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industrial plant emissions

Will COP21 Spur Big Oil to Invest in Low-Carbon Technology?

industrial plant emissionsThe 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.

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3 thoughts on “Will COP21 Spur Big Oil to Invest in Low-Carbon Technology?

  1. I’ve been saying for years now that the big oil companies need to spend more money on carbon capture development and less on trying to influence the public that climate change is a hoax or, at the very least, not driven by human behavior.

  2. All the above makes perfect sense as does Mr. Glick’s comment. My question is–and I’m no expert–which may become clear from the question–this: Why don’t these cash rich energy companies w/ top end engineering talent get into the energy efficiency and renewables businesses? They have to resources to scale these categories more quickly than most.

  3. Fossil fuel companies (and others) always invest in the highest-payoff short-term strategy that they perceive. In the case of the fossil fuel industry, this means investments in politicians and in super pacs and in lobbying efforts and in public relations ploys; all of which are aimed at maintaining business-as-usual practices. That way, they figure that they will not have to invest much in carbon capture technology or research, they will delay or outright prevent the spread of renewable energy, they will delay or outright prevent the implementation of various energy efficiency measures, etc., etc. – all the while maintaining their massive fossil-fuel-derived cash flows.

    Their largest short-term payoff comes from maintaining the status quo. It does not come from the development of a fossil fuel based power plant that is less carbon polluting, or any other initiative that are referred to. And unfortunately, the horizons that many companies act upon are generally short-term in nature – 5-10 years perhaps. It’s an example of how capitalism is simply not well suited to be a reliable means of achieving societal goals that are more diffuse and longer term by their very nature.

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