De-Carbonization Pathways for Oil and Gas
Bottom Line: COVID-19 has led to a drastic drop in the world's oil and natural gas demand. This has been combining with already pressing concerns on how the industry, and the use of these commodities, contributes to climate change. While the “energy transition” to a more sustainable system is surely underway, oil and gas consumption could continue to grow. It is therefore essential for the oil and gas industry to rethink its role in abating climate change and seek a wide range of options to reduce greenhouse gas emissions. This study offers 10 different pathways for the industry to pursue.
The contraction in oil and gas demand due to the spread of COVID-2019 has helped generate shockwaves through the energy and financial markets.
As governments grapple with one of the most severe economic disasters in history, the oil and gas industry is focusing on how to survive another extreme price cycle.
Some claim that climate change issues and de-carbonization efforts will reduce in importance and may even fall off the agenda of some companies.
Energy companies have a long-term horizon, however, and their investments extend for multiple decades and the projects planned and delivered today will go through many cycles.
As such, oil and gas companies must continually remain fixated on the structural trends shaping the industry.
Looking forward, there is little question that the issue of the “energy transition” to de-carbonization will remain dominant.
This is mostly driven by driven by environmental concerns, changes in public perceptions, investors’ attitudes, energy and climate policy, and the development of new technologies.
COVID-19 caused historic instability in markets, and its underlying causes may has the potential to render the oil and gas sector less attractive to investors and reinforce calls for an even faster transition.
But it must be remembered that oil and gas still account for some 65% of the world’s primary energy demand - currently irreplaceable at scale.
This makes the industry one of the biggest areas where the world must work to reduce the greenhouse gas emissions causing climate change.
We know that these companies are already facing growing political, societal, and financial market pressures.
At the same time, because oil and gas demand could easily be growing for quite some time, the industry could also become a part of the solution if it can find pathways to accelerate de-carbonization of oil and gas using new technologies and business models that embrace new regulations and policies.
The current study examines 10 key areas where the oil and gas industry could help meet climate goals while also supplying the critical energy that the world will continue to need:
- Carbon pricing options
- Justice in the energy transition
- Pathways to a low-emissions future
- Circular Carbon Economy
- Pathways toward de-carbonization
- Hydrogen options
- Decarbonized gas
- Methane emissions
- Oil and gas industry sustainability initiative
Read the full study here.
Projected Energy Demand Under International Energy Agency's
Sustainable Development Scenario
- The contraction in oil and gas demand from COVID-19 is causing a rethink in the industry – which has augmented already pressing concerns on how the business was working to abate climate change.
- While the industry is already facing growing political, societal, and financial market pressures, demand for oil and gas could easily continue to grow for some time.
- As such, the industry could also become a part of the solution for climate change if pathways to accelerate de-carbonization of oil and gas can be found, deploying new technologies and business models that embrace new regulations and policies to cut greenhouse gas emissions.
Read the full study here.