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Gas flaring reduction: contribution from carbon finance

Gas flaring reduction: contribution from carbon finance. Sectoral policies on GHG emission mitigation Moscow Carbon Market Forum April 28-29, 2008 Alexandrina Platonova-Oquab The World Bank. New approaches in the gas flaring reduction policy in Russia.

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Gas flaring reduction: contribution from carbon finance

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  1. Gas flaring reduction:contribution from carbon finance Sectoral policies on GHG emission mitigation Moscow Carbon Market Forum April 28-29, 2008 Alexandrina Platonova-Oquab The World Bank

  2. New approaches in the gas flaring reduction policy in Russia • Russian government has been developing a set of measures aimed at gas flaring reduction • Balanced combination of regulatory and economic tools is key • Cumulative positive effect of gas flaring reduction is significant both from the environmental (local and global) and economic perspectives: • One of the major sources of atmospheric pollution in Russia* • currently, gas flaring in Russia is emitting at least 50 MtCO2e per year *Source : Oil & Gas Journal Russia, March, 2008

  3. Oil companies’ programs for gas flaring reduction • APG utilization programs are being developed by oil companies: • Several projects are considered under the framework of the Joint Implementation • Implementation timeline realistically requires several years to meet satisfactory levels of APG utilization

  4. Harnessing opportunities through carbon finance • Achieving higher satisfactory level of the AG utilization will take time • Opting for the best available opportunities is key • Some projects will remain uneconomic due to specific barriers • Carbon finance could support the use of most efficient alternatives that often require significant additional investment… • and accelerate the achievement of sectoral goals

  5. Demonstrated impact of carbon finance on gas utilization (CDM projects) Al-Shaheen Gas-to-GPP (Qatar) • APG utilized: 1500 Mln.m3/y • CO2e reductions: 2.5 MtCO2/y • Leveraged investment: USD 260Mln Tambun Gas-to-LPG (Indonesia) • APG utilized: 260 Mln.m3/y • CO2e reductions: 0.4 MtCO2/y • Leveraged investment: USD 30Mln Kwale Gas-to-Power (Nigeria) • 480 MW CCGT • APG utilized: 600 Mln.m3/y • CO2e reductions: 1.5 MtCO2/y Total results for 10 years • GHG emission reductions: 44 MtCO2e • APG utilized: 23.6 Bln.m3

  6. Expected benefits of carbon finance in Russian context • Incentivizing project developers to select the Best Available Technologies • Contributing to the implementation of new technological solutions: • Gas conversion to products: GTL, methanol, DME • Gas to reinjection • Switching projects with marginal economics from “-” to “+” • Boosting economics of gas utilization programs grouping APG sources under unique umbrella (scaling effect)

  7. Potential role of JI gas flaring reduction in the Russian climate change policy • Project-based mechanisms have provided tool to accurately evaluate baseline and additionally of projects • Confidence in capabilities of Independent Entities in assessing compliance with JI requirements • Carbon finance has demonstrated substantial leverage effect on investment • Carbon finance could strengthen the scope of short and medium term gas utilization activities in Russia • JI window may be closing: could Green Investment Scheme complement JI?

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