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Sustainability, reducing greenhouse gas emissions, and the energy transition have been hot button issues for the oil and gas industry as the sector looks to build back from the COVID-19 pandemic. Policy makers around the world have been examining methods to encourage companies to reduce carbon emissions. Among these, instituting carbon pricing, a term referring to a policy that would put a dollar cost on emissions that emitters would have to pay, has emerged as a popular topic of discussion. A new report from multinational professional services firm Pricewaterhouse Coopers (PwC) has found that an international carbon price floor (ICPF) for carbon dioxide and other greenhouse gas emissions could reduce global greenhouse gas emissions by 12.3 percent. Encouragingly, the firm found that the cost of implementing the policy would be equal to less than one percent of GDP, and, more importantly, that this cost would effectively pay for itself by avoiding economic losses associated with global warming. “We found that introducing an ICPF could be done without severe economic damage to livelihoods and business, although the effects would be somewhat uneven across the world. The costs to society and business of failing to act are far greater,” says Robert Moritz, global chairman of the PwC network. PwC analysed a proposal from the International Monetary Fund announced in June to set an ICPF of greenhouse gas emissions that by 2030 would reach $75 per tonne for high-income countries, $50 per tonne for middle-income countries, and $25 per tonne for low-income countries. Importantly, this policy is designed to encourage greenhouse gas emissions to be lowered everywhere, rather than emitters simply moving operations to countries were the cost of greenhouse gas emissions would are lower. Today, carbon is priced anywhere between $0 and $130 per tonne of CO2 equivalent in different territories around the world. As such, countries have been reluctant to place onerous costs on the production of carbon due to the risk of decreasing their international competitiveness. By implementing a global policy, this problem is greatly reduced – along with reducing the possibility businesses shifting carbon production from one area to another in a bid to avoid additional costs, a dynamic referred to as carbon leakage. PwC’s scenario found that an ICPF would not lead to major carbon leakage, but also found that its impact would be uneven across territories and sectors, with lower-income countries that rely heavily on coal for energy being harder hit, for example. As such, PwC noted that examining the use of the revenue gained from carbon pricing would be key to understanding the efficacy of the policy. “The political and technical challenges remain very significant, but we hope the research will encourage countries to consider pricing carbon in such a way that it scales up effort to reach net zero in time to limit the worst effects of climate change on people and our planet,” Moritz says. Revenues that would be raised from a carbon pricing policy would be significant, which could then be used to help ease the transition. In some regions, PwC found that revenues from an ICPF could be as high as three percent of GDP. In the firm’s scenario, these funds are collected and then redistributed to all regions where the revenues were collected, creating, in effect, a carbon dividend which would help households that have been hit by the additional costs caused by the introduction of the ICPF. Additionally, these revenues could be used to supplement innovation research, create jobs, or lower taxes. PwC estimates that for low-income economies, only 13 percent of revenues raised by the ICPF in high-income economies would be needed to compensate for GDP losses caused by the policy. In particular, the firm points to the South African Customs Union and China as regions which would be most heavily impacted by the ICPF. In these regions, PwC believes carbon pricing revenues could reach 2.8 percent and 1.7 percent of GDP, respectively. “The results of analysis of the ICPF are extremely positive. Public-private cooperation will be key for next steps and to accelerate efforts for a more sustainable and inclusive recovery,” Børge Brende, President at the World Economic Forum says. The firm also analysed the differences between the application of an ICPF if it were limited only to high-income countries versus middle-income countries as well. PwC found that if only high-income countries were included, the global emission drop would reach just 1.9 percent, compared to estimated 2030 figures without an ICPF. However, if middle-income countries, particularly China, are included then the drop in emissions would jump to eight percent. For the 12.3 percent figure to be hit, an ICPF would need to be applied to all countries globally. If the ICPF were implemented globally, and when combined with countries’ existing pledges for emission reductions, global warming could be limited to 2C, the firm said. While this figure is still significantly higher than the 1.5C limit that scientists have previously pointed to as essential to prevent catastrophic climate damage, PwC believes that an ICPF, combined with additional climate ambition and action, would give the world a much greater chance of adhering to 1.5C.

Webinar: How digital technology will impact oil & gas decarbonisation goals

by Carla SertinSeptember 13, 2021September 14, 2021

Join us on 27 September for a virtual discussion about the potential for digital technology to power the energy transition

Digital technology is one of the tools that oil and gas companies can use as they aim to lower their own carbon emissions, and look ahead towards a lower-carbon future. As companies work on decarbonising their own operations, business workflows will shift, and oil and gas companies will have to leverage digital technology to maintain […]

Brazil to lead oil production from projects in Americas in 2025

by Carla SertinSeptember 13, 2021September 13, 2021

In Brazil, Bacalhau, Itapu and Buzios V are expected to collectively contribute about 39% of the crude and condensate production in 2025

Brazil is expected to contribute about 48% or 1,350 thousand barrels per day (mbd) of Americas crude and condensate production in 2025 from planned and announced projects (new build projects, excluding the US L48), according to GlobalData, a leading data and analytics company. GlobalData’s latest report, ‘Americas Upstream Development Outlook, 2021–2025’, reveals that 1,164 mbd […]

