Climate Strategies for Oil and Gas Production Under the Lens of an Integrated Assessment Model: The Case of Brazil

Abstract

Future projections of oil and gas demand suggest that their production will remain necessary. Although attention often focuses on emissions from the combustion of their products, oil and gas production is also a relevant global emission source. Hence, understanding the carbon performance of upstream activities in producing nations is vital for distinguishing producers in a climate-pressured global market. This work explores climate strategies for the oil and gas upstream sector, using Brazil as a case study. The sector´s emissions profile is evaluated under distinct national climate scenarios. The analysis employs BLUES, a national Integrated Assessment Model (IAM) to access production volumes, mitigation measures applicable to the sector, and carbon dioxide removal potentials within the country to eventually offset the sector's remaining emissions. Results indicate sustained oil and gas production over the evaluated horizon (2020-2050) without compromising national climate goals, yet the sector's future emission trajectory does not align with decarbonization targets pursued by more ambitious oil-producing nations and industry players. Despite sectoral mitigation measures indicated by the model, substantial emissions remain until 2050. Conversely, the country offers ample offsetting opportunities with potential synergies for the sector, especially through BECCS. Furthermore, the acceptability of offset is also a topic for discussion.

Keywords: oil and gas production, GHG mitigation, Integrated Assessment Models (IAM), Carbon Dioxide Removal, CCS, carbon offsets