CO2 as a Service (CO2aaS) Advisory and Optimization Contractual Models for Critical Production Assets

Abstract

Based on the existing knowledge and capabilities of rotating equipment and critical energy systems, industry players are developing and implementing solutions for Emissions Monitoring and Optimization ("EM&O") solutions, aiming advanced monitoring and advisory as well as emissions reduction targets within their Environmental, Social and Governance ("ESG") policies (e.g. Oil & Gas Methane Partnership 2.0 – "OGMP 2.0" or the United States Environmental Protection Agency GreenHouse Gas Reporting Program – "GHGRP"). By 2021, compliance markets had an annual trading value of more than $900bn, with the European Union ("EU") Emission Trading System ("ETS") by far the biggest, accounting for about 90 per cent of trading volume and value that year (LSEG Market Research, 2023). Much smaller, voluntary carbon markets, for their part, have seen the value of transactions rise sharply from $520mn in 2020 to $2bn in 2021 (Ecosystem Marketplace, 2023). However, growth has come with implementation challenges with waivers, trade-offs and policy postponements, raising questions over the extent to which these markets are reducing global emissions. Meanwhile, the EU ETS's policy of giving free allowances to heavy industries as long with other policymakers postponing or providing "carbon waivers", along with what until recently were low and volatile prices, carbon pollution credits and/or taxes have been considered too cheap to incentivise large-scale investments in clean technology and/or to oblige users in adopting "green" technology.