Ideas & Debate

Energy tech will push oil firms to embrace climate change solutions


The climate change solutions are very much in the realm of national energy policies. FILE PHOTO | NMG

Global oil industry supplies energy that is by its chemistry carbon-loaded and which is the main contributor to global warming. The industry fully understands the reality and gravity of this fact, but the extent to which it can participate and contribute to climate change solutions is limited by available alternative energy technologies. Further, national energy policies define energy options, which the oil industry can only follow.

It is therefore not realistic for climate groups to ask the oil companies to “leave oil in the ground” when there is petroleum demands to be supplied and which have no immediate energy alternatives.

Listed in their decreasing carbon content hierarchy, the commercial fossil fuels are coal, fuel oil, diesel, aviation kerosene, petrol, LPG, and natural gas. Coal has the highest carbon content while natural gas, which is essentially methane, has the lowest carbon content. Any replacement of a higher carbon fossil fuel with a lower carbon fuel is indeed part of the climate change solutions.

The main petroleum demand segments are road transportation (cars and trucks), rail diesel transportation, aviation fuels, marine transportation, power generation, industrial heating, domestic and institutional heating and cooking.

Renewable energy (solar, wind, geothermal etc) mostly addresses the power generation segment which has traditionally used coal, fuel oil, and low carbon natural gas. The choice of use between coal, fuel oil, natural gas and renewable energy for power generation is usually influenced by government energy and climate policies. Use of natural gas or LNG (liquefied natural gas) is considered a transitional climate change solution until full renewable energy change-over is achieved.

Just like in power generation, industrial heating for major industries like cement and steel is mainly by coal, fuel oil, and natural gas, with plenty of ongoing transition from coal to natural gas. Recently Heliogen, a venture capital company supported by Bill Gates, announced new concentrated solar energy technology for large scale industrial heating. If and when sufficiently scaled up, this new technology will replace coal, fuel oil and even natural gas in the heavy industrial sector.

It is in road transportation that the most impactful demand switches from petrol and diesel to battery electric and hydrogen-cell vehicles is expected to take place as technologies evolve to provide affordable vehicles . And here the oil companies are modifying their business and investment plans to accommodate new energy technology for road transportation.

In developed countries electrified rail transportation has essentially replaced diesel locomotives, while many developing countries are either planning or implementing rail electrification. However any electrification of road and rail transportation should incrementally be supplied from electricity generated from renewable energy (or lower carbon natural gas); otherwise it will be a deceptive climate change solution if that power is supplied from coal.

Aviation and marine transportation are significant high carbon contributors and these petroleum demand segments do not have immediate commercial scale low carbon substitutes. However, miniature experimentation has been done on solar energy for aviation, while LNG is under test for short distance shipping.

Domestic and institutional heating and cooking will continue to use low carbon natural gas and LPG until other affordable commercial-scale carbon-zero alternatives are sufficiently developed, which may include solar energy and electricity.

The extent to which the oil industry can contribute to climate change solutions will continue to be determined by level of development and investments in alternative lower carbon technologies. Besides, it is the energy consuming nations that have the primary role for defining energy options and the pace towards low carbon economies.

The oil industry will definitely continue to invest in supply of oil and gas to meet growing hydrocarbon energy demands which can only be moderated by increase in alternative energy supplies. It is only when the latter starts to exceed the former, that oil and gas will gradually be allowed to remain in the ground.

The climate change solutions are very much in the realm of national energy policies and the pace of development of alternative low carbon solutions and investments. The oil industry will in the meantime continue supplying the net energy demands from oil and gas.