Gas flaring reduction:contribution from carbon finance

Sectoral policies on GHG emission mitigationMoscow Carbon Market ForumApril 28-29, 2008

Alexandrina Platonova-OquabThe World Bank

New approaches in the gas flaring reduction policy in Russia

Russian government has been developing a set of measures aimed at gas flaring reduction

Balanced combination of regulatory and economic tools is key

Cumulative positive effect of gas flaring reduction is significant both from the environmental (local and global) and economic perspectives: One of the major sources of atmospheric pollution in

Russia* currently, gas flaring in Russia is emitting at least

50 MtCO2e per year

*Source : Oil & Gas Journal Russia, March, 2008

Oil companies’ programs for gas flaring reduction

APG utilization programs are being developed by oil companies: Several projects are considered under the

framework of the Joint Implementation

Implementation timeline realistically requires several years to meet satisfactory levels of APG utilization

Harnessing opportunities through carbon finance

Achieving higher satisfactory level of the AG utilization will take time

Opting for the best available opportunities is key

Some projects will remain uneconomic due to specific barriers

Carbon finance could support the use of most efficient alternatives that often require significant additional investment…

and accelerate the achievement of sectoral goals

Demonstrated impact of carbon finance on gas utilization (CDM projects)

Al-Shaheen Gas-to-GPP (Qatar) APG utilized: 1500 Mln.m3/y CO2e reductions: 2.5 MtCO2/y Leveraged investment: USD 260Mln

Tambun Gas-to-LPG (Indonesia) APG utilized: 260 Mln.m3/y CO2e reductions: 0.4 MtCO2/y Leveraged investment: USD 30Mln

Kwale Gas-to-Power (Nigeria) 480 MW CCGT APG utilized: 600 Mln.m3/y CO2e reductions: 1.5 MtCO2/y

Total results for 10 years GHG emission reductions: 44 MtCO2e APG utilized: 23.6 Bln.m3

Expected benefits of carbon finance in Russian context

Incentivizing project developers to select the Best Available Technologies

Contributing to the implementation of new technological solutions: Gas conversion to products: GTL, methanol, DME Gas to reinjection

Switching projects with marginal economics from “-” to “+”

Boosting economics of gas utilization programs grouping APG sources under unique umbrella (scaling effect)

Potential role of JI gas flaring reduction in the Russian climate change policy

Project-based mechanisms have provided tool to accurately evaluate baseline and additionally of projects

Confidence in capabilities of Independent Entities in assessing compliance with JI requirements

Carbon finance has demonstrated substantial leverage effect on investment

Carbon finance could strengthen the scope of short and medium term gas utilization activities in Russia

JI window may be closing: could Green Investment Scheme complement JI?