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| Financing Solutions to Reduce Natural Gas Flaring and Methane Emissions
The IEA attributes the large portion of vented (as opposed to fugitive) emissions to (1) the broad definition of venting and (2) poor regulatory and enforcement standards in some countries, which result in operators deliberately venting rather than flaring, despite the former’s much higher impact on global warming. Vented emissions, in the definition adopted by the IEA and this study, also include emissions resulting from equipment design; fugitive emissions are defined as, in essence, the result of unforeseen events. In addition, examining methane leakage rates for different types of oil and gas production facilities globally, the IEA has observed higher rates in countries with poor regulation, oversight, and enforcement—for example, in Central Asia. Some of the lowest leakage rates are in advanced oil economies such as Norway. Similar to flaring, projections of future methane emissions are subject to a great degree of uncertainty. Long-term projections depend on a wide range of variables. In the IEA’s Sustainable Development Scenario, global oil and gas methane emissions in 2040 would fall to less than 20 Mt (more than a 75 percent drop). This scenario, however, relies primarily on the assumption of a significant fall in oil and gas consumption by 2040, which would drive methane emissions down even without explicit abatement policies and measures. The IEA recognizes that relying solely on demand trends would be a “huge missed opportunity” in the efforts to mitigate climate change (IEA 2020a).21
REGULATORY DEVELOPMENTS Review of gas flaring and venting regulation A World Bank study of gas flaring regulation and regulatory practices in 28 oil-producing countries has produced the following key lessons of what constitutes an effective regulation (GGFR, forthcoming): • The key approaches toward developing an effective gas flaring and venting regulation are prescriptive and performance-based: – The prescriptive approach is based on specific and detailed gas flaring and venting regulations, using detailed prescriptions of regulatory procedures and operational processes to make clear what is required. – The performance-based approach sets objectives and targets, leaving it to the operator to achieve these targets and demonstrate compliance. • The effectiveness of the regulatory approach suitable for any given country depends largely on – The suitability of the methods and targets considered for the curtailment of routine flaring and venting, which result from an up-front consultation process with public and private sector stakeholders; – The availability and quality of measured results; and – Adequate enforcement capabilities. • The relevance of flaring and venting across ministerial responsibilities can lead to unclear reporting lines, conflicting mandates, and reduced effectiveness of the regulatory agency. These issues apply particularly in countries with a dedicated ministry for oil and gas, but with flaring and venting falling under the responsibility of the ministry responsible for the environment. For example, in the US state of Colorado, a liaison officer has been put in
