Emissions

Many have argued that U.S.-sourced LNG can be instrumental in combating climate change by helping countries around the world replace coal-fired generation with natural gas-fired power. While this argument carries a lot of force in the eyes of many politicians and LNG marketers, the questions of exactly how — and to what extent — LNG can replace coal need to be asked. In today’s RBN blog, we’ll look at the challenges that the expanded use of LNG faces in countries with high coal utilization and the possible means of overcoming them. 

The Biden administration has placed some big bets on clean hydrogen, seeing it as a replacement fuel for some hard-to-abate industries and putting it at the heart of its long-term decarbonization efforts. All of these bets are backed by a brand-new tax credit. But the goal isn’t just to drive production of more hydrogen — it’s also to make hydrogen in a specific way, with measurable decreases in greenhouse gas (GHG) emissions. That means producing hydrogen that qualifies for the tax credit is going to be a lot easier said than done. The proposed rules include a concept called deliverability — one of the “three pillars” of clean hydrogen — that adds further challenges to producers hoping to cash in on the tax credit and puts into further peril any number of potential projects. In today’s RBN blog, we’ll explain how deliverability works, how it fits into the proposed rules, and the challenges it will pose for hydrogen producers and power generators alike. 

Crude oil, natural gas and NGL production roared back in 2023. All three energy commodity groups hit record volumes, which means one thing: more infrastructure is needed. That means gathering systems, pipelines, processing plants, refinery units, fractionators, storage facilities and, above all, export dock capacity. That’s because most of the incremental production is headed overseas — U.S. energy exports are on the rise! If 2023’s dominant story line was production growth, exports and (especially) the need for new infrastructure, you can bet our blogs on those topics garnered more than their share of interest from RBN’s subscribers. Today we dive into our Top 10 blogs to uncover the hottest topics in 2023 energy markets. 

Many governments around the world are looking for ways to incentivize reductions in greenhouse gas (GHG) emissions and two approaches have received the most attention: cap-and-trade and a carbon tax. The European Union (EU) has chosen the former, Canada has opted for the latter, and the U.S. — well, that’s still to be determined. It’s logical for oil and gas producers, refiners and others in carbon-intensive industries to wonder, what does it all mean for us? In today’s RBN blog, we look at Canada’s carbon tax (which it refers to as a “carbon price”), explain how it works, and examine its current and future impacts on oil sands producers, bitumen upgraders and refiners. 

Given all the recent attention, you’d think the prospects for carbon-capture project development are fantastic. In the U.S., last year’s Inflation Reduction Act (IRA) featured significant increases in the 45Q tax credit for carbon sequestration, improving the economics for a wide range of carbon-capture projects. On a global level, it seems clear that efforts to reduce greenhouse gas (GHG) emissions and reach a net-zero world will continue for a long time to come. Nearly every plan to reach that target includes a significant reliance on carbon capture, with the International Energy Agency (IEA) forecasting that 7,600 million metric tons per annum (MMtpa) of carbon dioxide (CO2) — that’s 7.6 gigatons per year — will need to be captured and sequestered by 2050. We are a long way from those levels, given that most estimates put global carbon-capture capacity at a little more than 40 MMtpa today, or less than 1% of what the EIA thinks we’ll need in less than 27 years. In today’s RBN blog, we look at the main factors holding back the wider commercialization of carbon-capture initiatives in the U.S.

Cargo ships move more than 80% of the world’s internationally traded goods, making them essential to the global economy, but they’ve traditionally been fueled by heavy fuel oil or marine gasoil, both of which are emissions-intensive. With 60,000 or so ships in service, they account for an estimated 2.8% of global greenhouse gas (GHG) emissions, a percentage the International Maritime Organization (IMO) would like to reduce. At the 80th session of the IMO’s Maritime Environment Protection Committee (MEPC) in July, the group adopted a provisional agreement to eliminate GHG emissions from shipping by a date as close to 2050 as possible, with intermediate goals for emissions reduction by 2030 and 2040. Clearly, radical innovations will be required to meet the IMO’s goals. In today’s RBN blog, we look at some of the initiatives directed at emissions reduction in shipping and the challenges to (and opportunities for) operational improvements, especially regarding LNG carriers.

A great deal of attention has been heaped on the carbon-capture industry over the past couple of years, from its inclusion in major federal legislation such as 2021’s infrastructure bill and last year’s Inflation Reduction Act, plus all sorts of recently announced carbon sequestration projects. Still, there are plenty of concerns that the technology is not fully baked, that many of the projects are not ready for prime time, and that few have the practical know-how to deploy carbon capture and sequestration (CCS) at scale. But what if there was a company that has been doing carbon sequestration for a very long time — decades in fact? And what if that company has built out a huge carbon dioxide (CO2) collection, distribution and sequestration system on the Gulf Coast along with concrete plans for a massive expansion of this network to capture a lot more manmade, “anthropogenic” CO2, not in decades but in just a few short years? A company like that would be pretty much the ideal acquisition candidate for a cash-flush multinational with big ESG goals and strategies, right? As we discuss in today’s RBN blog, that is just what is happening with ExxonMobil’s acquisition of Denbury, a deal that will create today’s undisputed leader in CCS.

