The global transition to renewable energy systems will be mineral intensive and, under the current linear economy conditions,...
The global transition to renewable energy systems will be mineral intensive and, under the current linear economy conditions,...
Mining, Metals and Resource-based Development
Gas flaring is a major global challenge. Despite bold commitments from governments, national oil companies (NOCs), international oil companies (IOCs), and leading independents, global flaring levels have stagnated at around 140–150 BCM per year, emitting up to 1 billion tonnes of CO2-equivalent greenhouse gases annually, while representing as much as $30 billion per year in potential lost revenue.
Numerous studies have outlined how flared gas can be captured and monetized – through power generation, fertilizers, petrochemicals, LNG and pipeline exports, among other use cases. Substantial reductions in flaring are not only technically achievable but can often create significant commercial value with attractive returns. Compared with other levers, reducing gas flaring is a material decarbonization “quick win.”
This report, co-authored with Capterio and generously supported by the Grantham Foundation, illustrates the potential to reduce flaring with six case studies, going beyond analyzing the “what” and “why” of flaring, and focusing on the “how” to unlock and accelerate delivery. Three project-based case studies present projects that have successfully captured and utilized associated gas in countries and regions that are not among the global leaders in flare reduction (Angola, the Kurdistan Region of Iraq, and Argentina – links coming soon). Three country-based case studies (Federal Iraq, Egypt, and Algeria – links coming soon) highlight not only where modest progress in flare reduction has been observed, but also where opportunities to do more can and should be developed.
The report offers three core findings.
First, governments must foster an investable environment that facilitates decisive action, leveraging existing policies and infrastructure and supported by incentives/penalties that are applied and enforced.
Second, collaboration among governments, NOCs, and IOCs is vital, requiring a “country-first” perspective to drive synergies in national energy planning and flare capture projects, to enshrine a data-driven approach linking assets and projects, enforced penalties and creativity in fiscal structuring to ensure that the appropriate incentives are in place to make tackling flaring a true priority for operators, while not depriving the government with much needed fiscal resources.
Third, government and company leadership must engage, empower, and mobilize resources effectively. Ambitions need not only grand initiatives, but also grit.
Based on these findings, the report offers two sets of recommendations:
The first set of recommendations takes a novel approach by going beyond the calculation of direct emissions from flaring, developing a framework to analyze the true “net” climate benefit from flare reduction projects. We believe our framework can make a valuable contribution to the prioritization of flare reduction opportunities based on their decarbonization potential, over and above the analysis of economic value and opportunity.
Our second set of recommendations focuses on the commercial, economic, and financial aspects of flare reduction. They are multi-faceted and include the formation of dedicated “national task forces,” the mapping and prioritization of idle gas infrastructure to prevent carbon lock-in, the development of gas processing hubs or clusters, the creation of innovative “inside/outside the ringfence” policies, and the enforcement of (sometimes already established) flaring penalties and restrictions. Additionally, we emphasize the critical need to mobilize new and diverse sources of capital for flare capture projects, particularly to bridge temporary negative cash flow of governments and NOCs during the early phases of projects. Lastly, we underscore the deployment of data-driven strategies and an unwavering commitment to operational excellence. With the industry’s reputation and billions of dollars and tonnes of GHG emissions at stake, adopting a bold and actionable framework is essential to achieving meaningful progress and delivering results.
The authors are very grateful for the Grantham Foundation’s support. The Grantham Foundation for the Protection of the Environment is a private foundation established in 1997 with a focus on protecting and improving the health of the global environment.
Mining, Metals and Resource-based Development / Discussion paper
