The new decade begins with steady growth in campaigns geared towards facilitating a complete shift from fossil fuels to safer renewable energy options. The pressure from stakeholders, NGO’s concerned about the environment as well as the general public has prompted oil and gas companies to modify their operations in a bid to decarbonize the energy system.
The International Energy Agency’s Sustainable Development Scenario (SDS) and the Shell Sky Scenario—both aggressive decarbonization forecasts—show an ongoing, long-term role for oil and gas, even while demand levels are reduced from where they stand today. In the United States, India, and China—the three largest greenhouse gas emitters—natural gas, in particular, has the potential to remain an integral component of the low carbon energy transition for decades to come, depending on the policy mechanisms and technologies in place.
As economies around the world gradually begin to explore safer environmental practices, oil and gas companies are being pressured to – not just – adjust to a decarbonizing world, but to also position themselves as focal points in the transition towards renewable energy. The disincentivising of fossil fuels and the adoption of reuse and recycle strategies signal a shifting landscape, with investors beginning to advocate for hydrocarbons and the need for more decarbonized systems.
The transition towards renewable energy could threaten the worth of the oil and gas industry. Would hydrocarbon companies be able to survive the paradigm shift and furthermore, would they be able to lead the line in the further exploration of renewable energy options. While it continues to look like a daunting task, the oil and gas sector has begun to put some measures in place to facilitate the transition.
Diversifying Business Models
By increasing focus on other downstream opportunities such as electrification and energy services, oil and gas companies can create more awareness around options like coal-to-gas switching or lower GHG-intensity oil and gas.
Supporting Decarbonization Tech
Oil and gas companies are ramping up support for increased usage of deep decarbonization technologies at the company and industry level. These technologies include carbon capture, zero-emissions production, methane efficiency, etc.
Hydrocarbon companies are beginning to reexamine the geography and geopolitics in order to minimise exposure to potential “stranded assets”. The examination process will help these companies focus more attention on regions with more long term oil & gas demand.
Adopting ESG principles:
Environmental Social Governance principles are geared towards creating widespread awareness amongst governments as well as the public on the efforts being made by oil and gas companies to reiterate value and also assist in developing a future made of clean energy resources and technologies.
As the pressure to eliminate fossil fuels continues to mount on oil and gas companies, the sector is looking to explore potential business opportunities. From coal-to-gas switching to offshore wind and advanced biofuels, communicating value will hinge on the ability of these companies to prove that they can contribute substantially to the energy transition.