It has become abundantly clear over the past couple of years that energy transition isn’t going to be a straight line leading directly to abundant carbon-free power and a net-zero world. All sorts of obstacles have popped up, indicating that the energy industry’s trilemma of availability, reliability and affordability not only clash with each other, they can also conflict with environmental priorities. The challenge is being felt now in Hawaii, where a commitment to expanding energy production from renewable sources and tamping down the use of fossil fuels while also keeping prices under control and reducing pollution is turning out to be no easy feat. In today’s RBN blog, we look at Hawaii’s recent efforts to phase out coal- and oil-fired power generation, why that’s turned out to be easier said than done, and what it all means for environmental performance and energy prices.

As environmental protection and decarbonization efforts have ramped up in the past few decades, policymakers around the world have come up with a variety of schemes to lower industrial emissions. The Kyoto Protocol in 1997 committed developed nations to reduce their greenhouse gas (GHG) emissions by a defined amount from 1990 levels by 2012. The treaty was never brought up for ratification in the U.S. Senate, which unanimously opposed it because developing nations — such as China — weren’t included. Across the Atlantic, the Kyoto Protocol was received much more favorably, with all 15 members (at the time) of the European Union (EU) ratifying the treaty in 2002. In 2005, the EU launched the Emissions Trading System (ETS) as a mechanism to help reduce emissions from power plants, industrial facilities and commercial aviation, covering nearly half of total EU emissions. In today’s RBN blog, we explain the European cap-and-trade system, examine how the ETS is affecting the EU’s refining industry as a whole, and drill down to the refinery level to discuss disparities in carbon-cost exposure from one refinery to the next.

By now, just about everyone is aware of and has been impacted by efforts to reduce greenhouse gas (GHG) emissions — and methane especially — as a way of meeting global climate goals, but that doesn’t mean everyone is on the same page. The energy industry is a leading source of methane emissions in the U.S., but with nearly 1 million active wells across the country and not much common ground on the actual scope of methane emissions and how best to reduce them, finding a path forward without overburdening the sector and its customers is more than a little tricky. In today’s RBN blog, we preview our latest Drill Down Report on efforts to reduce methane emissions.

The oil and gas industry is being pushed by regulators, third parties and investors to better identify and mitigate its methane emissions, especially the few “super-emitter” sites that make outsize contributions to overall emissions. But while operators are ramping up capital spending on new technology, one thing has become clear: There is no silver bullet when it comes to reducing emissions, and each option includes one or more drawbacks, including source attribution, costs, quantification, and detection limits. In today’s RBN blog, we’ll break down the advantages and disadvantages of the different measurement technologies.

Over the past couple years of energy market turbulence, pretty much everyone has come to acknowledge that the U.S. — and the rest of the world — will continue to require refineries and refined products for decades to come. It’s also likely, though, that U.S. refiners, like their European counterparts, will be required to do more to reduce the volumes of carbon dioxide (CO2) and other greenhouse gases (GHGs) generated during the process of breaking down crude oil and other feedstocks into gasoline, diesel, jet fuel and other valuable products. And, thanks to new federal incentives, it might even make sense for refineries to capture and sequester at least some of the CO2 they can’t help but produce. In today’s RBN blog, we begin a series on refinery CO2 emission fundamentals, the differing policies that are applied here in the U.S. and abroad, and how those policies might ultimately influence refining competitiveness.

Oil and gas companies across the value chain are facing new pressures to manage and reduce methane emissions. Their ability to access premium markets and buyers, appeal to investors and avoid costly fees depends on developing a credible plan to measure and reduce methane emissions. At the very least, the industry’s regulatory outlook, its non-governmental quasi-oversight and its access to capital are changing in ways that make understanding sometimes inconsistent emissions data vitally important. In today’s RBN blog, we explore the recent changes and the mounting external pressures around methane emissions.

Over the past five years, the North American oil and gas industry has undertaken a major strategic shift, embracing the global push to decarbonize by, among other things, emphasizing the greener emissions profile of natural gas vs. coal and taking aggressive steps to reduce the volumes of methane, carbon dioxide and other greenhouse gases emitted during the production, processing and transportation of just about every kind of hydrocarbon. It’s a real challenge, though. Operators face a seemingly endless and overwhelming set of choices about how best to approach emissions reductions, which technologies to use, which programs to join, and how to interpret new emissions-measurement data, to name a few. In today’s RBN blog, we begin a look at how operators can achieve key environmental goals while protecting — even improving — their bottom line and meeting a host of important goals, from reducing the cost of capital and managing investor pressure to improving realized prices and market access.

The U.S. is gearing up to provide billions of dollars in financial support for a series of regional clean hydrogen hubs and had what amounts to an informal cutdown at the end of December, announcing that 33 project proponents had been formally encouraged to submit a full application this spring. Although the Department of Energy (DOE) didn’t name any of the projects on the “encouraged” list, we’ve been able to identify many of the proposals — and add five more in today’s blog — even though a lot of project details remain under wraps. In today’s RBN blog, we’ll look at the new projects on our list and examine the major factors that are likely to influence a project’s viability.