Oil and gas industry must embrace switch to net zero
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The 23rd biennial Offshore Europe conference held in Aberdeen earlier in September faced the challenges of climate change. In a world where the younger generation are fearful of its full effects as a global threat, how would the oil and gas majors react?
For sure they must, but would it be massive lobbying against a rapid exit from extraction or would they truly embrace a just energy transition?
The omens are mixed. On a global scale the biggest corporations have huge lobbying teams and budgets. In the USA, former senators and congressional staffers are on their payrolls. Don’t forget we are dealing with Exxon Mobil and Shell which have revenues equivalent to the GDP of Norway. They are used to being too big to baulk. They are used to governments protecting their interests as the US did for Exxon in Iraq.
Imperialism is not a facet of the past. It's right here in various public-private partnerships in the 21st century.
One commentator speaking about these issues ahead of Offshore Europe was Nick Dalgarno, who is MD at investment bank Simmons Energy. He notes the effects on public opinion of protesters, and he pinpoints the appeal of Greta Thunberg. This has "skewed public perception and, as a result, oil and gas is facing its ‘tobacco industry moment’," he suggests.
He goes on: "Environment-conscious millennials view oil and gas as dirty, volatile and hazardous." In addition to climate change, he sees the industry has real issues with diversity such as gender, age and culture.
What will change that mindset? Certainly not the industry attitude that the transition will need lots of fossil fuels to bridge the 20-year transition, so business as usual. Certainly not in further exploration for deeper and deeper wells.
The one sure way to curb such trends is the outlook of potential investors who are picking up the vibe that a far safer bet is electric storage and hydrogen technology alongside smart grids, wind and tidal power, where the income streams – like the product – are infinite.
Offshore Europe delegates have a choice. Either move quickly to the new normal or thumb their noses at this generation’s concerns over climate extinction.
Meanwhile, the Scottish Programme for Government was launched in Edinburgh on September 3. It majored on new ways to fight the climate emergency. That is, the means within the grasp of a small northern European nation with a world-leading approach to curbing the crisis.
Nicola Sturgeon reminded MSPs that climate change is happening as we speak. It is something that we must all contribute to tackling now. This Programme for Government contains the first package of additional measures that will respond to the climate emergency which Ms Sturgeon announced last April.
These measures cut across all parts of government, but they are by no means the final word – instead they should be seen as a down-payment on the SNP commitment to ensure that Scotland reaches its goal to contribute to global climate change by 2045 at the latest.
It’s an embryonic Scottish Green Deal that will require greater production of electricity from renewable sources. That’s good news for a growth in associated clean power jobs to build, service and deliver fully decarbonised fuel by 2032.
As one of the biggest emitters of CO2, transport requires a huge turnaround.
Scottish Government ambition is shown by the plan to put the Highlands and Islands on a path to becoming the world's first net-zero aviation region by 2040, including a commitment to zero emissions from Highland and Islands Airports Limited's operations. Trials of low or zero-emission flights will begin in 2021.
With long journeys to Edinburgh and Glasgow as well as within the Highlands, the need to reduce emissions from Scotland's railways to zero by 2035 will be achieved through the continued electrification of the network. Perhaps the procurement of battery-powered trains and exploration of the potential of hydrogen-powered trains in Scotland could serve the north best.
Supporting the demand for ultra-low emission vehicles (ULEVs) through the Low Carbon Transport Loan scheme will expand to include used electric vehicles. Charging points and reliable clean electricity supply will require work with energy industry partners such as Scottish Power.
To ensure that from 2024, all new homes must use renewable or low-carbon heat will need a fundamental overhaul in building regulations that will increase energy efficiency and efficiency of construction from 2021. This will be accompanied by a £30 million investment in renewable heat projects.
The transition to net zero will be at the heart of the Scottish National Investment Bank's work. It will try to unlock additional resource for emissions-reducing investment and offer the market a £3 billion portfolio of projects, including renewables, waste and construction.
The First Minister was nothing if not realistic. The oil and gas industry can’t just switch off extraction from the North Sea and west of Shetland immediately – to do so before fully sustainable clean power is in place would require imports from less scrupulous producers.
The importance of the Net Zero Solution Centre (NZSC), based at the Oil and Gas Technology Centre in Aberdeen, has a firm message of support from the Scottish Government. The target is early reduction of the UK sector by two-thirds and will include further research into Carbon Capture and Storage. This has the buy-in of the UK government and many oil majors including Shell and Ineos.
If the oil and gas tobacco moment is to be avoided, NZSC must succeed.
robgibson273@btinternet.com
