IP Week 2020: A Low Carbon Future
IP Week describes itself as ‘the place where oil and gas operators, clients and investors meet to form new partnerships’ – or at least, that is how it was traditionally defined. IP Week 2020 had a rather different agenda, bringing in renewables experts and environmental NGOs to join the discussion, with the emphasis being on the role of oil and gas in the energy transition.
Organised by the UK Energy Institute, a global professional body for the energy sector, IP Week is always guaranteed to be stimulating and thought-provoking, dealing as it does with energy and petroleum resources at a very strategic level, rather than the nuts and bolts of where the next major discovery or frontier breakthrough might be. Even so, and bearing in mind the fact that IP stands for International Petroleum, this was an unusual IP Week; in fact, the introductory session was well past the coffee break before the first speaker representing an oil company took to the podium.
Setting the Scene
As Louise Kingham, CEO of the Energy Institute, explained in her welcome speech, using energy wisely was at the core of the conference. The Executive Director of the IEA, Fatih Birol, set the scene in more detail, stressing the need for the O&G industry to fully embrace the complex challenge of a world that simultaneously needs more energy yet fewer emissions. Like a number of other speakers, he referred to the 800 million people in the planet who do not have access to electricity – a defining indication of a move out of extreme poverty – and the 1.5 billion without access to clean cooking, and the consequent dilemma of ensuring improvement in lifestyle for such people while reducing emissions.
Speakers from consultancy firms, climate action NGOs, academia and government around the world all contributed to the ensuing discussion, much of which demonstrated the rapid development and take up of renewable energy sources – both considerably faster than had been predicted by forecasters – and also how the economics have changed. Investment returns from fossil fuels have been flatlining while those from companies developing or using renewable technologies are rising quickly. Edward Mason from the large investment group The Church Commissioners of England enlarged on this last point, emphasised how shareholders are now driving through changes in disclosure and transparency rules in oil companies, sometimes against the express advice of the board members.
There was an interesting presentation by Ed Williams from Edelman on ‘how do we tell our story’, highlighting the often-discussed issue of the lack of trust the public has in the oil industry and what we should be doing about this. He emphasised the change that is underway throughout the business world, as the primary aim of a company moves away from creating maximum value for shareholders and towards developing maximum returns for all stakeholders. Every company, including those in the O&G industry, needs to accept that this change is on the way and that it will result from external rather than internal pressures.
The point of selecting this wide range of sources for talks and panellists was not, I must stress, to ‘bash the oil industry’. It was a valiant attempt to describe the complexity of the issues surrounding climate change and the energy transition, in order to help all involved look for ways in which the industry can play its part.
There were, of course, a good number of speakers from the industry, such as Shell UK Country chair Sinéad Lynch, who mentioned the need to listen to society, and also the importance of cooperation across all sectors, a point which was reiterated by Al Cook from Equinor. He was keen to identify some areas for optimism, such as global commitment, demonstrated by the 187 (and growing) countries that have ratified the Paris agreement, and the fact that growth in global emissions has flat-lined even while global economic growth has increased.
BP, Equinor and Shell have all announced a drive towards increasing the proportion of non-oil and gas businesses in their total investment, while Total claims that non-carbon businesses will make up to 30% of its portfolio in the near future. This looks promising – except that according to the IEA the O&G industry’s non-core investment worldwide in 2019 amounted to less than 1% of the total, suggesting that overall there is a long way to go.
Similarly, many companies have announced ambitious and laudable plans to make their operations net carbon zero within the next decade or so. However, 15% of global emissions, the majority of it methane, come from E&P production and transportation, so it was suggested that this has clearly got to become a priority for all companies.
Lithium, Hydrogen and CCSU
Other sessions during IP Week (which actually covers three days!) looked at the various enablers for the energy transition, summarised as collaboration, innovation and technology, as well as at the need to utilise the talents and skills of people in the energy industry. An interesting briefing session looked at the potential for oil and gas companies in the lithium and the lithium ion battery supply chain, as well as the importance of pricing lithium and other key raw materials.
Another fascinating briefing, chaired by John MacArthur, VP Group Carbon, Shell, discussed the role of hydrogen in enabling a net zero carbon energy system, outlining progress in research into the ways in which it can be used to heat homes, in industrial processes and in transportation. However, there is a lot of research and development to be done and we cannot yet produce hydrogen in volume without using fossil fuels in the process and thus emitting CO2, so carbon capture, utilisation and storage will be needed. Many speakers believe that governments should be encouraging the development of CCSU. Overall, it was interesting to note how often hydrogen as a potential energy source was discussed at this conference - much more than I have heard before.
