Schemes for Fossil Fuel Greenhouse Gas Upstream Reductions – Evaluating and Selecting Schemes and Standards for the Purpose of Article 7A of the FQD
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Ref. Ares(2013)2799460 - 31/07/2013 Schemes for Fossil Fuel Greenhouse Gas Upstream Reductions – Evaluating and Selecting Schemes and Standards for the Purpose of Article 7a of the FQD May 2013 Submitted to: Wojceich Winkler European Commission DG Climate Action B-1049 Brussels BELGIUM Submitted by: ICF International 3rd Floor Kean House 6 Kean Street London WC2B 4AS U.K. Schemes for Fossil Fuel Greenhouse Gas Upstream Reductions – Evaluating and Selecting Schemes and Standards for the Purpose of Article 7a of the FQD May 2013 Submitted to: Wojceich Winkler European Commission DG Climate Action B-1049 Brussels BELGIUM Submitted by: ICF International 3rd Floor Kean House 6 Kean Street London WC2B 4AS U.K. CLIMA.C.2/SER/2011/0006 Table of Contents Task 1 .................................................................................................................................................................. 1 1. Introduction .............................................................................................................................................. 1 1.1 Objectives ........................................................................................................................................ 1 2. Findings ..................................................................................................................................................... 1 2.1 Selection of projects ..................................................................................................................... 1 2.2 Information on projects ................................................................................................................ 2 2.3 Discussion ..................................................................................................................................... 18 Task 2 ................................................................................................................................................................ 20 1. Introduction ............................................................................................................................................ 20 1.1 Objectives ...................................................................................................................................... 20 2. Findings ................................................................................................................................................... 21 2.1 Selection of projects for inclusion in MAC analysis .......................................................... 21 2.2 MAC curve tool development .................................................................................................. 23 2.3 Discussion ..................................................................................................................................... 27 2.4 MAC tool user instructions ....................................................................................................... 33 Task 3 ................................................................................................................................................................ 36 1. Introduction ............................................................................................................................................ 36 1.1 Objectives ...................................................................................................................................... 36 2. Findings ................................................................................................................................................... 36 2.1 Current and Future Oil Production ........................................................................................ 36 2.2 Barriers to APG Utilization ....................................................................................................... 38 2.3 Options for Increasing APG Utilization ................................................................................. 41 2.4 Incorporation into MAC Tool .................................................................................................... 45 Appendix 1 ............................................................................................................................................... 46 Task 4 ................................................................................................................................................................ 47 1. Introduction ............................................................................................................................................ 47 1.1 Objectives of project .................................................................................................................. 47 1.2 Objectives of task........................................................................................................................ 47 1.3 Overview of tasks performed .................................................................................................. 47 2. Observations ......................................................................................................................................... 50 2.1 Comparison of methodologies and initiatives .................................................................... 50 2.2 Strengths and weaknesses...................................................................................................... 59 2.3 Recommendations ...................................................................................................................... 61 Appendix 1: APG Project Success Rate ......................................................................................... 64 Appendix 2: Template with analysis criteria .................................................................................. 65 Appendix 3: In-depth analysis of schemes .................................................................................... 67 Appendix 4: Comments on non-shortlisted schemes ............................................................... 134 May 2013 Use or disclosure of data contained on this sheet is subject to the restrictions on the cover page. i CLIMA.C.2/SER/2011/0006 Task 5 .............................................................................................................................................................. 135 1. Introduction .......................................................................................................................................... 135 1.1 Objectives of project ................................................................................................................ 135 1.2 Objectives of the task .............................................................................................................. 135 2. Observations ....................................................................................................................................... 135 2.1 Introduction to the oil & gas industry and flaring/venting activities ............................ 135 2.2 Characteristics of flaring/venting projects, emission reduction potential and impact on targets ................................................................................................................................................ 136 3. Simplified checklist with guidelines for policy makers .................................................... 138 3.1 Lessons learned from Task 4: recommendations for a potential EC scheme ....... 138 3.2 Key aspects of a potential scheme ..................................................................................... 140 May 2013 Use or disclosure of data contained on this sheet is subject to the restrictions on the cover page. ii CLIMA.C.2/SER/2011/0006 Task 1 1. Introduction 1.1 Objectives 1.1.1 Objectives of project The first objective of this study is to describe the technical, economic and regulatory variables that affect the potential for improving/incentivising upstream GHG reductions. This will entail presenting the most economically preferred approaches utilized to date with the use of marginal abatement curves (MACs) for upstream GHG reductions and conducting sensitivity analysis on the pertinent technical, economic and regulatory parameters to highlight potential economic drivers that could facilitate further investment in GHG reductions. The second objective is to develop guidelines and principles for development of methods/best practices for measuring and verifying GHG emission reductions and guidelines for legislators for screening, evaluating and selecting existing and future schemes, carbon credit standards or certification programmes that ensure that GHG emission reductions are aligned with the requirements prescribed in the draft implementing measure. 1.1.2 Objectives of task This is the first of three tasks that collectively address the first objective of the study. This task is intended to analyze historical reduction projects that reduce greenhouse gas emissions (GHG) from the flaring or venting of associated petroleum gas. The analysis focuses only on countries from which the European Union imports crude oil, with the primary focus being on the largest crude suppliers. Actual operating projects are the focus, but projects under review and consideration that have adequate data were included as well. In order to be included, the project information must be available for the cost of implementation,