Explosive Growth In Low-Carbon Certified Natural Gas Signals Real Change
This is the second in a series of five articles on the 2022 Voluntary Initiatives Report by Highwood Emissions Management. To start at the beginning, visit: Voluntary Initiatives 101: Going above and beyond emissions regulations.
A New Paradigm
New pressures on industry present operators with exciting opportunities and daunting risks. One of these opportunities is for operators to go ‘above and beyond’ regulatory decarbonization requirements by participating in a Voluntary Emissions Reduction Initiative.
In the 2022 edition of our Voluntary Initiatives Report we review 24 distinct opportunities for oil and gas companies to set ambitious targets, achieve reductions, demonstrate progress, and take credit for strong performance. In this article, we get into the details of the report findings, including new developments and ongoing trends.
New Developments in 2022
Our updated report found that the voluntary initiatives space is rapidly evolving and a great deal has changed in the past year. In particular, participation is growing rapidly, especially for independent certifications, with trillions of cubic feet now certified. The number of certifications rose dramatically for Equitable Origin 100 (from 2 in 2021 to 23 in 2022), MiQ (from 0 to 14), and for Trustwell (from 9 to 33). We have also seen the rise of a number of new initiatives, including the Xpansiv Digital Fuels program, which now has > 50 participating companies.
We have seen that focus has shifted from the production sector to the entire oil and gas supply chain. In 2021, most of the initiatives were focused on the supply side, helping producers to lower emissions. Today, growing interest and participation exists from operators in gathering and boosting, transmission and storage, processing, liquefied natural gas, and distribution. These operators want to understand how natural gas molecules’ carbon intensity can be tracked from production to end use as they pass through multiple companies and processes.
Another important development is the growing use of measurement-based technologies in initiatives such as MiQ, Veritas, OGMP 2.0, and others. The importance of methane measurement from different spatial and temporal scales is now widely acknowledged. We cover this topic in greater detail in Article 4 of this series and in a Feature Section ‘The Role of Measurement’ on pages 32-33 of the report.
Finally, we’re seeing that initiatives are becoming more granular. In several cases, industry-specific or even segment-specific guidance is on the rise. For example, a variety of new LNG-segment initiatives have been developed to prove low-carbon cargoes and drive better upstream and midstream performance.
A number of findings from the 2021 report hold true in the 2022 report. For example, we find that the use of independent auditing to verify participant performance remains uncommon. While a growing number of certifications require third-party audits, most initiatives rely on self-reported data. We find that the more rigorous an initiative is, the lower the participation levels, on average. Stringent rules are less appealing to some operators because they are more difficult to achieve and therefore most costly.
As in 2021, we find that Scope 2 and Scope 3 emissions are commonly excluded from voluntary initiatives because they are difficult for operators to control. In the future, we imagine that consideration of Scopes 2 and 3 will become more important. We also find there is flexibility in the adoption of methane monitoring and abatement technologies. In other words, initiatives tend to be outcome-based, giving operators the flexibility to reduce emissions in ways that make sense for them.
Finally, we find that the different categories of initiatives (certifications, guidelines, and commitments) are not mutually exclusive and can build on each other. For example, a company may use the Veritas guideline to comply with the MiQ certification. Less stringent initiatives should not be seen as less valuable — they provide a steppingstone for operators beginning their emissions management journey.
How can I learn more?
The first article in this series introduced Voluntary Initiatives – but only scratched the surface. In this second article we discussed the main findings from our report. Article 3 will present a value proposition for engaging in these initiatives, Article 4 will discuss the role of technology, and Article 5 will speculate on the future of differentiated gas.
In the meantime, you can download the free report to dive into the details, and don’t forget to register for our free interactive mini-conference, to be held on Sept. 21, 2022, in collaboration with Petroleum Technology Alliance Canada.