpit view of who are the high methane-intensive countries and companies. That information will be super useful to us in terms of our energy and climate diplomacy efforts with our energy partners and we’re pushing openly for regulatory equivalence with what we’re trying to do and learning from what others are trying to do. (Coughs.) Excuse me.
All of this then factors into our regular bilateral dialogues and engaging countries to follow the leadership that we and others are offering in terms of policies and, indeed, opening up the possibility in the future of possible common standards.
So that’s the – sort of the sequencing of it. It’s step by step. I really should underline what I’ve described to you at the moment is still the commission proposal and we wait to hear what our co-legislators will do with it. I think some – you know, what I’ve described here is pretty much mainstream but it’s on the water as we speak.
Mr. Cahill: Great. Thank you, Matthew.
Rick, let me turn back to you. I think you’ve done a great job already of describing how methane reductions fit in the broader picture of U.S. international climate priorities. But maybe you can talk about how the domestic side fits with the international side.
So, in the U.S. the EPA is in the midst of finalizing a really important set of rules on regulation of domestic oil and gas production and we also have new rules and guidance related to the IRA methane fee.
Can you talk about how these domestic developments shape your international efforts to drive down methane emissions? Do these things enable more transparency? Does it enable the kind of clarity on MMRV that you’re looking for? What’s the connection between the domestic policies and the international sphere?
Mr. Duke: Thanks for a great question, a complicated question.
Let me just first start with a bit of a broader context very briefly, which is to note that when we think about how to keep 1.5 degrees C within reach, we think about four big things that need to happen and IEA has affirmed this in a document prepared for the April 20th Major Economies Forum.
It’s, of course, energy transition by 2050, ending deforestation by 2030 and bolstering land carbon globally, and it is then also tackling methane and other non-CO2 as the global thermostat over the next 30 years more so than anything else. And, finally, it’s scaling carbon management, and I mentioned that broader context because in our domestic actions under the signature legislative accomplishments of this administration there is extraordinary support and incentive for the oil and gas sector to reduce its scope one and scope two emissions: methane, including through the methane fee and related EPA standards and related support in the legislation of the Inflation Reduction Act and other legislative vehicles, but also in reducing its CO2 emissions in the scope one and scope two production operations steps in areas like natural gas processing facilities or refineries.
There are major carbon capture and storage opportunities that are concentrated streams of CO2, in the case of natural gas processing facilities extremely low cost, relatively speaking, for carbon capture. And the Inflation Reduction Act includes $85 per ton of incentive for carbon capture, utilization, and storage over a very long duration.
And so, on the methane side, on the carbon capture element for CO2 and, indeed, even on the renewable-based electrification of operations the Inflation Reduction Act provides these incredible incentives for the oil and gas sector to get ever cleaner in the United States.
And so, what that means is that our LNG exporters that are already performing very well – the major players have relatively clean methane signatures already and strong objectives to further reduce their scope one and scope two emissions – are very well positioned to complete that journey to get even cleaner over time.
So, really, I think the way that these conversations link is that the domestic action that we’re taking means that we are very well positioned to be actively engaged in these efforts like the joint declaration with the European Commission in Japan on our shared commitment to measure and manage down the scope one and scope two emissions in traded fossil products.
So that’s an example of how these two areas domestic and international link. There’s more to it than that but that’s a start.
Mr. Cahill: That was a pretty comprehensive overview. Thank you very much.
Rick, let me stick with you for a minute. You’ve both mentioned already the international efforts on ways to improve measurement, reporting, and verification and more transparency on traded natural gas.
So, there is an international working group – you mentioned it earlier – involves the U.S., the European Union, and a number of both producing and importing countries.
Can you share a little bit more detail about what the objectives are and how the group is working?
Mr. Duke: Thanks for the question, and we are excited about this work. It’s deeply technical work. It’s very much actively underway, as Matthew has indicated, and it’s at the same time not at a stage where I could be, perhaps, as specific as you would like me to be. But what I can tell you is that the commitment is real, the work is happening, and the goals are clear.
I mean, we are seeking to, with the European Commission and others in the discussion like Japan and much more broadly than that, to make sure that we have a common framework for measurement, monitoring, reporting, and verification of supply chain greenhouse gas emissions as part of an overall greenhouse gas supply chain emissions MMRV framework working group.
This is all being led, as you’ve already alluded to, out of our Department of Energy on our side and in particular the fossil energy and carbon management – Assistant Secretary Brad Crabtree – and we are encouraged that this will give us a credible verification approach for understanding, tracking and, ultimately, as quickly as possible managing down the methane and CO2 emissions across the supply chain for these products during the energy transition, which, again – I want to be clear – the United States, the European Commission, and the others in this discussion are committed to accelerating as rapidly as possible.
