Good afternoon, and many thanks for the invitation.
I work at the International Transport Forum at the OECD. We are an international organization based in Paris with 63 member countries, mostly developed market economies. We conduct policy relevant analysis for the governments of our member states. Part of our work is to make projections regarding transport greenhouse gas emissions and to advise on policies to decarbonize the transport sector.
I have been asked to speak to you today on the relationship between transport emissions and emissions from the oil and gas sector. I will look at this from basically two angles.
First, a considerable part of the consumption of oil and gas takes place in the transport sector. This, of course, translates into large CO2 emissions. In our transport outlook, we estimated that the total transport CO2 emissions amounted to around 6.5 gigatonnes in 2020. This is around a quarter of the total global energy-related CO2 emissions.
Under a “business as usual” scenario, we project that annual transport emissions will grow to 7.5 gigatonnes in 2030 and 8.5 gigatonnes in 2050. Therefore, more ambitious policy scenarios are needed to limit the temperature to be in line with the Paris Agreement. Transport emissions need to start declining as soon as possible and by more than half by 2050, measured against 2020 levels.
This scenario could be realized with substantial carbon pricing, distance-based road charging, rapid transition to electric vehicle penetration and vehicles powered by alternative fuels, and various other measures.
In other words, decarbonization of the transport sector can reduce the need for oil and gas production, and in this way help realize the emission reductions from the oil and gas sector, as is intended with the cap. The other way around, a cap for the oil and gas sector that is reduced over time could also stimulate the decarbonization of the transport sector.
My second angle, which is transportation, could be considered an essential part of the oil and gas supply chain, so the sector in itself. Exports of oil and gas are often transported by oil tankers and gas carriers. Almost a third of total maritime transport volumes are composed of oil, oil products and gas.
Transport of oil and gas might be included in the definition of the oil and gas sector when designing the cap on oil and gas emissions. This could be interesting, because emissions from international shipping are usually outside the scope of national government policies.
Regulation of emissions from shipping is generally undertaken at the global level via the International Maritime Organization, the IMO, and not at the national level. For example, international shipping is excluded from countries' carbon pricing schemes. However, there is also currently no global carbon pricing scheme for the shipping sector either, as various IMO member states are opposed to this. Even if there might eventually be agreement on the need to introduce such a global carbon pricing scheme for shipping, it would likely take a long time before it was introduced and effectively implemented.
For this reason, some jurisdictions have taken initiatives at the sub-global level. An example is the proposal of the European Commission to include shipping in its emissions trading scheme, the EU ETS. Under this proposal, ships would need to pay according to the amount of CO2 they emit on their intra-EU voyages and also on part of their international voyages to and from a port in the EU. In other words, the carbon pricing applies to emissions not only within the territorial waters of EU states but also on emissions in international waters.
This example might be interesting in the context of your discussions because it would be somewhat similar to a situation in which the marine transport of oil and gas to and from Canadian ports would be considered part of, or auxiliary to, the oil and gas industry and be covered by a potential cap on emissions of the oil and gas sector.
I hope this is helpful to your discussions. I'd be happy to answer any questions you might have.