In recent years, industry, governments, the public and the financial community have paid greater attention to emissions from the fuel supply sector. There is a risk that the economic downturn caused by Covid-19 and sharp cuts in investment spending may divert attention away from these efforts, although several companies have continued to focus on emissions reduction targets as part of their strategic path forward. For example, in May 2020, CEOs of member companies of the Oil and Gas Climate Initiative reaffirmed their commitment to accelerate emissions reductions initiatives.

The latest data, however, show there is considerable variability in emissions performance across the fuel supply sector, with emissions increasing marginally to around 5.4 GtCO₂-eq – approximately 15% of global energy sector GHG emissions. Over half of these emissions (2.7 GtCO₂-eq) came from flaring and methane released during oil and gas operations.

The fuel supply sector is an integral part of energy supply far into the future, but its business models, company cultures and technologies would need to change significantly to achieve the Sustainable Development Scenario (SDS) 2030 emissions levels, which will require methane emissions to fall by 75% and flaring to decrease by 90%.

Oil and gas company announcements at the start of the year suggested a slight rise in planned investment in 2020, but Covid-19 has dramatically changed this outlook. Capital expenditure on oil and gas supply in 2020 is now expected to decrease by a third, and companies also announced cuts in operational spending in one of the most dramatic investment downturns seen in the sector.

Methane abatement is a key near-term opportunity for emissions reductions, as shown by the IEA Methane Tracker. While actions vary across the sector, companies focused on emissions reductions have made advances by introducing leak detection and repair programmes, establishing measurement procedures, sharing best practices (including the installation of vapour-recovery units), deploying unmanned aerial vehicles and stationary/point monitoring, improving data interpretation and implementing consistent maintenance and repair programmes.

There have been instances where mobility restrictions in lockdowns have hampered movement of the crews and equipment needed to perform maintenance. But a larger risk comes from the renewed pressure, in a low-price environment, on producer countries and industry to reduce costs: these cost reduction efforts should not come at the expense of environmental performance.

Canada provides a good example of how economic stimulus packages can assist efforts to reduce oil and gas emissions: the Covid-19 response plan directs CAD 750 million to GHG emissions reduction efforts in 2020‑21.

Policies to reduce venting and flaring need to be implemented in tandem to ensure that actions in one domain complement improvements in the other. Government support and industry initiatives are necessary to build and expand on areas of progress throughout the sector.

Climate-related shareholder proposals increased more than 60% in the second half of the last decade, putting pressure on companies to focus on their role in helping to tackle climate change (as indicated by several recent oil and gas companies’ emissions-reduction pledges). During the Covid-19 economic crisis, investor actions will continue to be important in guiding industry actions needed to attain SDS targets.