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U.S. Oil and Gas Innovation Provides a Critical Guide Ahead of COP27

As world leaders descend on Egypt for the 2022 United Nations Climate Change Conference (COP27), it’s against a backdrop of a global energy crisis that has countries throughout the world facing energy insecurity heading into the cold winter months.

In what should be a solutions-focused event to discuss ways to address shared decarbonization goals, it’s worth remembering the proven successes we’ve already seen to reduce greenhouse gas emissions while also increasing global energy access – successes led by the U.S. oil and natural gas industry.

#1: The United States is Leading the Globe in Reducing Greenhouse Gas Emissions

The U.S. oil and natural gas industry is making huge strides in reducing its emissions, setting the standard on the world stage.

The EPA’s 2022 Greenhouse Gas Inventory shows that total U.S. greenhouse gas emissions are down 20 percent since 2005, including continued reductions of both CO2 and methane, thanks in large part to the switch toward natural gas for power generation.

In 2020 alone, the shift to natural gas provided an emissions reduction of 562 million metric tons of CO2 (MMT CO2), according to recent EIA reporting. That’s the emissions equivalent of 150 coal-fired power plants operating for a year! And since 2005, the increased use of natural gas for power generation has led to emissions reductions of 3,871 MMT CO2, or the same as removing more than 834 million gasoline-powered vehicles off the road.

Additionally, total CO2 equivalent of methane from petroleum and natural gas systems dropped by 15 percent despite rampant increases of oil and natural gas production.

And while the United States leads the world in oil and natural gas production, it’s far from the largest emitter of methane. In fact, North American methane emissions are a fraction of those coming from Asia, according to GHGSat’s latest methane emissions report. A whopping 69 percent of methane emissions in 2021 came from Asia, highlighting the clear contrast in U.S. industry innovation.

Nonetheless, U.S. oil and gas companies continue to make reducing emissions a key priority. One such example of this is the voluntary Environmental Partnership coalition which works to drive down emissions through advancements including reducing flaring, replacing gas-driven pneumatic controllers with low- or zero-emitting devices, and reducing leak occurrence rates.

The Partnership’s recently released 2022 Annual Report details the industry’s success in cutting flare intensity nearly in half for the second year in a row, reducing leak occurrence rates to 0.05 percent, and replacing over 22,00 gas driven controllers, demonstrating the industry’s commitment to modernizing equipment that better serves the environment.

This highlights an immense opportunity for cleaner, more efficient U.S. energy production to replace higher emitting foreign fuels, especially as the demand for fossil fuels is more apparent now than ever.

#2: U.S. LNG Exports are a Lifeline for Global Energy Access

A sure-to-be much discussed topic at COP 72 is how to balance energy access and security without jeopardizing climate goals. Fortunately, U.S. liquefied natural gas has been proven to be one of the best tools for lowering emissions worldwide, while also meeting growing demand.

We’ve seen the stark need for a diversified European energy portfolio this year as a result of Russia’s invasion of Ukraine and the weaponization of their energy resources. In the face of crisis, the U.S. natural gas market stepped up to the plate, providing a critical global lifeline to keep the lights on for families across Europe.

In fact, according to the International Energy Agency’s World Energy Outlook 2022, the United States is poised to soon become the largest exporter of natural gas in the world. By late 2021, the United States became the world’s largest LNG exporter for the first time, and in the first eight months of 2022, net LNG imports into Europe rose by two‐thirds compared with the same period a year earlier.

U.S. LNG exports rose by 12 percent this past year, with at least 71 percent of these exports going to the European Union and the United Kingdom. And as the graph below displays, Europe’s natural gas consumption will continue to be heavily reliant on LNG imports throughout the next decade.

While Europe still faces high prices and a supply crunch, it is hard to imagine what the state of Europe’s energy crisis would be without the United States’ ability to quickly divert natural gas supplies due to our abundance of critical resources.

In addition, a recent Rystad Energy study co-sponsored by the American Petroleum Institute (API) and the International Association of Oil and Gas producers (IOGP), emphasized Europe’s need for U.S. LNG as the most viable and competitive solution to meet demand in the long run. The study found that U.S. LNG will be responsible for meeting 50 percent of that demand in the next 10 years and over 75 percent by 2040.

This rising dependence is buoyed by a growing recognition of the climate benefits of natural gas. For example, the European Parliament in July voted to classify certain uses of natural gas as “green,” or climate-friendly.

This is also why the highest-emitting countries like China and India are driving LNG growth to address decarbonization challenges. The International Energy Agency forecasts that China will account for 22 percent of the total LNG demand by 2025, while India would represent 20 percent of global LNG trade by the same year.

To meet emissions goals and demand, government leaders must embrace LNG exports as a solution for providing cleaner and reliable energy.

#3: Oil and Gas Industry Critical for Food Insecurity, Combating Poverty

In addition to the traditional thought-of-uses for energy, oil and natural gas is also a crucial component in securing the global good supply and combating poverty, two topics that will likely also be present in the upcoming COP27 conference.

Earlier this year, Máximo Torero, a top economist with the U.N. Food and Agriculture Organization, warned against the growing calls to shift away from natural gas too quickly:

Speaking with Politico, Torero said:

“If you switch the energy mix too quickly, you will increase the price of energy. … Then you will increase the price of fertilizers, you increase the price of food, more people dying of hunger. So, what do you want?”

“We need to understand that actions have consequences. You cannot go just with the goal of climate without assuming that there is not an interlinkage over hunger.”

In addition, increased access to energy is a key building block for reducing poverty around the world. Increased energy reliability equals increased energy security for economic, health, and viability.

#4: Not an “Either/Or” Choice – Renewables Work Hand in Hand with Natural Gas

Finally, renewable energy sources and the future energy transition will surely be a dominant part of the COP27 discussion – but it’s important to remember that this isn’t an either/or choice between fossil fuels and new technologies. Energy in Depth has repeatedly explored the symbiotic relationship between renewable energies and natural gas, a position the National Renewable Energy Laboratory(NREL) has also emphasized.

In a study, NREL deemed natural gas the most reliable and cost-effective method to fill the gaps left behind by intermittent wind and solar. NREL’s “least-cost electricity mix” scenario projects 60-80 percent of generation from wind and solar, with natural gas (combined with carbon capture and storage) supplying the remaining energy to provide net-zero emissions energy in aggressive scenarios by 2035.

And earlier this year, John Kerry, U.S. Special Presidential Envoy for Climate, wrote an op-ed in the Wall Street Journal, endorsing natural gas’ relationship with renewables:

“Natural gas is central to a smart and achievable policy to cut greenhouse-gas emissions today. In the near term, that means pairing with renewables to clean up electricity.” (emphasis added)

Natural gas is also critical to grid reliability, helping support the intermittent nature of renewable energy where wind and solar alone can often fall short.

The International Gas Union (IGU) notes:

Natural gas is clearly the most effective partner for green energy, merely one of a number of qualities of natural gas that make it a pivotal element of the global energy mix today and tomorrow.” (emphasis added)

Bottom Line: As the world watches this key climate conference and looks for solutions, leaders shouldn’t ignore the proven innovation we’ve already seen. The key to meeting global energy demands while simultaneously lowering greenhouse gas emissions, increasing energy reliability, and providing countries with a pathway for increased prosperity starts with the U.S. oil and natural gas industry.

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