Carbon Intensity (CI) – What Is It

By Published On: April 5, 2023Categories: Daily Market News & Insights, What Is It Wednesday

Have you ever come across the term “carbon intensity” in the context of the oil and gas industry? If not, you have probably heard it before in relation to climate change and achieving net-zero goals. Understanding carbon intensity can be beneficial in many ways. First and foremost, it can aid in reducing greenhouse gas levels in our atmosphere, and second, it can lead to cost savings on our energy bills. Are you still curious about Carbon Intensity (CI) and its importance to oil and gas?

Good, let’s dig deeper.

What is Carbon Intensity?

Carbon intensity (CI) refers to the amount of greenhouse gas emissions that are produced per unit of energy consumed or produced. In the oil and gas industry, carbon intensity is typically used to measure the greenhouse gas emissions associated with the extraction, production, and consumption of oil and gas.

Electricity produced from fossil fuels has a higher carbon intensity than other power sources due to the CO2 emissions generated during its production process. In contrast, renewable energy sources like wind, hydro, or solar power have significantly lower or zero carbon intensity values as they produce almost no CO2 emissions.

Carbon intensity is calculated by dividing the total amount of greenhouse gas emissions associated with a given activity by the amount of energy produced or consumed. For example, the carbon intensity of gasoline can be calculated by dividing the total greenhouse gas emissions associated with the production and combustion of gasoline by the amount of energy produced by that gasoline.


Why is CI important?

Reducing carbon intensity is an important goal for the oil and gas industry, as it is a crucial way to reduce the industry’s overall greenhouse gas emissions. This can be achieved through various strategies, including improving the efficiency of extraction and production processes, using cleaner fuels, and investing in renewable fuel sources.

Some states have specific requirements around carbon intensity. For instance, California’s Low Carbon Fuel Standard (LCFS) program gives incentives for using fuels with lower carbon intensity, such as ethanol, renewable diesel, and biodiesel.  Oregon and Washington have similar carbon intensity goals, and other states including New York, Minnesota, and Illinois offer incentives to use lower CI fuels.


What do you need to know about CI?

Fuel customers need to be aware of the carbon intensity of the fuels they consume, as it directly impacts their carbon footprint. The carbon intensity of different fuels can vary significantly, depending on their production process, transportation, and consumption. Emissions associated with fuel consumption can have negative impacts on the environment.

Fuel customers can choose to use alternatives vehicles, such as electric or hybrid vehicles, or fuels produced from renewable sources to reduce their carbon footprint. Improving energy efficiency can reduce the amount of fuel needed to produce the same amount of energy, resulting in lower carbon emissions and cost savings for the customer. Some countries have implemented regulations or policies that incentivize the use of low-carbon fuels or penalize high-carbon options. Fuel customers should be aware of these regulations and policies and how they may impact their fuel choices and costs.

Why does the US have the highest CI emissions?

The United States has historically been one of the largest emitters of greenhouse gases, particularly carbon dioxide, resulting in a high carbon intensity per capita. This is due to several factors, including:

High Energy Consumption: The US is one of the world’s largest energy consumers, with a high demand for electricity, transportation, and industrial processes, leading to increased carbon emissions.

Dependence on Fossil Fuels: The US has traditionally relied on fossil fuels such as coal, oil, and natural gas to meet its energy needs. These fuels have a higher carbon intensity, meaning their combustion results in increased greenhouse gas emissions.

Large Population and High Standard of Living: The US has a large population and a high standard of living, resulting in higher energy consumption per capita and increased carbon emissions.

While the US has made some progress in reducing its carbon emissions in recent years, more work is needed to achieve the climate goals to which the US has committed.

Carbon Intensity (CI) - What Is It - Annual CO2 Emissions from Oil 4-5-23

Which fuels have the highest and lowest CI?

Renewable fuels generally have the lowest carbon intensity as they produce less carbon emissions during their production and consumption. Fuels like ethanol, biodiesel, and renewable diesel are actually carbon negative during their production, since growing plants removes carbon from the air. Fossil fuels, on the other hand, generally have higher carbon intensity values, with coal being the highest due to its high carbon content and inefficient combustion process. Oil and natural gas have lower carbon intensity values than coal but are still relatively high.

It’s important to note that carbon intensity values can vary depending on various factors, such as the production process, the transportation distance, and the energy efficiency of the consuming equipment.

Carbon Intensity (CI) - What Is It - Petroleum at a Glance Chart 4-5-23

This article is part of Daily Market News & Insights


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The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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