International cooperation towards net zero emissions pushed
Greenhouse gas emissions by oil and gas operations accounted for 15% of global energy emissions last year.
The global energy sector is on the cusp of a significant transformation, with international institutions and governments aligning to radically change how energy is produced, distributed, and consumed.
Barbara Monterrubio, Managing Analyst in the Energy Division of Globaldata, underscored the urgency and scope of this transition in light of the need to avoid catastrophic climate change.
“There is a growing consensus within international institutions that the way in which energy is produced needs to be radically altered,” Monterrubio explained.
She said that this consensus is evident in the commitments made by various countries as signatories of the Paris Agreement, aiming to keep global temperatures below two degrees.
She highlighted the recent strides made in this direction:
“At COP28, 116 countries signed the global renewables and energy efficiency pledge, agreeing to triple worldwide installed renewable generation capacity to at least 11,000 gigawatts and to double the global average annual rate of energy efficiency improvement.” she highlighted.
According to Monterrubio, the role of international cooperation is pivotal. Furthermore, over 20 countries have declared an intention to triple their nuclear energy capacity.
When discussing the balance between regulation and market incentives to stimulate investment in decarbonization within the oil and gas industry, Monterrubio noted the diversity of approaches across different regions.
She stated, “Incentives stemming from policies, such as subsidies, feed-in tariffs, green energy incentives, and tax incentives, play a crucial role.” However, the challenge lies in finding the correct approach and developing incentives that vary from country to country.
Regarding the restructuring of oil and gas companies to align with a net-zero emissions goal, Monterrubio observed a significant shift in their business models as these companies are also increasingly focusing on carbon offsets and switching their products to low-carbon energy sources, including hydrogen, LNG, biofuels, or renewables.
“Most of the oil and gas companies have set net-zero targets by 2050, with a focus on reducing gas flaring, investing in Carbon Capture, Utilization, and Storage (CCUS) technologies, and powering platforms with renewables,” she said.
Monterrubio also emphasized the need for a balanced approach that incorporates both government incentives and market-driven strategies, saying that this approach will ensure that investments are channeled effectively towards decarbonization technologies, which is crucial for the long-term sustainability of the oil and gas industry.