New source of supply greater than the total
annual demand of France could be
added within just 2-3 years, S&P Global Commodity Insights
analysis finds
WASHINGTON, Dec. 14,
2022 /PRNewswire/ -- Current natural gas prices,
including record high global prices, and renewed concerns for
energy security are making projects that capture and commercialize
vented, fugitive and flared methane increasingly economic, with the
potential to lower emissions and unlock substantial new supplies of
gas, a new analysis by S&P Global Commodity Insights finds.
The analysis examined 6 key regions—North America, North Africa, Central Asia-China, Nigeria, Aussie-ASEAN, and Eastern
Mediterranean—and found that the elevated price outlook for natural
gas makes it economic to capture and commercialize more than 70% of
the lost methane and flared gas from those areas, equivalent to 80
bcm of new supply.
Notably, the analysis finds that it could be possible to add 40
bcm of new supply—more than the total annual demand of France—to
global markets within just 2-3 years. Capturing and commercializing
this gas would simultaneously reduce GHG emissions by more than
750 Mt CO2e*, an amount
approximately the size of Germany's total annual emissions.
Methane emission reductions are particularly critical to limit
near-term warming as methane is a highly potent, short-lived
climate pollutant (with over 80 times more global warming potential
than CO2 over a 20-year period), and is estimated to
have contributed roughly 30% of global warming to date.**
"With natural gas prices at historic levels and energy security
returning as a global priority, efforts to capture and
commercialize methane are increasingly economic and present a
win-win proposition," said Amb. Carlos
Pascual, senior vice president, global energy and
international affairs, S&P Global Commodity Insights.
"Accelerating efforts to bring these projects forward can provide
much-needed supply to the global market while supporting energy
security and climate imperatives in the energy transition."
The spike in global gas prices—which began in Fall 2021 and then
amplified by the conflict in Ukraine—have particularly enhanced the
near-term economics for methane capture projects in regions that
have access to the global gas market, the analysis finds.
For a methane capture project deployed next year, 10-year
revenues are now expected to be 140-240% higher than they otherwise
would have been prior to the price spike. Even as natural gas
prices stabilize in the longer term, forecasted revenues remain
elevated compared to pre-war price forecasts (56%-93% higher for a
project deployed in 2026 and 31%-38% higher for a project deployed
in 2030).
"The elevated price outlook for natural gas has created a
substantial economic opportunity to capture flared gas and methane
emissions, especially in the near term," said Eleonor Kramarz, vice president, energy
transition consulting, S&P Global Commodity Insights.
"While these opportunities will remain economic over the
longer-term, the strongest incentives are for acting sooner rather
than later when it comes to bringing new projects online."
Advancing methane and flare capture and commercialization
projects benefit from well-established technologies that already
exist at scale, meaning that there are few technological barriers
to deployment, the analysis notes. Still, other impediments need to
be overcome.
The analysis identifies key barriers for each of the six target
regions across four major categories—export capacity, capital
availability, commercial and financing environment, and security
risk—and lays out pathways that would enable projects to move
forward.
"While the paths forward will be different in each region, there
is a consistent need for clear project implementation roles,
stronger collaboration between private and public organizations and
improved capital availability," Kramarz said. "Bringing together
key constituencies will be essential to address barriers and
deliver new sources of supply that can strengthen energy security
while reducing emissions."
About the Study:
The study examines target regions where efforts to capture
methane could quickly increase the supply of natural gas in global
markets while reducing methane emissions.
S&P Global Commodity Insights identified key barriers to
capturing and commercializing methane across the six target regions
selected. Next, S&P Global Commodity Insights developed
abatement pathways that could address these barriers and unlock
methane emission reduction opportunities. This work consisted
of:
- Developing rough estimates of country-level methane
emissions from venting, fugitives and flaring, and associated
abatement costs. This analysis utilized IEA's methane
tracker, SkyTruth flaring data, and S&P Global Commodity
Insights infrastructure and field-level data.
- Identifying key barriers to capture and monetize methane
based on export capacities, capital availability, commercial and
financing environment and security risks.
- Developing abatement pathways that could address
key barriers and facilitate gas capture and commercialization
projects.
The study contributes to the continuing dialogue about achieving
Net-Zero Emissions by 2050 by quantifying the requirements of that
goal and benchmarking them against the supply response. These
insights are intended to facilitate well-informed policy
choices.
The analysis and metrics developed during the course of this
research and its conclusions represent the independent analysis and
views of S&P Global Commodity Insights.
The study was supported by the Environmental Defense Fund.
Additional Resources:
Download the executive summary here:
https://bit.ly/Methane-Consulting
* Calculation assumes methane or flared gas captured is
replacing other natural gas use. For flare capture projects, 2% of
methane is assumed to remain uncombusted. Calculation uses an 86x
multiplier to approximate methane's 20-year global warming
potential (relative to CO2). Using a 25x multiplier to
approximate methane's 100-year global warming potential results in
over 250 Mt CO2e.
** See IEA, "Methane and climate change," available at
https://www.iea.org/reports/global-methane-tracker-2022/methane-and-climate-change,
accessed November 22, 2022
Media Contacts:
S&P Global: Jeff Marn
+1-202-463-8213, Jeff.marn@spglobal.com
S&P Global Commodity Insights, Global/EMEA: Paul Sandell +
44 (0)7816 180039, paul.sandell@spglobal.com
Americas: Kathleen Tanzy + 1
917-331-4607, kathleen.tanzy@spglobal.com
Asia: Melissa Tan
+ 65-6597-6241, melissa.tan@spglobal.com
About S&P Global Commodity
Insights
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decisions with conviction and create long-term, sustainable
value.
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