Oil companies can slash carbon output
Walmart, Amazon and dozens of the world’s largest corporations have promised to produce no more carbon dioxide than they consume by mid-century, but if the world truly wants to mitigate climate change, energy companies must take the lead.
Because hydrocarbons are its main product, a zero-carbon oil and gas company may sound oxymoronic. S&P Global Ratings, a data and consulting firm, says an energy transformation is necessary and sees opportunities for the industry in hydrogen, carbon capture utilization and storage, and biofuels.
If we maintain this emissions pace through 2050, parts of the world will be dangerously hot.
“The oil majors could play a role given their size, gas and power trading, downstream fuel retail operations and offshore expertise. BP has indicated it expects to employ by 2025 as much as 20 percent of its capital in transition businesses, including low carbon,” an S&P study reported.
“Nevertheless, we expect the energy transition for oil majors will be long and challenging,” researchers added. But slashing carbon emissions is the only way for them to stay in business.
Scientists understand the relationship between carbon dioxide in the atmosphere and average global temperatures, and therefore know what concentration will make the planet unfit for habitation. If humans keep producing greenhouse gases at the current rate, we will exceed our “carbon budget” to limit warming to 2 degrees Celsius by 2035.
If we maintain this pace through 2050, some parts of the world will become dangerously hot, and temperatures in Texas will routinely top 120 degrees Fahrenheit. All nations must begin slashing emissions now, as Chinese President Xi Jinping promised to do last month at the United Nations.
The consulting firm Accenture last month found that if oil and gas companies stretch themselves, they can reduce their carbon footprints by 80 percent by 2050. Limiting global warming will require an enormous effort from society, government and business, said Muqsit Ashraf, the Houston-based global head of Accenture’s energy business.
Nearly two-thirds of the world’s carbon dioxide emissions come from burning fossil fuels, totaling about 54 gigatons, the equivalent weight of 88 billion people in carbon. Oil and gas companies
make up two-thirds of those emissions and can either be part of the solution or die. Accenture lays out a practical if ambitious plan.
“There are a lot of emissions that can be taken out of the system without changing their core product,” Ashraf explained. “None of this is pie-in-thesky stuff. It is only what is truly practical.”
More efficient buildings, vehicles and operations can make a difference. Patching methane leaks, ending gas flaring and completely getting rid of coal could reduce emissions by 20 gigatons.
Companies can eliminate the next 20 gigatons by embracing new, cleanenergy technologies such as wind, solar, batteries, hydrogen and carbon capture. Some companies are already using solar energy to power oil field operations, and developing plans to pump captured carbon dioxide into old wells.
Many of these technologies are already economical a decade earlier than expected, Ashraf said. But making the so-called energy transition will require an additional $1.5 trillion a year of investment on top of the $3 trillion the world already spends on energy.
“The money has got to come from outside the oil and gas circle,” he said. “But none of the major clean-tech companies today have the scale, balance sheets or deep pockets.”
Some European companies, though, are taking up the challenge.
The CEO of Spain’s largest oil and gas company, Repsol, has promised to achieve carbon neutrality by 2050. And not just of his company, but for all the oil and gas his clients burn, too.
“Taking the technologies that we see today, we think we will be able to reduce 70 percent by 2050,” Josu Jon Imaz told a webinar for CERAWeek, the global energy conference organized by consulting firm IHS Markit. “Either we are going to experience a technology revolution in the next 30 years … or, if we cannot do that, then we are going to compensate with natural sinks.”
Natural sinks are forests and other land uses that remove carbon dioxide from the air. But while they are useful, Imaz’s call for more research and development reveals the global business opportunity in helping energy companies reduce emissions.
Ashraf believes low energy prices will slow the adoption of advanced clean energy technologies unless governments intervene. He expects the global temperatures will rise more than 2 degrees Celsius by 2050, resulting in severe damage to human health.
The world needs energy companies to do more to address emissions. They know what they must do; they just need the right incentives to get on with it.