Gas and steam rise from an oil refinery in the Siberian city of Omsk, Russia. Reuters
Gas and steam rise from an oil refinery in the Siberian city of Omsk, Russia. Reuters
Gas and steam rise from an oil refinery in the Siberian city of Omsk, Russia. Reuters
Gas and steam rise from an oil refinery in the Siberian city of Omsk, Russia. Reuters

Ukraine war may have slowed Russia's efforts to lower methane emissions


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Russia, the world's second-largest oil exporter, may have slowed down efforts to tackle methane emissions from its energy sector as it seeks new export markets for its products amid Western sanctions.

Before the war broke out on February 24 last year, Russian oil and gas exporters — under pressure from European customers — were investing in equipment to help monitor and curtail methane discharges from their operations.

Robert Kleinberg, a senior research scholar at the Columbia University Centre on Global Energy Policy said that, before the Ukraine conflict, Russia had been sending signals that it was taking methane emissions more seriously.

“Gazprom acknowledged satellite detections of very large methane emissions from its pipeline system and was taking steps to reduce them,” he told The National.

Europe's natural gas imports from Russia currently account for less than 10 per cent of its overall imports of the fuel, Andrea Fontana, the EU ambassador to the UAE, told The National last week.

Hence, Russia now has fewer incentives to make the investments necessary to decrease emissions.

“They’ve been cut off from their most fastidious customer, Europe, and potential new customers such as India and China are looking for low prices, without putting a lot of environmental conditions on their imports,” said Mr Kleinberg.

“The leverage was always the monopsony that Europe had over Russian exports from its western gasfields.”

Before the conflict, Russia was considered to be one of the leading sources of emissions of methane caused by human activity.

The greenhouse gas has a short-term warming potential more than 80 times greater than carbon dioxide.

After CO2 emissions, methane is the second largest contributor, caused by humans, to climate change.

Climate experts consider reducing the international output of methane emissions as the most effective and least disruptive way to slow down the increase in global temperatures over the next few decades.

Russia released 24.36 million tonnes of methane into the atmosphere last year, representing nearly 7 per cent of global emissions, the International Energy Agency said in its latest Global Methane Tracker report.

Although countries such as China, the US and India emitted more methane in 2022, the share of the energy sector in Russia’s emissions — at 74 per cent — is the highest among large countries, IEA data showed.

Last year, the largest recorded emissions of methane occurred due to leaks in the Nord Stream pipelines, which transported natural gas from Russia to Europe.

A drop in Russian energy exports due to Western sanctions, could, in theory, reduce methane emissions from the country’s fossil fuel industry.

“To the extent that they are producing and transporting less gas, that would suggest lower emissions,” said Mr Kleinberg.

“The usual doctrine is that the leaks are proportionate to the amount of gas being handled.

“However, that way of estimating methane emissions is very unreliable and it is known to, in some cases, vastly underestimate the amount of methane being actually discharged into the atmosphere.”

View from the top

Governments and independent climate-tracking bodies have been increasingly relying on satellites to detect methane releases, particularly in the oil and gas industry.

In the next few years, a number of newly developed satellites with significantly improved resolutions are scheduled to be deployed, including MethaneSat, which is scheduled for launch by the US non-profit Environmental Defence Fund this year.

However, satellites only have a better track-record for detecting large methane leaks or “super-emitting events” like the one seen after the Nord Stream ruptures.

In the case of Russia, satellites rely on the country’s self-reported methane emissions data as an initial guess, said Mr Kleinberg.

“Although no one should be better positioned to monitor the operations of the very large and far-flung Russian oil and gas industry than Russia itself, it is hard to take methane emission reports seriously because the numbers change substantially from year to year,” he said.

Moscow, which has repeatedly changed the way it calculates its emissions, reported four million tonnes of methane emissions from its oil and gas sector to the UN Framework Convention on Climate Change in 2021 — roughly a third of the IEA’s estimate for the year.

Gazprom and Novatek — Russia’s main natural gas-exporting companies — did not respond to The National’s queries regarding the status of their methane-reduction plans.

In its latest sustainability report, Novatek said it reduced its methane emission intensity by 11 per cent to 12.9 tonnes per million barrels of oil equivalent in 2021.

In August, the company also launched a project for methane leak monitoring with the use of unmanned aerial vehicles.

Russia’s top oil producer Rosneft said it allocated about $4 billion towards green investment in the last five years.

“Rosneft is implementing a comprehensive programme of production process improvements and initiatives to reduce methane emissions,” said the company told The National, without specifying a timeline.

The “expansion” of this programme, along with the introduction of ground and air monitoring technologies, will help Rosneft reduce its methane emission rate to less than 0.2 per cent, it said.

‘No good’

The IEA and several climate bodies have urged oil and gas companies to do more about methane emissions, considered cheaper and easier to control than carbon dioxide.

The Paris-based agency has said that oil and gas companies would need to set aside less than 3 per cent of their 2022 profits to reduce the industry's methane emissions by 75 per cent.

The global oil and gas industry's income jumped to almost $4 trillion last year, from a recent average of $1.5 trillion, according to the IEA.

“A number of major oil companies are going after methane. After all, they derive no benefit from emitting methane,” said Mr Kleinberg.

“The solutions are technical and oil companies are really good at technical solutions.”

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

Bloomberg

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Updated: February 24, 2023, 3:30 AM