Oil and gas firms, clearly, have a more difficult route to decarbonization. All the same, their involvement in climate change mitigation is equally important. In fact, both investors and customers are holding them responsible for their actions.
The oil and gas business is undergoing a transition unlike any other. In contrast to earlier industrial upheavals, the decarbonization transition will usher in a whole new set of laws, problems, and possibilities. The race to decarbonization has begun, fueled primarily by consumer expectations for an alternative energy system and shareholder demands for consistent environmental, social, and governance (ESG) outcomes. To maintain its ability to operate during and after the transition to a low-carbon/net-zero energy system, the sector has set high emissions-related objectives. They should, after all. A few of businesses have already taken strong steps.
First of all, there is no one sure-fire way to mitigate harmful emissions in the oil and gas industry. Decarbonization measures are possible to implement, but it requires a balance of stringent policies and/or legal frameworks to carry out efficient strategies.
Even as the upstream oil and gas businesses face an exceedingly challenging approaching economic climate, they face a greater dilemma: increasing demand from authorities, investors, and other stakeholders to decarbonize their activities. Several upstream firms have already achieved significant decarbonization progress. However, as stakeholder requirements and expectations continue to climb, they will have to accomplish a lot more in the future.
In fact, it is proposed that the mitigation of emissions in the oil and gas industry may be accomplished by a mixture of increased energy efficiency of technologies and processes, a shift to green power alternatives, an emphasis on less energy-consuming oil extraction, and Carbon Capture, Utilization, and Storage (CCUS). As suggested by an industry expert in sustainable energy, “The future of CCUS in Egypt is possible, but we need to focus on efficient storage in reduce our emissions even from natural gas which is mistaken for a green source even though it is [considered to be] a transition source. One step at a time sustainable goals can be reached and with the help of CCUS if it is completed in a practical way.”
Furthermore, since methane emissions from venting or inadequate flaring account for a major fraction of operational emissions, industry experts highly recommend using drones and guidance systems to directly quantify methane emissions. In the gas sector, the use of CCUS to offset operating emissions is now acceptable and reasonably cost-effective. If a corporation employs CCUS, the projected contribution of CCUS to attaining its net zero operating emissions objective should be disclosed.
Along the path to decarbonization, players in the energy industry have three options for action. Companies can reduce emissions and increase the effectiveness in existing operations, equipment, and value chains. Organizations may hasten the transition by replacing existing energy and consumption sources with cost-effective and cleaner, zero-emission options. They may also adopt and scale new sources of energy, techniques, and technologies that are financially and technically feasible today. ln order to achieve success, a variation or mix of strategies must be carried out. De-risking the process is dependent on finding the proper balance over time.
Since more oil and gas companies vow their endorsement for net zero, carbon offsetting is one technique the sector may utilize as part of a multi-pronged strategy to reduce overall emissions. Simply expressed, carbon offsetting involves balancing emissions from one cause (for example, emissions from gas flaring in hydrocarbons) by lowering emissions from some alternative sector by an equal quantity.
This might include investing in initiatives that utilize the power of ecological systems like plants and forests to remove GHGs from the atmosphere. An oil company, for example, may pay for another industry or company to cultivate sufficient plants to offset one barrel of oil. One technique that enables oil and gas producers to accomplish this is the purchase and sale of carbon offset certificates. These are fundamentally financial schemes that enable carbon polluters to acquire credits from organizations that cut or avoid GHG emissions.
Skeptics of carbon offset programs, in contrast, claim that they are merely a way for polluters to maintain polluting while feeling indifferent about it. They might argue that extracting oil from the ground and utilizing it to fuel automobiles produces the same amount of carbon emissions.
To conclude, advocates say that permitting emission-intensive sectors to acquire carbon credits allows for capital invested in sustainability programs such as renewable power or forestry rejuvenation that would normally go unfunded. It may be argued that it is critical for the global community to embrace a realistic, economically investable, action-oriented strategy to reducing emissions—all with a tight perspective on implementing the transition at scale. The clock is ticking. Organizations that act now will not only drive the decarbonization push toward 2050, but will also put themselves in a better position for long-term business potential.