But, again, we can’t wait to reduce methane and, for that matter, CO2 emissions in the value chain during the energy transition. We have to do both in parallel.
Matthew, you want to add something, please?
Could I jump in on that one, too? Just to complement that, I very much agree with it. I think it really is an important and interesting initiative and for your viewers, Ben, I mean, just to realize that all of our great talk about mitigation doesn’t mean a thing if we can’t really straighten out this whole MMRV situation. So that’s just how important this is, and we really are pleased to be working with the U.S. Department of Energy and these other countries on it.
The way I would try to characterize the work – and it is complicated, as Rick has said, and very much going on as we speak – is trying to develop a sort of checklist to ensure that the different frameworks that are out there on MRV all reply to certain agreed criteria, for example, the principle of really good quality data collection. That’s fundamental principles. A lot of these are set up, as far as we’re concerned, already in terms of the very well established and pretty successful OGMP 2.0 standard, another raft of acronyms to throw at you.
I think there’s now more than a hundred companies involved with operations in at least 60 countries covering around one-third of global oil and gas production and that’s the basis for our own proposed legislation in the EU, and it’s very important for us not only that we don’t undermine that process through this group, that we support it and we buttress it and we try to build out on it.
And I’m very confident that we’re able to do so because not just our excellent cooperation with the U.S. through the EU-U.S. Energy Council for all the things we’ve been doing that Rick has mentioned but also through our excellent collaboration with the U.S. Department of Energy and Assistant Secretary Crabtree.
I think as we do so, just to underline what I said again at the start, if we can get this really strong internationally agreed MRV framework with good quality data as one example it would be very, very important not just for oil and gas companies to take the suitable abatement measures that are necessary but to really start to establish the criterion for the future fossil fuel phase out.
And in terms of – and last but not least, to pick up something Rick said right at the beginning, the important work that the International Methane Emissions Observatory is doing and the very exciting progress which has been done in terms of satellites through MARS, and to quote David Bowie, there really is life on MARS in terms of these initiatives. We’ll see, I think in the next couple of years a lot of extremely interesting data starting to flow and they’re already in a pilot phase. I learned this morning from the chairman, Andrew Spiboglin (ph), it’s starting to take shape. Thank you.
Mr. Cahill: Great. Well, as you both mentioned, this is extremely technical work, but I think it’s really important because even for companies that are really committed to reducing methane emissions and providing that cleaner gas, right now we have this kind of complicated array of voluntary industry schemes in certified gas. We’ve got international reporting standards. And so, trying to create some kind of clarity and a set of technical principles that everyone can agree on I think is going to be quite helpful to the industry.
Rick, let me turn back to you. You talked a little bit about implementation since the Global Methane Pledge and what’s been done. It’s encouraging that some more countries like Colombia and Nigeria have now started to introduce new domestic legislation.
Where are we in the process? What can we expect in the run up to COP-28? What are you looking for now from countries that have signed on to the Global Methane Pledge? What’s next?
Mr. Duke: So, it’s important to step back for a second from just the oil and gas sector and talk about the broader context. So, when you look at the 30 percent by 2030 reduction goal for the Global Methane Pledge that, of course, requires immediate and extraordinary action to address oil and gas methane emissions.
It also, though, requires that we rapidly attend to the agriculture and waste sector emissions that are important in their own right. Those will be slower to develop because they involve more complexity. But there are major opportunities in each of those and I’ll just briefly give an example.
The Global Methane Pledge has – nearly all the world’s largest livestock and dairy countries have enlisted in the Global Methane Pledge and the reason for that is that they understand that the substantial methane emissions from that sector can be managed in a way that is respectful of economic imperatives, for example, through livestock and dairy productivity enhancement.
There is a factor of 10 and in some cases a factor of 20 difference in the methane intensity of different beef or milk products – dairy products – depending upon the underlying nutrition and productivity of the livestock or dairy farms in question.
And so that is another opportunity to achieve multiple objectives at once in implementing the Global Methane Pledge and we are working very closely with institutions from the African Development Bank to our own U.S. Agency for International Development and increasingly the World Bank Group in order to realize those opportunities in the agricultural sector.
Similarly, in the waste sector you have major options to address methane emissions from, essentially, dumps or landfills that are not properly managed, organics diversion, and composting and like and, again, those can have important co-benefits for solid waste management, public health, and the like.
They will take longer than what’s possible in immediate investment in the fossil sector and so we’re working on it all in parallel but with the imperative to make sure that we move with maximum speed in the oil and gas sector and that’s why this partnership with the European Commission in the details of MMRV for oil and gas and policy and, for that matter, investment and technical support for other governments and their national oil companies is so critical.
