This letter was written in response to Jason Bordoff’s recent article “A flaring tax can end this wasteful and damaging practice”, published 3rd March in the Financial Times
Each year globally some $27 billion of gas is burnt, or flared, in association with oil production, a volume equivalent to the UK and Germany’s gas consumption. Flaring, in addition to incomplete combustion of gas at flares, results in over 1 billion tonnes of CO2-equivalent emissions per year (the equivalent of 25% EU emissions). Given the US is the fourth-largest source of flaring globally, and its volumes continue to rise, it was therefore right for Jason Bordoff to raise the issue in the US context, (“A flaring tax can end this wasteful and damaging practice”, 3rd March). Whilst we concur with many of the sentiments we also wanted to flag how relevant and urgent this topic is within a European context.
Flaring is an issue which must be solved both for Europe’s domestic oil and gas production and for its external supply sources. Domestic production meets over 40% of Europe’s gas demand, but in some European countries (UK, Denmark), flaring intensity (flaring volume normalised to oil production) is up to a one-third higher than the US. External sources (Russia, Libya, Algeria, LNG) supplying the remainder of Europe’s gas have flaring intensities up to seven times higher than the US.
To reduce flaring within Europe, all major oil-producing countries must join the World Bank’s “Zero Routine Flaring” initiative, learn from Norway’s successful policy and incentive regime (achieving one-tenth US flare intensity), and ensure they have bold ambitions to support COP 26. To reduce flaring amongst European gas suppliers, certification coupled with incentives for lower-carbon intensity gas (from both the oil and gas supply chains), in addition to policy support and investment in flare abatement solutions, is critical. In many parts of the world, the problem can be fixed with the right commercial approach, technology selection and policy support. If natural gas has a role to play in the energy transition, flaring is an issue which must be solved.
Dr Mark Davis, CEO of Capterio
John-Henry Charles, Commercial analyst, Capterio
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