The role of innovative financing in promoting sustainable emissions reduction in the oil and gas industry

Abstract

Purpose: This study seeks to provide an understanding of the role of innovative financing mechanisms (IFm) in the implementation of sustainable environmental policies for the sustainable reduction of greenhouse gas (GHG) emissions in the oil and gas industry. A sustainable reduction of GHG emissions entails the reduction of carbon dioxide (CO2) emissions without necessarily resulting in negative implications for the economic output/income of a country.

Background: The Kyoto Protocol birthed the idea of an IFm for the reduction of GHG emissions. Many countries have shown commitment to reducing/ halting the emissions of GHG (most especially, CO2) and made strategies/policies to mitigate and prevent climate change effects by reducing their carbon footprint. However, the effectiveness of most of these policies is yet to be seen. Meanwhile, countries have continued emitting GHGs. Also, there is a concern that the reduction of emissions will mean a reduction in the economic output for countries, for instance, oil-producing countries.

Methodology: Following the pragmatic research philosophy, on which the study is based, there could be different elements or layers – objective, subjective, or both of the reality being investigated. Therefore, the study adopts a mixed methods approach using case study methodology and multiple data analytic techniques. 34 cases (countries) – with significant dependence on oil and gas across the world were examined. Since the pragmatic philosophy encourages the verification of the implications of findings (reality), the additional case of Nigeria's national gas policies was used for this.

Key Findings: It was found that the major causes for unsustainable reduction of emissions in the cases examined include lack of sufficient internalities and inadequate IFm as financial flow in terms of incentives for the non-state corporate actor. Meanwhile, IFm as a financial strategy would not directly cause a sustainable reduction of emissions except by the influence of appropriate state leadership. The means of achieving the policy goal of sustainable reduction of GHG emissions was summarised in the theoretical framework developed in the study, which built on the existing frameworks to fill the gaps in their approaches. Using the theoretical framework developed in this study in analysing the case of Nigerian national gas policies for sustainable reduction of flared gas (CO2) emissions, it was found that there is need to focus on promoting participation of community members, setting prices correctly for firms to be able to compete fairly in the market, and creation of an institutional structure for the transfer of technology.

Conclusions: In achieving the aim of this study, it was found that IFm both as a financial strategy and incentive (or Financial flow support) plays an important role at the centre of the governance for GHG emissions reduction. This study has birthed new knowledge and a theoretical framework by providing a comprehensive approach to analysing the regulatory and financial mechanisms in the governance for emissions reduction. Therefore, the need to reduce GHG emissions should not create fear about how to grow the economy. However, despite the effort being made to improve the generalisability of this study, care must be taken in doing so. The case study methodology used for this study limits the generalisation of the findings. Finally, recommendations were made for policymakers and future studies, and the author provided autobiographical reflections on how this study contributes to knowledge and his experience in conducting the research study.

Date of Award	2024
Original language	English
Supervisor	Jared Davies (Supervisor) & Brian Telford (Supervisor)