The Paris climate deal — and the actions it will require to keep global temperature rise to “well below” 2 degrees Celsius — can go one of two ways for big oil. Either it’s a nail in the coffin of the high-carbon-emitting industry, or it’s an opportunity for oil companies to develop a low-carbon future.
At IHS CERAWeek, the world’s largest gathering of oil executives held last week, industry insiders told Reuters it’s the latter — an opportunity to improve and cheapen carbon capture and other technologies that will help oil and gas cut emissions and protect the industry from climate change legislation.
“If you could eliminate all of the carbon dioxide from fossil fuel combustion, then you could use those fuels as long as you want,” said Robert Armstrong, director of the MIT Energy Initiative, in an interview with Reuters, adding that renewables should also be part of the oil industry’s research focus. “It’s just a matter of making those technologies competitive in the market.”
A number of international oil companies have for many years pursued research and development of low-carbon technologies and business opportunities, Navigant Research energy director Nick Allen tells Environmental Leader. “The question is whether they are doing enough, fast enough? COP21 potentially provides the necessary momentum.”
Capital Investment Vs. Core Hydrocarbon Business
At the COP21 Paris climate talks in December, all 195 nations pledged to keep a global temperature rise this century to well below 2 degrees Celsius. After they ratify the deal, governments will likely begin mandating emissions reductions. The industry doesn’t want that to mean that oil and gas production will be banned in some areas.
Allen says oil companies have, and continue to, pump significant research and development money into renewables, carbon capture and storage technologies, biofuels, and even electric and fuel cell mobility. “The fair challenge that has been placed at the door of these companies is the relative scale of this capital investment versus that made in their core hydrocarbon business,” he says.
For example, carbon capture and storage — a suite of different technologies — has huge potential. It can drastically reduce emissions from the fossil-fuel based energy sector and it’s expected to play a key role in the US’ plan to cut carbon emissions. But it requires huge amounts of energy and, like any new technology, is expensive, making it cost-prohibitive for widespread use.