Assessment of CO2 emission reduction potentials in the Chinese oil and gas extraction industry: From a technical and cost-effective perspective

Abstract

The oil and gas extraction industry is an energy-intensive and high CO2 emission sector in China. This study estimates the cost-effective CO2 emission reduction potentials until 2050 by classifying key low-carbon technology bundles and investigating the energy efficiency, market penetration rate, and emission reduction cost of each technology bundle. A bottom-up technical evaluation model is established to give a comprehensive perspective to the Chinese oil and gas extraction industry and policymakers about the emission reduction potential and its associated cost. Results show that the carbon emission reduction potential in the Chinese oil and gas extraction industry in 2050 can reach 16.71 million tons in the case of all low-carbon technologies available and that the decrease rate can be as high as 14.3%. The contributions of emission reductions are mainly the improvement of energy efficiency, the transformation of production process, and the utilization of new energy sources. Most low-carbon technologies are cost-effective, with an average annual cost savings of 71.43 billion RMB. Nonetheless, the diffusions of low-carbon technologies are still significantly affected by energy price volatility and firms' expectations of future investment risk.