The Economic Cost of Ignoring Methane Emissions in the Oil and Gas Industry

As the world grapples with the urgent need to reduce greenhouse gas emissions, one potent yet often overlooked culprit remains largely unchecked: methane. And when it comes to methane emissions, few industries compare to oil and gas in terms of both scale and impact. The economic cost of ignoring these emissions is staggering – from wasted resources to environmental damage and increased healthcare costs. In this blog post, we’ll take a closer look at why addressing methane emissions in the oil and gas industry is not only critical for our planet’s health but also makes good business sense.

The cost of methane emissions

The economic cost of methane emissions from the oil and gas industry is significant. A recent study by the Environmental Defense Fund (EDF) estimated that the industry emits about $30 billion in methane each year, which has a warming potential equivalent to nearly 300 million tons of carbon dioxide.

This estimate does not even include the additional costs associated with other air pollutants emitted by the industry, such as volatile organic compounds (VOCs) and black carbon. When these other pollutants are taken into account, the total cost of methane emissions from the oil and gas industry is likely higher.

There are a number of reasons why methane emissions are costly. First, methane is a powerful greenhouse gas, trapping heat in the atmosphere and contributing to climate change. Second, methane emissions contribute to smog formation, which can cause a range of health problems including respiratory irritation and exacerbation of asthma. Finally, methane leaks can lead to explosions and fires, posing a risk to public safety.

Despite the clear economic costs of ignoring methane emissions, the oil and gas industry has been slow to address the problem. In part this is due to the fact that many companies do not believe that they are responsible for their emissions, or that regulating them would be too costly. However, there is growing evidence that voluntary measures taken by some companies are beginning to reduce methane emissions from the oil and gas sector. As public awareness of the issue grows and more companies take action, it is hoped that the economic cost of ignoring

The oil and gas industry’s impact on methane emissions

Methane emissions from the oil and gas industry are a significant contributor to climate change, and the economic cost of ignoring these emissions is high. The Intergovernmental Panel on Climate Change (IPCC) estimates that methane has a global warming potential of 34 over a 100-year time horizon. This means that the release of one tonne of methane into the atmosphere has the same impact on climate change as releasing 3.4 tonnes of carbon dioxide.

The oil and gas industry is responsible for approximately 30% of all human-caused methane emissions, with approximately two-thirds of these emissions coming from natural gas production and processing, and the remainder coming from crude oil production. A large portion of these methane emissions are ‘fugitive’ emissions, which means they are released into the atmosphere before they can be used or burned. Fugitive emissions occur during all stages of oil and gas production, including exploration, drilling, well completion, transport, storage, and distribution.

The economic cost of these methane emissions is significant. In 2015, the IPCC estimated that the social cost of carbon (the damage caused by emitting one tonne of carbon dioxide) was US$40 per tonne. Applying this estimate to global methane emissions from the oil and gas industry (approximately 280 million tonnes in 2015), we find that the damage caused by these emissions was US$11 billion in 2015 alone. This cost is likely to increase in the future as climate change worsens and more extreme weather events

The economic cost of ignoring methane emissions

Methane emissions from the oil and gas industry are a significant contributor to climate change, and ignoring them comes with a high economic cost.

A recent report by the Environmental Defense Fund (EDF) found that methane emissions from the oil and gas industry totaled nearly 9 million metric tons in 2015 – equivalent to the annual emissions of 160 coal-fired power plants.

The report also found that the economic cost of these methane emissions is $2.5 billion dollars each year. This cost includes damages from climate change, as well as healthcare costs associated with respiratory illnesses and other health problems caused by exposure to methane.

Ignoring methane emissions from the oil and gas industry is not only bad for the environment, it’s also bad for our economy. Taking action to reduce these emissions is essential to protecting our planet and our wallets.

Conclusion

Ignoring methane emissions in the oil and gas industry can have dire economic consequences. Methane is a potent greenhouse gas, and reducing it can help to slow the rate of climate change, which in turn could lead to long-term cost savings for companies in terms of energy efficiency and resource management. With this in mind, investing now in technologies that reduce methane emissions should be seen as an investment both for the environment and for a company’s bottom line.