The time to transform the energy space is here and the business case for energy transition is stronger than ever. The question remains, is the fossil fuel industry ready?
COP26 came and went this past November, and the goals are ambitious. On the fifth anniversary of the Paris Climate Agreement, more than 110 countries pledged to achieve carbon neutrality by 2050, which means that every country, city, financial institution, and company must slash emissions by nearly half by an even earlier date: 2030. The clock is ticking, and the pressure is on for every industry to cut emissions, none more so than fossil fuels.
Certainly, there is recognition among the industry of their environmental impact: According to the International Energy Agency (IEA), oil and gas operations are responsible for 15% of total energy sector’s greenhouse-gas (GHG) emissions. Given the heightened visibility of climate and sustainability issues, many oil and gas companies are concerned with surviving an imminent energy transition. None want to become a stranded asset.
The industry’s history necessitates proactive steps. The issue of worker safety provides a strong parallel. Following multiple high-profile disasters, such as the Shell Baker Platform fire and the Deepwater Horizon oil spill, oil and gas operators were forced to prioritize safety through increased regulation (and fines). This focus helped to elevate worker safety as a central pillar of the industry’s operational risk management. We are seeing the same push with sustainability now—although its applications are more diverse.