Currently, the transformation of fossil-fuel-based energy systems to sustainable and decarbonized energy systems is one of the world’s greatest challenges. At the same time, it presents great opportunities for making global energy supplies affordable and widely available than ever before.
The primary catalyst for this transformation was the 2015 Paris Agreement. It had set the goal of lowering the global average temperature to less than 2°C above the pre-industrial levels by 2050. To work towards this objective of decarbonization of energy, 800+ companies have launched ambitious programs to curb their greenhouse gas emissions, mainly carbon dioxide.
Evidently, everyone has their eyes set on the oil and gas industry. An analysis found that the world’s energy-related carbon emissions totalled around 40 gigatons, and two-third of these emissions were related to oil and gas, which were collectively emitted through industry processing, extraction, transportation, refining activities as well as at the consumption point when hydrocarbons are converted for different uses. Therefore, it is crucial for oil and gas corporations to mitigate climate change by not just limiting the emissions occurring in their operations but also emissions which are beyond their reach, thus leading the way to the decarbonization of energy.
To achieve climate and carbon neutrality by limiting carbon emissions beyond their reach, oil and gas corporations can do multiple things. A few of them are:
- Actions Oil And Gas Corporations Can Undertake
These actions can be further divided into three sets:
- Cleaning the core activities by minimizing emissions and maximizing the efficiency ofcurrent operations.
- Decarbonization of energy by accelerating the transition action and replacing the existing sources of demand and energy with cleaner alternatives.
- Extending the frontier actions by focussing on adopting renewable and new energy sources, technologies such as machine learning, artificial intelligence, digitalization, and so on.
- Oil And Gas Companies Have The Ability To Organize Actions In Hydro-Carbon Burning Sector
According to an analysis, a significant percentage of emission reductions are dependent on the collaboration of energy suppliers and their customers. Moreover, the four sectors- transportation, buildings, heavy industry and power will drive a majority of the projected increase in emissions.These are the industries the oil and gas corporations need to influence and target by accelerating investment and successful collaborations.
- Strategic Positions Oil and Gas Corporations Can Hold in the Future
Ideally, there are archetypal roles oil and gas corporations can play to combat climate change while making efforts for the decarbonization of energy.
- Decarbonization Specialist, for sustaining and growing value from oil and gas value chain
- Energy Major, for building or adding clean energy businesses
- Low-carbon Solution Leader, by focusing on different areas of energy systems, instead of limiting focus on oil and gas industry
To begin with, oil and gas corporations can collaborate with leading companies that can provide robust and technologically advanced decarbonization solutions and services.
How Are Other Corporations Working Towards Decarbonization of Energy?
- Investing In Energy Efficiency
Some companies have decreased their energy intensity by a significant percentage in recent years by reducing their energy demand and adopting sustainable technologies and renewable energy sources. They have set energy efficiency targets to combat climate change and to achieve them, they have implemented an exhaustive suite of innovative strategies.
- investing in Renewable Energy Sources
May corporations have been driving the decarbonization of energy with renewable energy sources, including hydro, solar and wind. Corporations adopting renewable energy sources can collaborate with leading companies to create efficient and renewable energy systems. This helps save costs significantly and achieve higher efficiency.
- CorrelatingCorporation’s Success With Electrification Of The Energy Systems
As decarbonization of energy is gaining importance, corporations have begun correlating their success with the electrification of their systems. Additionally, they are aligning the same with their corporate climate action plans.
Decarbonization of energy by 2050 is achievable. To contribute to it, the need is for all stakeholders’ collaborative and cooperative efforts. Undeniably, it is time for corporations to rethink their customer value prepositions and operating models, engage with other industry sectors differently, and ramp up innovation engines.