Country
Assessment
The Carbon Credits (Carbon Farming Initiative) Act, 2011, made GHG emissions reduction possible for crediting companies across the economy. The Carbon Farming Initiative Amendment Act, 2014, established the Emissions Reduction Fund, which is administered by CER and is now known as the Australian Carbon Credit Unit (ACCU) Scheme. Companies can earn ACCUs for reducing fugitive leak and venting emissions at oil and gas extraction, production, transport, and processing facilities by installing and operating equipment to capture these gases and combusting them in a flare device. The Carbon Credits (Carbon Farming Initiative—Oil and Gas Fugitives) Methodology Determination, 2015, establishes “procedures for estimating abatement (emissions reduction and sequestration) from eligible projects, and rules for monitoring, record keeping and reporting.”
No evidence of negotiated agreements between the public and private sectors was found in the documents consulted.
Generally, laws and regulations governing GHG emissions also apply to midstream and downstream activities. For example, Part 9.11 of Volume II of the OPGGS Act provides regulations for preventing petroleum’s wastage or its escape from pipelines conveying it to be flared or vented (see section 3 of this case study for other examples). As discussed in section 15 of this case study, the NGER (Measurement) Determination, 2008, establishes calculation methods and prescribes specific methods for various sources of GHG emissions, including those associated with flaring and venting, and fugitive emissions across the oil and gas midstream and downstream activities. Some states have separate laws and regulations for pipelines, storage facilities, processing plants, refining facilities, and distribution networks, but the requirements appear to be mostly consistent with national GHG emission restrictions.
According to Article 7 of the Petroleum Law, 1997 , the ANP under the Ministry of Mines and Energy (MME; Ministerio de Minas y Energía) is responsible for regulating all petroleum industry activities. It is responsible for formulating Brazil’s policies in the energy sector. The council comprises government representatives (including seven ministers), outside energy experts, and nongovernmental organizations. The Energy Research Office (Empresa de Pesquisa Energética [EPE]) was established by Law 10847/2004. It supports the MME’s energy policies with studies and research on energy planning, including for electricity, oil, natural gas, and biofuels. Law 7735/1989 created the Brazilian Institute of Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais), the administrative arm of the Brazilian Ministry of the Environment.
There are limits on the volume of gas that can be flared or vented by each concession area. According to Ordinance 123/2000 issued by the National Agency for Petroleum, Natural Gas, and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis [ANP]), the Annual Production Program (Programa Anual de Produção [PAP]) approved by the regulator should include a schedule with monthly estimates of flared or vented gas. Article 3 of Resolution 806/2020 sets the maximum allowable limit for the monthly volume of flaring or venting at a level that is 15 percent above the forecasted gas-to-oil ratio based on the most recent approved PAP.
Article 2 of Resolution 806/2020 defines “ordinary flares” as flaring or venting of gas that does not require prior authorization. Article 3 states that the volume of ordinary flaring or venting of natural gas carried out each month cannot be higher than that corresponding to the Associated Gas Utilization Index (Índice de Utilização de Gás Associado [IUGA]) for the same month in the approved PAP with a permitted exceedance of 15 percent. Sanctions are applied to each monthly infraction. Article 14 states that authorization is not needed in case of emergency flaring or venting. Operators should provide ANP validation of the volume of gas flared or vented during emergencies. Article 6 states that flaring or venting associated gas does not require the ANP’s prior approval in the following cases: Flaring or venting of associated gas in volumes equal to or less than 3 percent (IUGA greater than or equal to 97 percent) of monthly offshore production of associated gas in fields in operation five years before the date of the publication of the resolution (before January 17, 2025) and 2 percent (IUGA of 98 percent or greater) in fields that start production five years or later after the date of the publication of this resolution (after January 17, 2025) 1.5 percent (IUGA of 98.5 percent or greater) of the monthly associated gas handled by a marine production unit for lifting oil or received from other units in volumes equal to or greater than 50 percent of the volume of gas handled 3 percent (IUGA of 97 percent or greater) of the monthly onshore production of associated gas. When the volumes of associated gas flared are greater than those approved, but the new (or revised) IUGA is equal to or greater than the one considered in the most recent approved PAP. Flaring of petroleum or flaring or venting of natural gas during well testing with a flow period of 72 hours or less per interval tested. Flaring or venting of associated gas in fields that produce a total monthly volume equal to or less than that corresponding to an average flow rate of 5,000 m³/day as long as the field does not have wells with an average flow rate above 1,500 m³/day, for which a project using associated gas should be proposed. Flaring or venting of associated gas produced in onshore fields or marine production units with a gas-to-oil ratio of 20 m³ of gas per m³ of crude oil or less. Flaring for safety reasons. For onshore production units, a limit on a maximum monthly volume of 1,000 m³/day for each pilot/flare. The offshore limit is 2,000 m³/day for each pilot, provided that such pilots are operational. Articles 7–16 define the criteria and procedures for authorization and validation of extraordinary flares and circumstances under which extraordinary flaring and venting of associated gas are allowed without prior approval.
According to Law 9847/1999, the volume of gas flared under the responsibility of the concessionaire will be included in the total volume of production used for calculating royalties. The royalty rate is typically 10 percent but can be as low as 5 or as high as 15 percent. Royalties on oil and gas production are fully tax-deductible.
According to the ANP’s interpretation of Article 2 of Law 9847/1999 , infractions involving flaring or venting may be subject to suspension of operation. Article 13 provides for the right to appeal. Under Decree 2953/1999 , nonmonetary sanctions can take the form of suspension of product supply; temporary suspension, total or partial, of the facility or installation; cancellation of registration of an installation; and revocation of authorization to carry out the associated activity. Sections 1 and 2 of the decree provide administrative penalty procedures; Sections 3 and 5 describe the appeal procedures. The defendant has 15 days to present evidence to contest the charges, and the ANP has 30 days to evaluate and decide on the case. If the decision rules against the operator, a second appeal can be mounted within 10 days. The ANP director will decide on the appeal within a maximum period of 30 days, starting from the date of the submission of the appeal.
No evidence regarding performance requirements could be found in the sources consulted.
Article 2 of Resolution 806/2020 defines “extraordinary flaring” as associated gas flaring and venting subject to the ANP’s prior authorization or subsequent validation. Article 3 requires the ANP’s approval of the PAP, which must include forecasts of routine gas flaring and venting and volumes flared or vented that would not be subject to royalties. Article 7 states that the ANP’s authorization of extraordinary flaring should be requested with notice of a minimum of 30 days. Articles 8–16 establish the procedures and criteria for authorization or subsequent validation of “extraordinary flaring.” The annual production programs approved by the ANP may contain specific conditions, including those related to flaring or venting, in addition to those imposed by Resolution 806/2020. ANP Ordinance 123/2000 provides the procedures to be followed for approval. Resolution 806/2020 provides the technical criteria. Chapter 4 of Ordinance 422/2011 authorizes the Brazilian Institute of Environment and Renewable Natural Resources to set conditions for environmental licenses, including controlling emissions discharged to the atmosphere.