"Airpocalypses" & Why The Smart Money Should Be on Gas Flaring Reductions - A Cheat $heet for Carbon Credits - Sustainability as Survival Series

Introduction

Have you ever heard of an “airpocalypse”?

Despite the clearly documented; wide-scale and ongoing; environmental and societal damage caused by gas flaring ; an avoidable methane-inducing by-product of the oil extraction process which involves the burning and often uncontrolled release of natural gas into the environment (World Bank, 2023), the appalling practice still exists over 160 years after it began.

Unspeakable environmental damage in the form of pollution from “noxious gases; heat, [unrelenting] noise, acid rain, ... diseases in the form of cancer, renal failure and lung condition, etc” plus the decimation of surrounding groundwater and vegetation and climate change (Seiyaboh & Izah, 2017) has led to ravaged communities.

?The Costs

Proximate Societal Costs

The human impact costs of ongoing gas flaring and oil leaks to these proximate communities surrounded by these activities are numerous with millions powerless to comfortably live, work, farm and fish in the areas they call home, in addition to the frustrated daily reality of being continuously poisoned through this byproduct of oil extraction. ?

Beyond the catastrophic impact to disproportionately impacted proximate communities, who mostly come from developing countries, society as a whole, including countries that do not participate in gas flaring, are directly impacted through the wider environmental impact of this activity.

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Environmental and Larger Society Costs

Annually, it is estimated that in excess of 400 million tons of CO2, plus methane and soot, derived from the flaring of ~150 billion cubic meters of natural gas, all contributes to raised greenhouse gas (GHG) emissions (World Bank, 2015).

GHGs raise the core temperature of the earth directly impacting extreme weather events in addition to causing long term adverse respiratory and cardiovascular outcomes from prolonged exposure in dense urban cities to surreal and post-apocalyptic “ghostly images ” caused by smog “clouds of filth ” and “airpocalypses ” which already occur almost daily in areas as diverse as Port Harcourt , Tehran, Bangkok , Mexico City, Krakow and New Delhi (Dong, Xue, Xiao, & Liu, 2021) (Otene, Murray, & Enongene , 2016)?(Harvey, 2018)?(Watts, MA, et al., 2019)?(Bamji, 2021)?(Vidal, 2016) (Welch, 2022`) (Giles, 2018) ( Raj, Stevens, Yoon, & Brradsher, 2022) (Ghertner, 2020)?(Regan, 2019).

Financial Costs

With regards to gas flaring and the triple bottom line (TBL) of sustainability (Slaper, Ph.D. & Hall, 2022), not only do the people and planet suffer, but so patently do profits!?

Money literally gets burned in the form of wasted natural gas emissions, to the tune of an estimated ~”USD 55 billion per year ” (IEA, 2022)!

The financial loss estimates above assume that we have a reasonable understanding of ?how much natural gas is actually flared and how much methane is produced.

Allegations?

Recent investigations by the BBC allege that some of the biggest players in the oil and gas industry may have consistently under declared gas flaring emissions to the tune of millions of tons, despite corporate public commitments to end routine flaring practices by 2030 via the World Bank sponsored Zero Routine Flaring (ZRF) initiative in partnership with Global Gas Flaring Reduction Partnership (GGFR) (Stallardd, Pinnell, & Kelly, 2022) (World Bank, 2022).

If these allegations are proven to be true, this means that not only, are we today underestimating the scale and impact of this activity, such as reported instances of leukemia in proximate communities (Kelly, Pinnell, & Stallard, 2022), but we may be compromising the accuracy of future projections on environmental and societal impact through the use of dodgy input data (Radhakrishnan, DiCarlo, & Orrbach, 2022).

It is worth noting that the deliberate or unintentional underreporting of gas flaring emissions could be argued to be forms of Corporate Social Irresponsibility (CSIR) (Cherry & Sneirson, 2011), and almost definitely a form of Greenwashing , which refers to the “corporate spin practice” and hypocritical exercise of highlighting sustainability friendly practices in voluntary CSR self-publications while sidestepping mentions of conflicting practices (Du, 2014).

Even just the allegations alone could have significant consequences for different stakeholder groups, including but not restricted to investors, communities, activists, and government regulators. ?

Call To Action

The intersection of social-media-savvy trans-generational thinkers , who challenge us to take responsibility for addressing long-term issues that extend beyond our individual life spans; government and global climate change initiatives; and the growing discipline of environmental sustainability demand that we as a society “meet the resource and services needs of current and future generations without compromising the health of the ecosystems that provide them”?(Wallach, 2017) ?(Morelli, 2011).

All of this means that gas flaring reductions and conversions should be a right-now goal.

Opportunity Costs

What are the opportunity costs of gas flaring?

The obvious place to start in calculating the opportunity costs of gas flaring would be the immediate benefits to the millions of members of proximate communities that would no longer suffer from unending environmental degradation and treacherous health outcomes caused by gas flaring.