We do think at this particular COP, with UAE as host of the COP and with Dr. Al Jaber having indicated his intent to drive methane emissions from the oil and gas sector down radically at CERAWeek, there is a tremendous specific opportunity to make progress on this agenda at this COP and we seek to work with industry to see this as an opportunity and for leading companies to step up and, of course, lead in their own operations in reducing their methane emissions from those operations and also to take advantage of this moment to support those in lower income countries that may need some help in getting the work done.
And the leading companies in the sector are very well positioned with current earnings and positioning to provide that help, to make some financial contributions to that cause. So, we are hopeful that this will be a COP that’s very consequential on oil and gas methane and we’re going to be working with all of our partners including UAE on that basis, picking up on Dr. Al Jaber’s leadership on the topic at CERAWeek.
Great. Thank you for mentioning that. Yeah, I was going to ask about the fact that this COP-28 will look a little bit different and the fact that it’s being held in a major oil- and gas-producing state that’s also made climate commitments as pretty significant I think we will all expect a lot of announcements at this COP that are related to methane.
Matthew, let me turn to you and ask a related question. So, you mentioned the European Commission’s idea of a “you collect we buy” scheme and I think this is connected to the broader issue of how can we help drive down methane emissions in lots of places around the world including some of the countries that have a big problem like Turkmenistan, Iraq, Algeria.
Can you explain a little bit more how the EU thinks about this problem and what kind of technical support, financial support, other things, will be required to create progress in countries like that? What is the EU doing?
Sorry. Just unmuting myself.
No, I very much agree with the thrust of that question. I very much agree with what Rick just said now and I will answer in a similar vein about that need to develop the overall set of policies, and it’s great that you and the State Department are able to do that and leverage your efforts in terms of underpinning and support and we’re trying to do the same thing in a very joined up way.
I mean, it all under – it all will be ultimately, I think, underpinned by a very strong system – sorry about the background noise here – the very strong system which we are going to develop, I think, through the International Methane Emissions Observatory to clarify beyond a reasonable doubt where methane emissions are coming from and through that I think we can also support technical assistance to governments, to companies, and scientific studies that are really focused on measurement campaigns.
And we’ve both been talking about the MARS system, this Methane Alert Response System launched at COP-27. I mean, I hope there can be more progress signified on that in COP-28. Again, talking to the team this morning I think they’re very much on track for that.
And, once again, through these satellites major emitters will be identified. The related country and company responsible will be notified and asked in a friendly, polite, diplomatic way to act, and Iraq, for example, is one of those which has been cooperating with the system and after notification we know that action has been taken to abate those emissions. And this is great, and we really salute countries like Iraq that are ready to work in this way.
You asked about the detailed ideas we have for “you collect we buy” in North Africa, particularly in relation to Algeria and Egypt, and, again, it fits very much with what Rick is saying, this strong interest amongst companies, in this case European companies like any in addressing these issues, working hand in hand with the countries, with the often national oil and gas companies with a strong interest in doing it.
And, again, it’s a win-win situation. It’s not just about Europe trying to get its hands on this gas, but it’s about these countries being able to realize the maximum of their potential, for example, without having to go out and stir up new oil reserves – to use what is being used in a much more efficient and avoid this horrendous problem of leaking, flaring, and venting.
So, there’s a lot of things going on and we’ve got to pull it together, and it’s challenging because it’s both deeply technical and involving lots of detailed national work from energy agencies and companies and laboratories. But it’s got to be allied with a powerful diplomatic activity, which is why things like the COP are so important. Thank you.
Mr. Cahill: Rick, do you want to add to that?
Mr. Duke: If I could, I wanted to add another positive note about cooperation transatlantically on this agenda where there’s important co-benefits and it’s right at the heart of the matter that we’re discussing, which is it is really encouraging that just a couple of weeks ago Egypt updated its NDC to reflect cooperation between the European Commission, Germany, and the United States through the European Bank for Reconstruction and Development to put themselves on a track to quadruple their current renewables level by 2030 to bring forward their renewables goal by a full five years as part of that and to actually move towards shutting down and decommissioning some inefficient gas electricity plants as part of that.
And that is a package for the last COP that we worked on that is delivering significant climate benefits on the order of five gigawatts a year of renewables now moving towards deployment in Egypt and important energy security benefits because as Egypt reduces its reliance on inefficient gas electricity production by shifting to cheap, clean renewables that gas is available on the marketplace at a time of need, given the illegal and brutal invasion of Russia into Ukraine and the reverberations of same.
