Dataset Information

Carbon intensity of global crude oil trading and market policy implications.

ABSTRACT: The energy mix transition has accelerated the need for more accurate emissions reporting throughout the petroleum supply chain. Despite increasing environmental regulations and pressure for emissions disclosure, the low resolution of existing carbon footprint assessment does not account for the complexity of crude oil trading. The lack of source crude traceability has led to poor visibility into the "well-to-refinery-entrance" carbon intensities at the level of granular pathways between producers and destination markets. Using high-fidelity datasets, optimization algorithms to facilitate supply chain traceability and bottom-up, physics-based emission estimators, we show that the variability in global "well-to-refinery-entrance" carbon intensities at the level of crude trade pathways is significant: 4.2-214.1 kg-CO₂-equivalent/barrel with a volume-weighted average of 50.5 kg-CO₂-equivalent/barrel. Coupled with oil supply forecasts under 1.5 °C scenarios up to 2050, this variability translates to additional CO₂-equivalent savings of 1.5-6.1 Gigatons that could be realized solely by prioritizing low-carbon supply chain pathways without other capital-intensive mitigation measures.

SUBMITTER: Dixit Y

PROVIDER: S-EPMC10520038 | biostudies-literature | 2023 Sep

REPOSITORIES: biostudies-literature

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Carbon intensity of global crude oil trading and market policy implications.

Dixit Yash Y El-Houjeiri Hassan H Monfort Jean-Christophe JC Jing Liang L Zhang Yiqi Y Littlefield James J Long Wennan W Falter Christoph C Badahdah Alhassan A Bergerson Joule J Speth Raymond L RL Barrett Steven R H SRH

Nature communications 20230925 1

The energy mix transition has accelerated the need for more accurate emissions reporting throughout the petroleum supply chain. Despite increasing environmental regulations and pressure for emissions disclosure, the low resolution of existing carbon footprint assessment does not account for the complexity of crude oil trading. The lack of source crude traceability has led to poor visibility into the "well-to-refinery-entrance" carbon intensities at the level of granular pathways between producer ...[more]

PMID: 37749103

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Project description:The development of China's National Carbon Market has strengthened the inherent link between the carbon market and the broader energy market, providing a potential for cross-market risk transmission resonance. Studying the risk spillover effects between China's National Carbon Market and the crude oil futures market is of significant practical importance, both in terms of carbon market development and carbon risk management. Based on the Maximal Overlap Discrete Wavelet Transform (MODWT), the price series are decomposed across multiple scales, and the risk spillover effects between the carbon market and the crude oil futures market are examined from both the time domain and the frequency domain. Methods such as wavelet energy decomposition, wavelet correlation, lead-lag analysis, and wavelet coherence are used to explore the mean spillover effects and volatility spillover effects (collectively referred to as risk spillover effects) across various scales. The study finds that China's National Carbon Market exhibits a clear compliance-driven effect, with relatively low market liquidity. The crude oil futures market experiences frequent price fluctuations, primarily driven by long-term factors. In the time domain, the risk transmission resonance between the carbon market and the crude oil futures market is high, with significant positive correlations observed at the D1 to D4 scales, and noticeable mean spillover effects. In the frequency domain, at the D3 to D4 scales, the carbon market and the crude oil futures market exhibit similar volatility frequencies, indicating strong volatility spillover effects. Based on these findings, it is recommended that the trading volume of the carbon market be gradually increased to improve market liquidity. Furthermore, the risk monitoring and early warning mechanisms of China's National Carbon Market should be improved. For carbon-emitting companies, enhancing awareness of carbon asset management and making informed investment and hedging decisions based on the correlation between the two markets is crucial.

Dataset Information

Carbon intensity of global crude oil trading and market policy implications.

Publications

Carbon intensity of global crude oil trading and market policy implications.

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