The United States is teaming up with Canada, Norway, Qatar and Saudi Arabia to target net-zero greenhouse gas (GHG) emissions from the five countries, all of which are major oil and gas producers.
The countries, which together account for about 40% of global oil and gas production, jointly said on Friday they are establishing a “Net-Zero Producers Forum.”
The announcement followed President Biden’s pledge during the Leaders Summit on Climate that the United States is doubling its nationally determined contribution or NDC for greenhouse gas (GHG) emissions to a 50-52% reduction from 2005 levels by 2030.
“To achieve our global climate goals we need cooperation from all major emitters, including oil and gas producing nations, to identify and act on solutions to phase out unabated fossil fuel emissions, while reducing emissions to the maximum extent possible in the interim,” said the U.S. Department of Energy.
The Net-Zero Producers Forum “will develop pragmatic net-zero emission strategies, including methane abatement, advancing the circular carbon economy approach, development and deployment of clean energy and carbon capture and storage technologies, diversification from reliance on hydrocarbon revenues, and other measures in line with each country’s national circumstances,” the countries said.
The United States, Saudi Arabia and Canada were the world’s first, second and fourth-leading oil producers in 2020, according to the U.S. Energy Information Administration, with Russia ranking third.
Biden is targeting a carbon emissions-free electric power sector by 2035 and a carbon-neutral economy by 2050, though it remains unclear what role the administration sees for oil and gas in achieving these targets.
Analyst projections show that natural gas in particular is likely to continue playing a central role in global energy production even if human-induced global warming is held to under 2 degrees C, and that expanding and upgrading natural gas infrastructure may indeed be necessary to meet the herculean task of deep decarbonization.
The American Petroleum Institute (API), the leading U.S. oil and gas lobbying group, has said it supports the ambitions of the 2015 United Nations climate accord, as well as an economy-wide price on GHG emissions.
Canada joined the United States last week in strengthening its NDC to a 40-45% reduction from 2005 levels by 2030, up from its previous target of 30%. Russian president Vladimir Putin, meanwhile, said at the summit one of his “top priority tasks…in terms of socioeconomic development” is to “substantially limit cumulative emissions in our country by 2050.”
He stressed the importance of curbing emissions of methane, citing that it accounts for about 20% of anthropogenic emissions, and said Russia continues to increase utilization of natural gas produced as a byproduct of oil production, aka associated gas.
Qatar, for its part, was the world’s second-leading liquefied natural gas (LNG) exporter last year, sending out 77.1 million tons (Mt), according to the International Group of Liquefied Natural Gas Importers. Australia took the No. 1 spot at 77.8 Mt.
State-owned Qatar Petroleum (QP) this year unveiled a sustainability strategy that aims to cut the GHG emissions intensity at its LNG and upstream facilities to eliminate routine flaring of natural gas by 2030.
Saudi Arabia’s Crown Prince Mohammed bin Salman in late March unveiled the Saudi Green Initiative, which includes goals “to reduce carbon emissions by more than 4% of global contributions, through an ambitious renewable energy program that will generate 50% of the Kingdom’s energy from renewables by 2030,” the Saudi government said.
State-owned Saudi Arabia Oil Co., better known as Aramco, is aiming to leverage the scale and low production costs of its immense conventional natural gas and oil reserves to underpin blue hydrogen exports as the world shifts to low carbon emissions.
Norway, meanwhile, was among the first countries to submit an enhanced climate target under the 2015 Paris Climate Agreement, announcing in 2020 that it will target an emissions reduction of at least 50% by 2030 compared to 2005 levels.
Commitments are one thing, but achieving them is quite another, according to analysts at Evercore ISI. Evercore analysts led by James West noted in a research note after Biden’s announcement that the United States is currently on track for a 12% emissions reduction by 2030, far below the 50-52% cut pledged by the president.
“The task at hand will be difficult, especially with all the political and policy maneuvers which will be necessary,” the Evercore team said. “In our view a price for carbon emissions is a necessary stick to accelerate energy transition in the United States.”
Meeting Biden’s goals “will require a major increase in residential and especially utility scale solar, the birth of a serious offshore wind business in the U.S. plus a continued buildout on land, accelerated growth in the hydrogen economy and a major expansion in power storage,” the Evercore analysts said. They also said there needed to be major expansions of electric vehicles and carbon capture, utilization and storage.
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