For many, many decades the oil & gas industry has been at the heart of delivering on an increasing energy demand. This has allowed many areas in the world (and, frankly, the industry) to develop and prosper, in line with fundamental global political and macro-economic beliefs.
However, it seems the climate challenge has changed this perception of our industry: increasingly, the energy world is being divided into “fossil bad, renewable good”.
National governments in Europe are developing extremely ambitious goals to reduce CO2 and abolish fossil fuels in the heating and mobility sectors; oil & gas producers are being accused of lying to investors about the CO2-implications of fossil fuels, the European Investment Bank has ceased to provide funds to “fossil fuel projects”. Finally, EU Commission President von der Leyen has just recently presented her ideas for the Green Deal to make Europe the first climate-neutral continent by 2050 and the European Union to become leader in the fight against climate change. It seems as if there is a competition going on when it comes to develop ever more ambitious long-term targets.
It seems that the end of oil & gas is approaching rapidly; at least in certain parts of the world. Having a closer look into Germany, the self-proclaimed frontrunner in climate protection, this has become a widely supported position. Policy makers and a majority of public opinion appear to be of the firm belief that the (German) world can do without oil & gas sooner rather than later. As a consequence, a mantra has been created across the board of many societal, industrial and political groups that – in simple terms – does not provide room for challenge, let alone open opposition to this pre-agreed all-renewable energy world.
Having said that, German energy policy makers are becoming aware that wind and solar will not suffice to provide the necessary (renewable) energy for the country. Yes, roughly 40% of the electricity consumption stems from renewable energy, but what about overall energy consumption: wind and solar make up for approx. 160 TWh/a, i.e., just six percent of the overall energy consumption of 2,500 TWh/a. It is ambitiously expected that renewable electricity might grow to as much as 600 – 800 TWh/a. This provides a huge challenge to the renewables industry and success is unclear to say the least. In any case, even in this scenario there is room for “molecules”: gas and oil will have a lot of space even in rapidly advanced renewable societies, and this is true not just as feedstock, but also in heating, power and mobility sector.
But the oil & gas producers cannot sit and wait. We have to work on all fronts: (1) reduce the carbon footprint in our activities, from well head to burner tip, (2) promote ways to seek carbon neutral energy from gaseous fuels: hydrogen (incl. gas pyrolysis) CCS and CCU are some examples; (3) last, by no means least: in a heavily politicised energy world, the oil & gas industry is well advised to provide a CO2-narrative that provides the people on the ground and policy makers with a clear and sustainable storyline, that our industry provides not just low-carbon to carbon-neutral energy, but ensures security of supply and supports the world with affordable energy that helps to foster economic growth as well as welfare for billions of people in the developing countries. This narrative must be conveyed loudly, clearly and with confidence, also in countries that have developed a “100%-renewable-narrative”.
As much as OECD countries are at the forefront of CO2-reduction, their economies must survive the energy transition in a global competitive market – if people want to maintain their way of life and work and if politicians want to stay in office. In a world of yellow vests and other populist protest this cannot be taken for granted. Getting it right means our industry is set to provide the necessary mechanism for a successful transition.
About Ludwig Moehring
In 1992, Ludwig Moehring started his career in the energy business with BEB Erdgas und Erdöl GmbH (Hanover), the biggest gas and oil producer in Germany. In 2000 he joined Shell Gas and Power in London where he was responsible for the governance of Shell’s European gas affiliates. In 2004, he became Shell Energy Europe’s General Manager for Shell’s gas activities in North-West Europe, based in The Hague. From 2010 to 2018 he was Managing Director responsible for Sales in WINGAS GmbH (Kassel); between 2012 and 2018 he also held senior non-executive roles on the Boards of the German gas associations Zukunft ERDGAS and ASUE. Since November 2018, he has been Director General of Bundesverband Erdgas, Erdöl und Geoenergie e.V. (BVEG), the German Oil and Gas Producers Association.