Global Versus Regional
Something that many speakers referred to was the complexity of the challenge; while the issue of climate and energy transformation is global, the responses will be regional. This was very clearly illustrated in the sessions devoted to Africa, Asia and the Middle East.
The Africa session was entitled ‘driving sustainable growth for transforming economies’ while the Asia session discussed ‘meeting demand and achieving sustainability’; both focused on the need to improve access to energy in these regions as a means to economic growth and economic security. Coal is still a major energy source in Asia, particularly in India and China. A representative from the Chinese Embassy explained how, even though the country is a leader in the energy transition, with ambitious targets to increase the share of renewables in the county’s energy mix from the 21% it is at now to 52% by 2035, coal will still be a major contributor to that mix. India has similarly ambitious renewables targets, but with over 250 million people without access to affordable electricity in the country, it also has ambitious electrification targets, and foresees that coal is likely to still constitute 40% of India’s energy mix in 2050.
As a major emitter of CO2, the emissions from which actually increased slightly in 2019, the transport sector will require a transformation over the course of the century to meet the goals of the Paris Agreement, and a wide range of technologies will be necessary for the sector to evolve to a low-emissions future. The briefing session on transportation covered everything from improvements in engine efficiencies and optimised vehicle and vessel designs – including a vessel powered by a combination of solar panels, LNG and a sail – to battery technologies, biofuels and hydrogen. In aviation, it was interesting to hear that a flight you take today produces 50% less CO2 than a similar fight in 1990, but also that take up of Sustainable Aircraft Fuel has been slow.
Changing the World
IP Week provided a very stimulating and thought-provoking few days, with a wide ranging programme that did not shy away from difficult discussions, such as how will this be paid for and by whom? Carbon pricing is an obvious way forward, but the discrepancies between prices set in different parts of the world raise further issues for this. Strict industry rules to reduce CO2 output in, for example, the EU will increase the price of the process, making it potentially cheaper to import the product from somewhere with less stringent rules, thus just moving the emissions elsewhere rather than reducing them. Overall, the public are keen for the energy transition to happen, particularly if large industry and oil and gas pay and feel the pain, but research suggests there is little inclination to make it personal. There are no easy answers.
However, due to demand, most projections estimate that in 2050 up to 50% of the world’s energy will still be coming from fossil fuels. The UK Oil and Gas roadmap 2035 aims for net zero by 2035, with a 20% decrease by 2025 – yet while still maximising recovery from the North Sea. This is the challenge to the oil and gas industry: how to continue producing the hydrocarbons that will be needed for some time yet, while balancing short term returns with the long term license to operate.
In summary, the message from IP Week is: energy professionals have changed the world before and they have a vital role to play in the change it is in process now.
Further Reading on Delivering a Lower Carbon Future
Recent Advances in Climate Change Research: Part V - Underground Storage of Carbon Dioxide
Eva K. Halland, Norwegian Petroleum Directorate. Series Editors: Martin Landrø and Lasse Amundsen, NTU/Bivrost Geo
By building on knowledge from the petroleum industry and experience of over 23 years of storing CO₂ in deep geological formations, we can make a new value chain and a business model for carbon capture and storage (CCS) in the North Sea Basin.
This article appeared in Vol. 16, No. 6 - 2019
AAPG Energy Transition Forum 2019: A New Era for the Geoscientist
The second AAPG Energy Transition Forum was entitled ‘A New Era for the Geoscientist: Competing in a New Energy Landscape’ and looked at how the energy transition will affect geoscientists.
This article appeared in October, 2019
Geothermal in the Future Energy Mix
Marit Brommer; International Geothermal Association
Geothermal energy is still a marginal player in the energy mix, but geoscientists will be needed to help it play its part in the energy transition.
This article appeared in Vol. 15, No. 4 - 2018
Action to Reduce Greenhouse Gas Emissions
Dr Nick Riley MBE; Carboniferous Ltd.
Is carbon capture, storage and utilisation (CSS) an essential greenhouse gas reducing technology, and what part can the oil and gas industry play in meeting reduction targets?
This article appeared in Vol. 15, No. 1 - 2018
Growth and Future of CCS in Europe
Gavin Ward and Martin Wilkes, RISC Advisory; Conor Ward, University of Edinburgh
Carbon Capture and Storage (CCS) can be used to reduce emissions, but can oil and gas save the future of CCS in Europe?
This article appeared in Vol. 15, No. 1 - 2018