So, it’s an example of how we can do the energy transition while in parallel we are, of course, working with Egypt on cleaning up flaring, venting, and leak – you know, addressing flaring, venting, and leakage in their oil and gas operations as well.
So, we can do both at the same time. We can walk and chew gum on the energy transition and on the methane question during that transition.
Yeah. I completely agree. I wish I could have put it as eloquently, Rick. That’s splendid. Thank you.
Well, we have a lot of questions that have come in from the audience, which I think shows the level of interest in these topics. Not enough time to get to them all but let me group a couple together.
There are a few questions that have come in about energy security, security of supply, and how you square all these efforts to drive down, you know, the emissions intensity of gas supplies with just the need to ensure sufficient gas.
So maybe, Matthew, I can ask you how the EU is reconciling these two goals, especially in light of Russia-Ukraine. And then, Rick, afterwards, I’d love to get your thoughts on what all this means for U.S. LNG producers and gas suppliers. You know, is it possible to meet these requirements and, you know, what does it mean for the industry?
So, Matthew, to you first and maybe to you, Rick, afterwards for your thoughts.
I’ll try to be really brief. I mean, we’ve been leading a number of linked up efforts here in the energy department of the European Commission faced with this rather interesting and difficult year we had last year and what I think we’ve learned very much is that security of supply, reducing our dependency on Russian gas, and our own domestic efforts, whether it’s on methane legislation or the thing I want to mention now, how we worked to solidify our situation on storage and cut our immediate demand, they all go hand in hand. And they fit – and I won’t repeat everything that we’ve been talking about – hand in hand with our domestic efforts.
But on storage, which is really our backup insurance policy to make sure we got through the winter, we advanced our legislative requirements on member states to be 80 percent filled in terms of storages by November 2022.
That’s risen to 90 percent this year, and as a result of this new legislation there’s, I think, a much more secure position as we start to approach the winter of ’23-’24 and that’s been supported by the fact that we’ve managed to achieve nearly 19 percent reduction in demand across the board from all member states.
Not all of that demand reduction has been positive. It’s been price driven and there’s been quite a lot of destruction of demand and energy companies really – energy-consuming companies really struggling to survive in 2022. But it’s also important, I think, if we’re going to go out there internationally and preach because we’ve put our own house in order.
We haven’t just been taking gas that was headed for other places; we reduced that demand dramatically in a very short timeframe. And I think this just goes to show that you need a properly joined-up energy policy in this area which deals with security of supply, deals with affordability, and sustainability, as Rick is saying. The ideas when you could work out of silos, I think, are long gone. Thank you.
Mr. Cahill: OK. Rick?
Mr. Duke So, to build on that and hit on some of the themes that we’ve already covered a bit but just to embed further, we can and must do the energy transition and this scope one/scope two mission reduction effort in parallel and when we do that we maximize both climate and energy security benefits as part and parcel of that effort.
So, I think the Egypt example is instructive with rapid renewables deployment really providing gas to the marketplace at a time of need and also the potential for flaring, venting, and leakage reduction to provide new supply.
And, again, to put that in global context, that’s 260 billion cubic meters of wasted gas from today’s oil and gas operations, and that is not only the fourth largest – excuse me, equivalent to the third largest producer of gas in the world, it’s also more than triple what the European Union imported from Russia last year.
So it’s just – it’s a substantial opportunity in terms of a quick, clean gas supply during the energy transition at the same time that we are moving as rapidly as possible on deploying zero-emission vehicles with both the European Commission and the United States putting in place really substantial incentives and standards, in our case a draft rule that would lead to over two-thirds of light-duty vehicles being zero-emission vehicles by 2032 and a similar ambition in the European Union.
We’re doing both at the same time and that’s exactly what the moment requires, and that is what will maximize both energy and climate security at the same time, not to mention the public health benefits.
Mr. Cahill Great. Well, we’re coming close to the end of time. I do want to put in a plug for CSIS work. We’re planning to do a lot of work in the coming year on national oil companies and climate commitments and methane mitigation to get at some of these international dimensions that we’ve discussed today, and we’ve done a lot of work in the past on the international gas market and how the concerns about methane intensity are filtering into global LNG trade. Still lots to monitor there.
We have a lot more questions from the audience. I have many more myself. But you’re both busy people so I want to make sure that we end more or less on time.
I really want to thank both of our speakers for joining us today – Matthew Baldwin from the European Commission, Rick Duke from the U.S. State Department. Thank you so much. This is really informative. And to everyone who joined us online we are grateful for your time, and we hope to see you soon at another CSIS event.
Signing off for now. Thank you.