Analysis of the Development Status and Policy Trends of Carbon Pricing Mechanism in the Oil and Gas Industry

In the context of accelerating energy transition, the coverage of the international carbon pricing mechanism continues to expand, the carbon price level and the carbon pricing income of various countries have risen significantly. With the acceleration of global climate governance, the international carbon pricing mechanism shows a trend of strengthening, with steady growth in quantity and a wave like spiral rise in price level. However, the current impacts of carbon pricing on the oil and gas industry are relatively limited because greenhouse gas emissions from the oil and gas industry are mainly generated in the terminal consumption sector, which generally do not covered by current carbon pricing instruments. Furthermore, rare resources countries have carbon pricing instruments. Nevertheless, based on the case study of Canada’s carbon pricing mechanism, high carbon price would have significant economic impact on high emission oil and gas projects, which can push the investors to make more efforts on emission cut. In the long run, the impacts of carbon prices on oil & gas industry tend to strengthen in the future with more significant influences on projects’ economic benefits, which will accelerate the whole process of oil and gas industry low-carbon transition.