Oil and gas have an important role to play in getting to net zero

The Global Energy Center at the Atlantic Council hosted The Role of Gas and Oil in Net-Zero on June 28 to discuss the role of hydrocarbons and international energy companies in reaching the goal of net-zero by 2050. In his opening remarks, the founding chairman, Richard Morningstar, emphasized the need for a public-private partnership to reach the goal in a timely manner. The speakers of the event were:

Ambassador Richard Morningstar

Founding Chairman, Global Energy Center Atlantic Council

Al Cook

Executive Vice President, Exploration and Production International Equinor

Juliana Garaizar

Vice President of Innovation, Greentown Labs

Greg Sharenow

Portfoli Manager, Real Assets, PIMCO

Helima Croft (moderator)

Managing and Global Head of Commodity Strategy, RBC Capital Markets; Board of Directors member, Global Energy Center Atlantic Council

In his keynote speech, Cook emphasized net-zero as the future of the energy industry. The means of producing energy must become more conscious of the resulting carbon emissions. 80% of the world’s energy is supplied by fossil fuels. This 80% must fall, despite the growing demand for coal – a demand expected to continue to rise through the upcoming decades.

Cook referenced the latest report by the International Energy Agency that suggested no new oil and gas projects globally after 2021. He believes this is essential, though it does not align with current government policies. Cook believes there must be a decrease by 50% in greenhouse gas emissions by 2030 and energy companies must provide the 50% of people who lack access to electricity with renewable and affordable solutions. To accomplish these goals, Cook proposed three objectives for the energy industry:

1. The amount of carbon dioxide produced with each barrel of oil must be decreased. On average, today the production of 1 barrel of oil produces 17-18 kg of carbon dioxide. Equinor has harnessed developing technology to decrease this to 8 kg of carbon dioxide per barrel. Equinor employs a combination of carbon capture and storage (with burial underground) and electrification of offshore operations to drastically decrease emissions.
2. Energy production companies should reinvest revenues and capital in renewable energy. Cook suggested investment in offshore windfarms. Equinor is currently constructing the world’s largest offshore wind farm – Dogger Bank – off the UK coastline and partnering to build a windfarm off the shores of New York called Empire Wind, which will produce 15% of the renewable energy target set by the Biden Administration.  
3. At its current rate, renewable energy cannot immediately solve the world’s need for energy. Due to its combination of low intensity and intermittency, Cook emphasized the need to continue using fossil fuels. We must acknowledge the future demand for oil and gas and take this into account in future.

Reactions to the IEA Report: what do you take from the report? What is doable and what is necessary?

Cook emphasized the need for its severity. He claimed that for too long, too many reports have underestimated the importance of renewable energy. Fatty Burrel, the author of the IEA report, argues the world cannot wait until 2050 to reach these targets, the energy industry and its supporting governments must enact change today.

Garaizar and Sharenow echoed Cook’s response, stating this report is a wake-up call for investors as well as policy makers. While Sharenow argued the proposal is an aspiration, it will provide clarity and foster greater steps in building confidence for investors in renewable energy.

What are the policy changes that need to happen to enact change?

Sharenow argued for implementation of stricter carbon prices, taxes, and complementary policies to address carbon emissions. Carbon policies can be a positive tool for companies to redistribute their investments and provide incentive for future movement towards renewable energy. Sharenow also emphasized the need for collective action, as more opportunities can be offered to the world, especially those in areas without consistent access to electricity, if this pursuit is undertaken as a communal effort.

Garizar agreed with Sharenow and asserted the need for developing innovative business models to make up for the lack of political structure in some countries. Instead of promoting change within political systems, it is the responsibility of international energy companies to create and promote new models that accommodate differing political structures in promoting consistent and affordable access to renewable energy.

To conclude, Cook, reaffirmed his previous arguments, acknowledging the need for consistency and long-term policies to streamline the promotion of decreased carbon regulations around the world.