Q&A: How the oil and gas industry compares in reducing carbon

By Patrick C. Miller | May 18, 2018

A new study from the American Petroleum Institute (API) shows the oil and gas industry is a leader in zero-emission and low-carbon technologies, spending more than double what the other two leading industries invest.  

The study titled, “Key Investments in Greenhouse Gas Mitigation Technologies,” was conducted for API by Thomas Tanton, president of T2 and Associates, an energy and technology consulting firm. The study examines investments by the oil and gas industry, other industries and the federal government from 2000 to 2016.

“The natural gas and oil industry is a leader in the development and deployment of greenhouse gas reducing technologies,” said Kyle Isakower, API vice president of regulatory and economic policy. “It shows that our nation can lead the world in energy production, strengthen our economy and create good-paying jobs while leading the world in the reduction of carbon emissions, which are at 25-year lows across the entire U.S. economy.”

Key points from the study are:

- The oil and gas industry is a leading investor in zero and low-carbon technology, investing more than $108 billion between 2000-2016—more than double the investments of each of the next two industries.

- In 2016, the oil and gas industry reported the largest greenhouse gas (GHG) reduction to date compared to the previous year—a reduction of more than 57 million tons of carbon equivalent. It’s the amount of carbon captured by 5.4 billion, 10-year-old evergreen and pine trees.

- U.S. carbon dioxide emissions are at 25-year lows because of increased natural gas use. Global emissions have risen 50 percent during the same timeframe.

Below are some examples of questions addressed by the API report.

What are the top carbon-reducing technology investments?

The five leading emission mitigation technologies for private and public-sector investment, as measured by expenditure share, are: shale gas, 33 percent ($194.6 billion); advanced technology vehicles (ATV), 17 percent ($100.0 billion); efficiency, 15 percent ($86.9 billion); wind, 9 percent ($53.4 billion); and ethanol, 6 percent ($34.7 billion). These top five technologies commanded 79 percent of the estimated total investments, or $469.7 billion over the 2000-2016 period in the North American market. All other technologies combined comprised 21 percent of the estimated total investments.

What was the oil and gas industry’s most significant CO2-reducing technology over the 16-year period covered by the study?

During the 2000 to 2016 period, different technologies captured attention in certain years, as opportunities and challenges developed or played out. Within the oil and gas industry, the most significant technology mover was shale gas. The EIA estimates that in 2016, proved reserves of natural gas increased by 5 percent from 324.3 trillion cubic feet to 341.1 trillion cubic feet—an increase of 16.8 trillion cubic feet. Proved reserves of U.S. crude oil and lease condensate rose 3 percent onshore in the Lower 48 states, while declines in oil reserves in Alaska and the Federal Offshore, led to virtually the same total U.S. crude oil and lease condensate at year-end 2016—35.2 billion barrels.

How much has the private sector and the U.S. federal government invested in GHG mitigation technology?

U.S. based companies and the federal government invested approximately $597.8 billion (2016 dollars) from 2000 to 2016 on greenhouse gas mitigating technologies in the North American market. The U.S. based oil and gas industry invested $301.5 billion ($108.2 billion without shale gas), 50 percent of the $597.8 billion total, in end-use, fuel substitution, nonhydrocarbon, and enabling technologies. Other private companies invested an estimated $143.6 billion or 24 percent of the total, predominantly in end-use and non-hydrocarbon technologies. During the same period, the federal government invested in a wide array of greenhouse gas mitigation technologies, with expenditures of approximately $152.7 billion ($151.4 without shale gas), or 26 percent of the total North American investment. This does not include state and local expenditures nor investments.

How much has the oil and gas industry invest in GHG-reducing technologies between 2000 and 2016?

It is estimated that U.S. based oil and natural gas companies invested $301.5 billion ($108.2 billion without shale gas) from 2000 through 2016 in GHG mitigating technologies in the North American market.This expenditure represents 50 percent of the estimated total of $597.8 billion spent by U.S. companies and the federal government. Publicly announced nonhydrocarbon investment by the U.S. based oil and gas industry in the North American market is estimated at just more than $19.6 billion over the 2000-2016 period, or about 7 percent of the oil and natural gas industry’s investments. This represents 16 percent of the total industry and federal government investments of approximately $120.1 billion in this technology class. The oil and gas industry’s top publicly announced non-hydrocarbon investments continue to be in wind, biofuels, solar, geothermal, and landfill digester gas, although investments in those technologies each diminished in absolute amounts and in relation to shale gas investments.