IEA and IMF COVID Recovery: Oil Industry Bail Out Cloaked under GHG Reductions

On June 18th, the International Energy Agency (IEA) and the International Monetary Fund (IMF) released a joint report showing how to use COVID recovery funds towards a more "sustainable" energy sector. [1]
One of the suggestions is to fund the reduction of methane emissions from oil and gas operations, which mainly result from either venting/flaring associated gas at oil fields or gas leaks from gas extraction and transport. In response, Urgewald and other civil society organisations are calling for the recovery funds not to be used to benefit ailing fossil fuel majors.
Such issues are also on the agenda on the Finance in Common Summit in November hosted by the French Development Agency, gathering about 450 public finance institutions to discuss COVID recovery plans. [2] This week, the Executive Committee of the Finance in Common Summit is gathering to shape the Summit’s key outcomes. [3]
“The oil industry should bear the costs of controlling their methane pollution, not the tax payers. Public assistance to capture gas from oil field operations that are currently flaring the gas is exactly what the oil industry wants. Gas they usually flare will now provide them a significant revenue stream, which may bail out struggling upstream oil fields. In some cases, it could also contribute to the oil industry’s plan to diversify into petrochemicals. Captured gas can be used as a cheap feedstock for petrochemical production,” explains Heike Mainhardt, Senior Advisor for Multilateral Financial Institutions at Urgewald.
The World Bank already committed $200-$400 million of climate finance for gas capturing in Iraq to the benefit of Shell’s gas and petrochemical build out plans and to the benefit of ExxonMobil, ENI and BP’s large oil field operations in Iraq. [4] [5]
The IEA and IMF joint Sustainable Recovery Report states:
"Strengthening efforts to reduce methane emissions could form an important part of any support that may be offered to the oil and gas industry. In Canada, for example, around US$550 million is included in a federal stimulus package to help oil and gas companies reduce methane emissions."
In Canada, it was just reported that Alberta’s economic recovery plan intends to provide incentives for petrochemical investments. [6] Such incentives coupled with the federal stimulus to reduce methane emissions – in this case at the Alberta tar sands operations – could benefit a C$4.5 billion petrochemical project by Pembina Pipeline Corp and Kuwait’s Petrochemical Industries in Alberta, that was put on hold in March.
Heike Mainhardt comments: “Everyone is in favor of stopping gas flaring and reducing methane emissions. But using public money to reduce the oil industry’s methane emissions and as a result provide more revenue to the oil operations through selling the recovered gas is the opposite of a carbon tax. Tax payers will bear the costs and oil companies will profit. Canada should rule out any additional subsidies to such climate-damaging operations.”
A significant amount of COVID recovery funding could be at stake, according to the IEA-IMF Sustainable Recovery Report’s estimates:
"We estimate that it is technically possible today to reduce around 75% of current oil and gas methane emissions. Around $15 billion spending would be required annually to fully realise this reduction." [7]
It is also worth noting that capturing gas is often a cost-effective measure in advantage of oil and gas companies, according to the IEA:
"While natural gas prices are generally much lower than in the past, we estimate, on the basis of 2019 prices, that around one-third of methane emissions from oil and gas operations could be avoided at no net cost. This is because the value of the captured methane is higher than the cost of deploying the measure. Around $5 billion spending would be required to mobilise these reductions, but these would end up saving natural gas worth nearly $10 billion each year.” [8]
Policy demands for the summit to avoid oil industry bailouts cloaked under greenhouse gas emissions:
• Public finance institutions should not follow the IEA and IMF recommendation on funding the reduction of methane emissions for the oil industry with COVID recovery funds or in general.
• Instead, laws should be adopted to make it illegal to flare gas as is already the case in Norway. 
• Government revenue could be generated for COVID recovery by charging a fine on oil and gas operations for their methane emissions until they end them.
Notes:
[1] https://www.iea.org/reports/sustainable-recovery
[2] https://financeincommon.org
[3] https://twitter.com/RiouxRemy/status/1280260461217361922
[4] https://disclosures.ifc.org/#/projectDetail/SII/39146
[5] https://www.mitsubishicorp.com/jp/en/bg/natural-gas-group/project/basrah-gas-company/
[6] https://analysis.petchem-update.com/operations-maintenance/albertas-economic-recovery-plan-promote-petrochemicals
[7] https://www.iea.org/reports/sustainable-recovery
[8] https://www.iea.org/reports/sustainable-recovery