Watson Institute for International and Public Affairs

Oil Climate Index Awarded Sloan Foundation Grant

March 11, 2019

Senior Fellow Deborah Gordon was recently awarded a $35,000 grant from the Alfred P. Sloan Foundation to conduct outreach on the OCI’s decision-making potential.

Oil is changing. As a result of technological breakthroughs like fracking, an energy transition with major implications for climate change, statecraft, and commodity markets is underway.  Conventional petroleum resources are dwindling but tight oil, oil sands, shale gas, sour gas, liquefied natural gas, and other unconventional resources have emerged. These little-understood resources are increasingly heterogeneous and pose new environmental, economic, and geopolitical risks.  

Global warming is likely to reach 1.5°C as early as 2030. In an effort to limit the earth’s temperature rise beyond this point, the Intergovernmental Panel on Climate Change (IPCC) has developed pathways to decarbonize energy supplies. Meeting these targets will be a tall order for the oil and gas sector. Until recently, the dominant environmental paradigm centered on the assumption of resource scarcity (“peak oil”) and the homogeneity of energy sources (“standard oil.”). But massive reserves remain worldwide to manufacture transport fuels and countless consumer products.

Today, resource abundance and heterogeneity are raising critical new research questions:  Which oil and gas reserves pose the greatest risk to society, which ones are candidates for innovative techniques to reduce their environmental impacts, and how can new knowledge about oil and gas inform national and international resource decision-making?

Researchers at Brown University, Stanford University, and the University of Calgary have developed a first-of-its-kind Oil Climate Index (OCI) that ranks global oil and gas resources by their estimated total greenhouse gas (GHG) emissions through the entire supply chain—extraction, processing, transport, refining, marketing, and product combustion and end uses. OCI research has identified over a 60-percent difference in total GHG emissions per barrel of the lowest GHG-emitting petroleum resource and the highest.  Using the OCI, researchers estimate that industry generates as much as 40 percent of total GHGs in a barrel of oil, before end-use fuels are pumped into cars, planes, and more. Oil sands, extra-heavy, and depleted oils take significantly more energy to extract, process and refine. They also produce petcoke, a residual fuel with a larger GHG footprint than coal. Lighter oils can leak potent GHGs, methane, with 30 times the climate impacts pound for pound in the short term compared to carbon dioxide.

Significant, real-world climate mitigation opportunities exist in the petroleum sector. To realize these benefits, however, policymakers must use the knowledge created through the OCI to set targeted standards and price carbon. Market actors need the information generated by the OCI to make realistic asset valuations and commit to sound infrastructure investments. And the public needs the OCI’s transparent information and incentives to make wise energy choices.