The carbon conundrum...

JON FULLER, GLOBAL HEAD OF ADVISORY AND ENERGY TRANSITION AT XODUS GROUP

We have a responsibility to use engineering talent to stop carbon being released into the atmosphere and to remove what’s already there. Not only are we seeing a decline in appetite for oil and gas projects, but UN climate predictions suggest we need to reduce the carbon in our atmosphere by a compounded 7.6% annually for the next decade.

It is not responsible to argue that the world can yet do without hydrocarbons nor that we should stop producing all domestic reserves and rely on unstable regimes with questionable environmental records to sell us energy. We have the opportunity to use our expertise, resources and ethical standards to deliver a just transition.

The financial markets will dictate the need for projects that demonstrate rapidly reducing carbon impact, and those who move quickly will be rewarded at the expense of those who stand still.

The world is shifting towards electric energy. For more than a decade Xodus has advised the renewables sector, including on offshore generation and plant electrification. However, in some applications – such as shipping, heavy haulage, smelting and heating – the power density, transmission cost and weight of hydrogen provides advantages over battery charging and HVDC cables, especially if existing infrastructure can be redeployed. The expertise in generation, containment, transmission, compression and combustion developed by the oil and gas industry is directly applicable.

Carbon will become expensive and difficult to handle (think asbestos). Rightly, society will soon make it unacceptable to “fly tip” carbon into the atmosphere.

The UK ETS carbon emissions trading scheme is expected to launch this month. The UK Government has an opportunity to send clear price signals by setting a minimum price floor for each tonne of emitted carbon – recent EU ETS prices imply £40-45 per tonne would be a sensible starting point. There is a temptation to assume that the cap-and-trade market mechanism in the scheme will find the “right” price. Similar arguments were made against introducing a minimum wage in the UK. All sides of the UK political spectrum now agree it was the right thing to do.

For a sustainable North Sea, engineers will play a vital role in saving our environment. All new projects must clearly understand their carbon impact and financiers must be bold to not reject all carbon producing projects – but invest to minimise and remove carbon. We have the opportunity to think differently and provide clear incentives for investment to make a positive and lasting impact for the good of all humanity.

FUTURE: Jon Fuller says positive impact can be made.