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Global Gas Flaring Reduction Partnership (GGFR) A Sector Specific CDM Capacity Building Effort

Global Gas Flaring Reduction Partnership (GGFR) A Sector Specific CDM Capacity Building Effort. Host Country Committee Annual Meeting, Cologne April 30th, 2007. GGFR and CDM/JI. Gas flaring and venting, what is the issue? Why GGFR and carbon finance? Capacity building efforts

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Global Gas Flaring Reduction Partnership (GGFR) A Sector Specific CDM Capacity Building Effort

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  1. Global Gas Flaring Reduction Partnership (GGFR) A Sector Specific CDM Capacity Building Effort Host Country Committee Annual Meeting, Cologne April 30th, 2007

  2. GGFR and CDM/JI • Gas flaring and venting, what is the issue? • Why GGFR and carbon finance? • Capacity building efforts • Overall flaring reduction demonstration projects • Flaring activity to expect in the future

  3. Where gas is flared? Europe: 3 bcm CIS: 15-60 bcm Middle East: 30 bcm North America: 5-7 bcm Asia: 7-20 bcm Africa: > 45 bcm Central andSouth America: 10 bcm

  4. Why is gas flared ?Some typical barriers “Hard” causes: • Risks of gas re-injection in oil reservoir • Distance from significant gas markets (“stranded gas”) • Reliability of supply from associated gas • Gas Infrastructure constraints • Lack of • or access to it

  5. Why is gas flared?Some typical barriers “Soft” causes: • Limited institutional, legal and regulatory framework for gas, including associated gas: gas terms (or absence of) in existing oil development agreements • Supporting fiscal terms (gas price, equity share, tax structure, etc) • Underdeveloped domestic market for gas and gas products (LPG, CNG, fuel methanol, power, etc.) and gas product pricing • Funding constraints and need for coordinated actions by multiple stakeholders

  6. Why is gas flared?…impact on the environment • Each m3 of gas flared is a waste of resources, and generates nearly 2 kg of CO2 in atmosphere • If vented, a m3 of methane is 5 times more damaging than when it is flared • In many countries, but not all, venting is prohibited mainly for safety reasons • Gas Flaring and Venting have to be reduced: It wastes resources, prevent gas development, and harms the atmosphere

  7. How much gas is flared ? • GGFR estimates that global flaring is around 150 to 200 bcm or >400 MtCO2eper year • In perspective, all annual ER from CDM/JI projects equal 348 MtCO2 • Major areas are: Russia, Africa and Middle East • Flaring in Africa alone could be used to produce 50% of current power consumption of the continent

  8. Reported flaring levels : 2004 & 2005 30 25 2004 2005 20 15 bcm 10 5 0 UK Iran Iraq USA Libya Brazil Qatar Gabon Nigeria Congo Angola Mexico Algeria Kuwait Indonesia Cameroon Venezuela Kazakhstan Russia (total) Equatorial Guinea

  9. GGFR Public and Private Partners Countries/NOCsIOCs Algeria (Sonatrach) BP Angola ChevronTexaco Cameroon (SNH) ENI Chad ExxonMobil Ecuador Marathon Oil Equatorial Guinea Norsk Hydro Indonesia Shell Kazakhstan Statoil Khanty Mansiysk (Russia) Total Nigeria Qatar (as of 2007) Donors Multilateral Organizations Canada The World Bank European Union(as of 2007) OPEC Secretariat France (as of 2007) Norway USA

  10. Carbon FinanceCapacity Building – Reason for action Why? • To help initiation of DNAs in GGFR partner countries (Angola, Nigeria, Indonesia, Algeria, and Russia) • To better understand how flaring/venting reduction projects could earn carbon credits and achieve results • Chance to make a difference: projects offer large, real, measurable ERs • Industry engaged but not strongly linked with emerging processes • Few projects back then (and still now, 17/1700) • Few AG utilization methodologies approved (2/80) • SD benefits: from small to large scale projects

  11. Carbon FinanceCapacity Building - Beginnings • Started in 2003 by request from Partners to: • Build understanding within National Oil Companies (NOC) and International Oil Companies (IOC), and other relevant stakeholders • Examine prospects and issues surrounding carbon credits from flare reduction activities • Collect expert input for elaborating carbon credits flare reduction guidebooks and for selection of demonstration projects (Reports 2 & 6) • Begin capacity building of GGFR members on CF and their potential value in promoting flare reduction www.worldbank.org/ggfr

  12. Where GGFR intervened and how? • Early stages of project cycle • Supports project proponents & host country • Not a project participant • Leveraged expertise from World Bank CFU • Has offered links to WB lending programs

  13. Carbon FinanceCapacity Building - Approach • Establish a forum for exchange of views, ideas and experiences on gas flaring reduction CDM/JI projects; • Screen potential flare reduction projects by country to select a pilot (demonstration) project; • Foster and establish links and cooperation between oil & gas stakeholders and DNAs; • Support development flaring reduction methodologies (3 NMs drafted) • Test new issues such as: ownership and policy development to remove barriers, national circumstances, transaction costs, and additionality.

  14. GGFR Program 2003 Standard Regulations Flaring and Venting Phase I Reduction Activities Commercialization Carbon Credits 2006 Country Deliverables and Demo projects Focus on major flaring countries 2007 Phase II and in-country deliverables Sustainable Gas Flaring Reduction 2010

  15. Carbon FinanceCapacity Building - Outputs

  16. Resources www.worldbank.org/ggfr

  17. Carbon FinanceCapacity Building – Demonstration Projects • Seven demo projects initiated (1 registered, 1 in validation) • One recently submitted new methodology to UNFCCC MP (Afam) • One challenging new methodologies in progress (gas to reinjection) • One JI project in Russia

  18. Expectations & Challenges Midterm • Maintaining momentum, as window of opportunity (1st commitment period) is closing • Sustaining capacity generated in DNAs (linking these with WB Carbon Assist program) • Host countries have capacity and political motivation to approve CDM/JI flaring reduction projects • Effective sharing of learning and best practices inside and out of GGFR partnership Long term • Delivering real sustainable development effects through downstream provision of clean, cheap and reliable energy supply (in addition to health, local environment and economic development benefits) • Mobilizing substantial technological, financial and political resources from the IOCs.

  19. Thank you! GGFR’s Vision is… Further information: fsucre@worldbank.org www.worldbank.org/ggfr

  20. Back Up

  21. Other Gas Flaring CDM/JI Projects in UNFCCC Registry

  22. Back Up

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