Can a "low carbon fuel standard" be a CCS commercial mechanism?

Jul 30 2017


The UK government announced plans this morning to ban new diesel and petrol vehicles from sale from 2040. That's a clear regulatory driver to reduce CO2 emissions from vehicles. Although not everybody will want an electric car. By Karl Jeffery.

An alternative pathway to reducing CO2 emissions from vehicles, which the oil and gas industry could lobby for, would be a market mechanism to encourage zero or low emission hydrocarbon fuel, which could be phased in gradually from now until 2040, reaching zero emission by 2040.
 
There is already a regulatory framework for this - the existing and proposed "low carbon fuel standards", if they can be extended to include different types of hydrocarbon fuel such as LNG, and fuel which is 'zero emission' because the oil company has paid for carbon capture elsewhere, or because an equivalent amount of CO2 has been sequestered (as EOR) during production.
 
As you can see on the Wikipedia page, California has the most well evolved low carbon fuel standard,  calling for a reduction of at least 10 percent in the carbon intensity of California's transportation fuels by 2020.
 
The UK has a "Renewable Transport Fuel Obligation" which is a similar idea (although currently limited to biofuel suppliers).
 
The EU proposed a "Fuel Quality Directive" in 2014 which would "oblige suppliers to reduce by 6% the life cycle greenhouse gas intensity of fuel and other energy sources supplied for use in road vehicles by 2020." See here 
 
Let’s say that fuel suppliers (oil companies) were obliged to achieve this 6 per cent reduction in greenhouse gas intensity from vehicles - and had a choice of doing it by converting vehicles to LNG fuel or paying for carbon capture and storage.
 
They could do this by subsidising 24 per cent of all vehicle owners to switch to LNG fuel (calculated on the basis that LNG is 25 per cent less GHG intense than gasoline powered vehicles). That would be difficult and the kind of distributed "people" work that oil companies dislike.
 
Alternatively they could do carbon capture and storage for the equivalent of 1/16th of their production with a few big projects, the sort of thing oil companies really love.
 
Meanwhile - the Oil and Gas Climate Initiative, a group of 10 oil majors, is looking for a "commercial mechanism to enable to roll-out of carbon capture and storage", according to BP representative Gardiner Hill.
 
Does this sound like a "commercial mechanism to enable roll-out of carbon capture and storage"?
 
If so, it could be implemented, if the oil majors in OGCI was willing to use its substantial lobbying power to persuade governments to make this small regulatory change to achieve something governments want to do anyway.
 
We plan to discuss ideas like these at our November 20 London forum "Carbon Management and the Oil and Gas Industry," organised jointly with Carbon Capture Journal. If you have any ideas for talks please contact me 



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Issue 58 July - Aug 2017

CCS in Australia: Loy Yang post combustion carbon capture PICA pilot plant .. Otway project moves to Phase 3 .. CarbonNet progresses to commercial phase .. Australian carbon Capture Utilisation and Storage: are we there yet? New test campaign at Tec.....


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