A clear direction in unclear times…

By Iman Hill, IOGP Executive Director

Iman Hill, IOGP Executive Director

Like you, I have been gripped by the crisis in Ukraine. The invasion is a crime, the humanitarian situation a tragedy, and the disruption to the energy supply a ticking time bomb. It’s obvious why this is front and centre of every media channel, social media post, and debate in our homes.

But has this disaster taken the focus away from another crisis, that of getting the world to net-zero carbon emissions by 2050? Rising costs and the daily struggle of making ends meet has become the priority for the public – we are all trying to manage our short-term responsibilities. Indeed, when Extinction Rebellion protestors glued themselves to trains and buildings in London, they received backlash from the public trying to get to work after a financially challenging lockdown. The rising cost of fuel and its availability has brought many to a crisis point. As a result, the climate is in danger of being pushed down the agenda of priorities, and this is not good. If you’re wondering why I say that, think about the much-anticipated recent report by the Intergovernmental Panel on Climate Change (IPCC) on adaptation and mitigation which should have topped the news. It didn’t.

But what is becoming more evident than ever is that climate change and energy security are wholly interdependent and should only be addressed together. When announcing plans to launch new licensing rounds for the North Sea, Kwasi Kwarteng, the UK Secretary of State for Business, Energy and Industrial Strategy, said, “In such an uncertain world – and in a world where oil and gas are necessary – it would be foolish to turn the taps off on domestic production anytime soon. This has to be a transition, not extinction. Those calling for an immediate end to UK oil and gas ignore the fact that it would make the UK more reliant on foreign exports – it doesn’t reduce demand.”

And this is where I see hope, a hope that many will challenge. While a lot of effort in recent years has gone into marginalizing the oil and gas industry in the debate on climate change, I see that our industry must now step in and take its rightful leadership position to work with society on these two key issues. It is perfectly placed to.

The IPCC report says that we have less than three years to hit peak greenhouse gas emissions or average temperatures will soar past the 1.5oC warming barrier the Paris agreement sought to put in place. To keep on track, global emissions must be cut by 43% by 2030. It’s a huge but achievable task. The answer lies in effective climate policies and technology.

Policymaking has cut emissions but needs to scale up rapidly if we are to achieve the levels of reductions we need. By 2020, over 20% of global emissions were covered by carbon taxes or emissions trading systems, but this has still been insufficient to achieve the deep reductions needed. It’s probably too early to determine how energy policy is likely to evolve because of Ukraine. We will need to see policymakers working to balance society’s needs for energy, keeping in mind the criticality of diversity of supply and energy security, along with climate and environmental objectives. And they will need to develop these policies while keeping reliability and affordability in mind, as well as cleaner energy. Our industry must be part of the consultation on these policies because we will be producing and supplying that energy. A recent IEA report on methane emissions stated that “tackling methane emissions from the energy sector represents one of the best near-term opportunities for limiting global warming because the pathways for reducing them are well known and often cost-effective. The oil and gas sector has the know-how and resources to take quick action.”

While governments land policies and mechanisms to ease the strain on consumers, the current context also has the potential to foster innovation and solutions. And this wouldn’t be the first time that crisis has led to invention. The oil embargoes in the 1970s spurred innovation at the time and gave us the nuclear power operating capacity we have today. The IPCC report states that carbon removal is part of the net-zero equation and will be vital to keep the average global temperature rise less than 1.5°C above pre-industrial levels. This opens opportunities for our industry to accelerate technologies that we have been fostering for some time, such as methane management equipment, low-carbon hydrogen and carbon capture use and storage (CCUS). CCUS can achieve deep emissions reductions in parts of the economy where full electrification is technically or economically unfeasible and is a proven technology. But what has been and remains missing are the supporting government policies needed to commercialize it, deploy it at scale, and bring down costs.

So, the message from the IPCC is clear: better policies and technologies are needed to help the world decarbonize. This is a huge opportunity for our sector. We don’t have to give up hydrocarbons to achieve net-zero by 2050. The industry has already positioned itself on a path to helping achieve net-zero, but it’s not enough for us to continue doing what we’ve been doing; we need to broaden and intensify our existing efforts while continuously seeking new opportunities for decarbonization in our operations.

Hydrocarbons are deeply, perhaps inextricably, woven into the world we’ve built. Hydrocarbon products don’t have to be eliminated from our lives and can be produced in a low-carbon world. And, ultimately, we need to make money from hydrocarbons today to fund the low-carbon technology we all need for tomorrow. IPCC Chair Hoesung Lee states that we have the tools and know-how to limit warming. I would go further and say that our industry holds much of that expertise and so must be brought in to collectively solve the problem of managing both climate change and the challenge of energy security. That is the key to a sustainable future.

This article is also published on LinkedIn.

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