We could even argue that broader society with climate change concerns, requires reductions in greenhouse gas emissions, for which a reduction or elimination of gas flaring would be an obvious benefit.

But let us assume that improving the quality of life of millions or even billions is not incentive enough.

Let us also assume that climate change concerns and extreme weather events which cause documented misery and affect up to “189 million people annually” (Ogola & Ormond-Skeaping, 2022) is also not incentive enough.

Clearly the carrot & reward approach has not worked.

So, let’s take the stick & punishment approach to apply a “quasi-regulatory” lens to the issue.

We know that routine gas flaring is targeted to end by 2030, per the ZRF 2030 initiative , which commits “governments and oil companies” to abolish routine flaring by 2030?(World Bank, 2022).

The COP26 in NOV-2021, arguably the most important forum on climate change, included an “”invitation” for members to be more concerned about actions that would further reduce GHGs and methane by 2030 (Olczak & Piebalgs, 2021).

Let’s not leave out the Global Methane Pledge (GMP) , sponsored by the USA and EU, which encourages countries to take “voluntary actions to contribute to a collective effort to reduce global methane emissions at least 30 percent from 2020 levels by 2030” with over 150 states signed up (GMP, 2021).

Clearly, there appears to be consensus and a clear time-bound incentive to tackle this issue.

So why have global attempts to decrease gas flaring levels plateaued over the last ten years (The World Bank, 2022)?

Did you know that 75% of gas flaring within the oil and gas industry worldwide takes place in just 10 countries?

Depending on who you ask there are between 193 UN member states , about 211 if you are a FIFA footie fan, and up to 241 countries, territories, and unrecognized nations overall .

By either measure the 10 countries that contribute to 75% of gas flaring worldwide make up between 4% to 5% of the total population of countries.

Ponder on that for a bit.

Just 5% of the world’s nations contribute to the overwhelming majority of gas flaring that the entire world experiences today.

From this ignominious top 10 list, the following countries have made limited strides in reducing emissions: “Russia, Iraq, Iran, the United States, Venezuela, Algeria, and Nigeria”.

Somewhat frustratingly, the other three countries that make up the top 10, namely China, Mexico and Libya, have gone in the opposite direction and actually increased gas flaring (Pollard & Alderson, 2022) (GGFR, 2022).

Opportunities and Value Creation

Now that we have adored some of the problem of gas flaring ad nauseum, could there be alternative ways of addressing the issue of gas flaring while simultaneously solving some of society’s problems with energy generation and distribution?

The opportunity costs of gas flaring are extensive given its deleterious impact, but perhaps the most significant opportunity cost is the wasted opportunity and missed value creation of converting wasted flared natural gas into various other forms of energy.

While not quite green energy, these alternative energy forms such as LNG, CNG and LPG, which can be derived from capturing and converting flared natural gas, could in theory, provide enough electricity to alleviate power shortages and blackouts for millions worldwide?(Jacobs, 2020) (World Bank, 2015) while significantly abating the adverse environmental and social impacts caused by the practice of gas flaring.

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Join me as this series progresses and where I will discuss additional opportunity costs and alternative uses of flared natural gas in the form of compressed natural gas (CNG); Liquefied Natural Gas (LNG) and ?Liquefied Petroleum Gas (LPG); Flaring and Methane Reduction (FMR) projects; Carbon Offset Projects, Carbon Credits origination and placements as they relate to gas flaring, Valuation Methodologies; Emission Trading Systems; Eligibility Criteria; How to calculate the possible value of carbon credits based on volume of standard cubic feet (scf) emissions from oil fields; Specific Market Criteria and Regional differences; The growth of Green Bonds and the Current Stakeholder Backlash to Sustainability Efforts in the “Green Investing Space”.

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#sustainability #strategy #climatechange #carboncredits #cop26 #oilandgas #gasflaring #co2reduction #climatechangesolutions #sustainablefinance #greenwashing #greenbonds #greenenergy #csr #esg #climate #netzero

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Tracy-Alero Doyle is a Strategy Supremo and Transformation Catalyst with a proclivity for providing long answers to short questions ??.

She has held global senior management and c-suite consultancy roles in Business Transformation; Risk Management, Digital Product Ownership, Compliance & Regulatory;?Agile Digital Delivery and Corporate Social Responsibility (CSR) across America, Asia, Africa, and Europe with global & regional oversight of APAC, EMEA & LATAM.

An entrepreneurial problem solver with a people-first bias, Tracy-Alero has embraced a variety of sectors with ?experience in Wealth Management, Insurance, Investment Banking, Commercial Banking, Investments & Advisory, Private Equity, Travel Services, Retail, Technology Start-Ups & FinTech.

As an engaging public speaker with multiple media appearances, Tracy-Alero uses her strong personal brand and mentoring mojo towards driving the debate on Sustainability, challenging and encouraging Diversity & Inclusion efforts; and supporting enterprises committed to improving Financial Services Access Improvement for marginalized communities.

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