Material Insights · Understanding the Material World

Flare and off-gas recovery: Economics and contracts

The gas has value; pipes and buyers are missing

What this tab covers Economics and commercial structures: levelised cost of the recovered energy against the fuel it avoids, host-site risk, and service models such as heat-as-a-service.

The gas has a market value, so much recovery pays for itself. Projects stall on infrastructure, offtake and regulation rather than on technology.

Levelised cost of heat or avoided cost

Favourable

The World Bank values the gas flared in 2025 at about USD 54 billion, about USD 0.32 per cubic metre (calculated). It estimates USD 70 to 100 billion of upfront investment would end routine flaring. Refinery projects pay back fast. An Italian refinery's liquid-ring recovery unit was estimated to pay back in about 2.5 years. An Iranian refinery study found 1.6 years for turning flare gas into LNG and NGL, on USD 5.4 million of fixed capital, against 3.1 years for using it in a boiler and steam turbine. For coal mines, IEA (via Ember) estimates 62% of drainage-and-use potential is available at negative net cost. IEA also finds about 30% of all fossil methane, more than 35 Mt, cuttable at no net cost at 2025 prices.2457810

Value of gas flared about USD 54 billion (2025), about USD 0.32/m3 (calculated)45 Investment to end routine flaring USD 70-100 billion upfront4 Refinery recovery payback about 2.5 years (Italy); 1.6 years LNG/NGL, 3.1 years power (Iran)78 Methane cuts at no net cost about 30%, more than 35 Mt2

Host factory credit risk

Unfavourable

Upstream hosts are often national oil companies or joint ventures in countries with weak credit and sanctions exposure, and the largest flarers include Russia, Iran and Venezuela. Gas volumes fall with field age. Refineries are stronger counterparties but face their own long-term demand decline. Coal mine methane projects depend on the mine's life, though abandoned mines keep emitting. They released nearly 5 Mt of methane in 2024, about 60% of it in China.35

Abandoned coal mine methane nearly 5 Mt (2024), about 60% China3

Heat-as-a-service and ESCO models

Mixed

Third-party models exist where a developer takes the gas and sells power or processed gas. The World Bank's flaring and methane programme backs such projects; in Uzbekistan an USD 11 million effort is cutting 9,000 t of methane a year. In coal, Anglo American reports spending about USD 100 million a year on its Queensland mines, abating about 60% of reported methane in 2023 and 70% in 2024. UNECE says about USD 20 per t CO2e for four to five years would make ventilation-air projects investable. This pass did not source a named take-or-pay contract for flare gas.110

Uzbekistan methane programme USD 11 million, 9,000 t/y cut1 Anglo American Queensland CMM about USD 100 million/y; 70% abated (2024)10 Carbon price for VAM investability about USD 20/t CO2e for 4-5 years (UNECE)10

Sources

  1. Global gas flaring hits highest level since 2007 (Global Gas Flaring Tracker 2025, covering 2024) World Bank, 2025
  2. Global Methane Tracker 2026: Key findings International Energy Agency, 2026
  3. Global Methane Tracker 2025: Understanding methane emissions International Energy Agency, 2025
  4. 2026 Global Gas Flaring Tracker report (publication page, covering 2025) World Bank, 2026
  5. Global Gas Flaring Tracker 2026 (full report, covering 2025; copy hosted by DevelopmentAid) World Bank, Global Flaring and Methane Reduction Partnership, 2026
  6. Energy efficiency improvement in oil refineries through flare gas recovery technique to meet the emission trading targets (Comodi, Renzi and Rossi), Energy 109 Elsevier (abstract via RePEc/IDEAS), 2016
  7. Thermo-economical evaluation of producing liquefied natural gas and natural gas liquids from flare gases (Barekat-Rezaei et al.), Energies 11(7) 1868 MDPI (peer-reviewed), 2018
  8. Global Coal Mine Methane Review 2026: cutting CMM this decade is urgent and feasible (reporting IEA Global Methane Tracker 2025, UNEP and UNECE figures) Ember, 2026