Exploration & Production

Oil rises on US production lag, Hurricane Ida impact and OPEC report

by Nishant Bhushan, oil markets analyst, Rystad EnergySeptember 13, 2021September 13, 2021

Oil prices are starting the week with gains as a result of the persistent impact of Hurricane Ida on US production. The prospect of further bad weather and an expected demand revision by OPEC are also offering support

The impact of Hurricane Ida is lasting more than the market expected and as some oil production capacity remains shut this week, prices are rising on supply not being restored and therefore not reaching refineries that have restarted operations quicker than producers. The threat of more disruptions from extreme weather is also a cause of […]

DRILLING & PRODUCTION, Exploration & Production

Venezuelan heavy oil reserves to be stranded as international players divest

by Carla SertinSeptember 13, 2021September 12, 2021

Due to high risks and the unstable deteriorating economy in the country, international players no longer see an upside in Venezuelan projects, GlobalData says

Two international oil and gas players in Venezuela, TotalEnergies and Equinor, recently divested their respective 30.32% and 9.67% interest in the largest project, Petrocedeno, to the state-owned Petróleos de Venezuela S.A (PDVSA) company. According to GlobalData, this means that due to high risks and the unstable deteriorating economy in the country, international players no longer […]

News

3D printing stainless steel now a reality for oil and gas

by Carla SertinSeptember 11, 2021September 9, 2021

Financial support enables Australian company to print stainless steel

An innovative 3D metal printing process developed by a Melbourne-based manufacturing technology business enables the printing of corrosion resistant, stainless-steel components on site, thanks to a vital funding injection. SPEE3D was established in 2015 by Byron Kennedy and Steven Camilleri with the specific aim of overcoming the challenges of making metal parts more conveniently. Today, […]

Energy Transition

Oil companies must plan major production drop by 2030s to meet 1.5°C target

by Carla SertinSeptember 9, 2021September 9, 2021

$1 trillion at risk if companies continue to pursue business-as-usual investment, according to Carbon Tracker Initiative

The world’s largest listed oil and gas companies cannot be considered aligned with global climate targets unless they plan for major production declines, with half facing cuts of 50% or more by the 2030s, warns a new report from the financial think tank Carbon Tracker released today. It reveals that companies are still approving billions […]

Exploration & Production

Oil price update: Oil rises on US production lag and geopolitics

by Bjornar Tonhaugen, head of oil markets, Rystad EnergySeptember 8, 2021September 8, 2021

Oil prices are rising today as shut-in US production struggles to come back as fast as refinery capacity does, and as negotiations that could bring back Venezuelan barrels so far failed to conclude on an agreement

It is a great Wednesday for oil prices as today they are receiving support from all sides. US production that was shut-in due to the Hurricane Ida is struggling to return as fast as refinery capacity does, and that means refinery demand is not met with the supply it normally would from producers. Another important […]

News

These topics will be at the centre of the Oil & Gas Future Forum

by Carla SertinSeptember 8, 2021November 7, 2021

The Oil & Gas Future Forum is virtual and free to attend, and will comprise three panels starting at 2PM GST on 27 October–join us to hear from industry experts and to ask them your questions directly! Panel 1 – Hydrogen on the Horizon In our first discussion of the day, we will explore the […]

Exploration & Production

Oil prices fall on demand trends and trade data

by Carla SertinSeptember 7, 2021September 8, 2021

Oil prices fell today as the two main grades, Brent an WTI, are being affected in different ways by demand trends and trade data

Brent futures started trading a tad higher this morning as a result of traders seeing a moderate buying opportunity after prices dropped yesterday following the Saudi selling price cuts. Brent also got boosted by some positive news flow on Covid developments and stronger-than-expected Chinese trade data, both of which are interpreted as bullish for economic […]

Exploration & Production

Oil down on Saudi price trimming

by Bjornar Tonhaugen, head of oil markets, Rystad EnergySeptember 6, 2021September 6, 2021

Oil prices followed the Saudi pricing hint today and dipped as the oil giant Saudi Aramco cut selling prices to Asia for October

It’s no surprise that oil prices took a hit today as the market got a clear price direction from one of the industry’s pricing leaders, Saudi Aramco. When the Saudi giant cuts its selling prices to Asia for October, signaling it sees the supply-demand relationship slightly shifting, traders can’t but follow down that path today. […]

Search results

Webinar: How digital technology will impact oil & gas decarbonisation goals

Brazil to lead oil production from projects in Americas in 2025

Oil rises on US production lag, Hurricane Ida impact and OPEC report

Venezuelan heavy oil reserves to be stranded as international players divest

3D printing stainless steel now a reality for oil and gas

Oil companies must plan major production drop by 2030s to meet 1.5°C target

Oil price update: Oil rises on US production lag and geopolitics

These topics will be at the centre of the Oil & Gas Future Forum

Oil prices fall on demand trends and trade data

Oil down on Saudi price trimming

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