CERAWEEK: Oil, gas industry must hasten pace of decarbonization effort, Moniz says

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Highlights

Electricity sector ‘walking the talk’ on emissions reductions

Opportunities seen for oil, in low-carbon world

Moniz says must pick up pace in seizing those opportunities

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The US oil and gas sector appears to be lagging in the transition to a clean energy economy, former -era Energy Secretary Ernest Moniz said March 3 at the CERAWeek by IHS Markit conference.

But he was optimistic the sector would put its skill set to work in helping bring about pragmatic solutions to deep decarbonization.

Moniz, along with OGCI Climate Investments CEO Pratima Rangarajan, shared that they worried at the outset of the coronavirus pandemic that climate issues would fall by the wayside. Yet, more countries and companies are talking about and allocating capital toward net-zero emissions targets than ever before, they agreed.

Moniz suggested that the coronavirus caused the public worldwide to “recognize that the unthinkable does happen.” That notion, with respect to climate, was “amplified by very, very strange weather, which really catches the attention of the public,” he said, referring to the recent blast of extreme cold weather that led to millions losing power in Texas last month, and to the week-long heat wave over the summer that forced rolling blackouts in California.

And in the five years since the Paris Agreement was signed, the science has moved from believing “an 80% reduction in emissions by midcentury would spare us the worst of the climate impacts … [to] now recognizing that goals like net-zero emissions and, eventually beyond that, net-negative emissions, is really required,” said Moniz, now president and CEO of Energy Initiative.

Rangarajan expressed her shock that the pandemic brought the country to a standstill, yet US carbon emissions only slid 9% in 2020, a level of reduction that would need to be met on a yearly basis to keep Earth’s temperature from rising further.

“It really brought home the fact that we can’t do incremental approaches anymore,” she said. “We have to really systematically and systemically change the way we operate in this world in terms of both consumption and emissions.”

Moving from intention to action

She asked Moniz how major players in the climate fight can move from great intentions toward actual actions at the scale and timing needed.

Moniz responded that in the US and the rest of the industrialized world, the electricity sector is “really walking the talk,” with US investor-owned utilities, for example, on track to likely reach 50% emissions reductions well before 2030. While the Biden administration’s goal of carbon-neutral electricity by 2035 has “even the forward-leaning utility executives kind of swallowing hard on that,” they are still working on it.

“We are seeing the electricity sector, not surprisingly, as being the leader in the industry of decarbonizing. Now … the next step is fundamentally building off of that very low-carbon electricity system by electrifying more and more of the remainder of the economy,” Moniz said.

In the lead, there will be the sector with the conversion to electric vehicles. “As EVs reach cost parity with internal combustion engines within a few years, … we will not be surprised to see 40% or 50% of new light-duty vehicle sales by 2030 being electric vehicles,” Moniz said, adding that would account for more than half of the emissions from the highest emitting sector transportation.

“I will say the place where I think we still lag and need to see a lot more action is from the oil and gas industry,” Moniz contended. “Certainly the European companies are well ahead of the American companies, but in general I think the business models of the oil and gas companies are going to have to accelerate into what they can do in a low-carbon world, which is a lot.”

Moniz mentioned removal, carbon sequestration, , and engineered geothermal systems among the areas oil and gas companies could turn.

“And there are others where the skill set of the industry is very, very well matched to the needs of a low-carbon economy,” Moniz asserted. “And what we need to see is really picking up the pace in terms of the oil and gas companies taking advantage of those opportunities. Otherwise, we’re going to go too slow in reaching the deep decarbonization.”

‘Supercharging of innovation’

But Moniz said he was optimistic and believed that, as innovation continues, he expected to be pleasantly surprised with how fast new technologies roll in. He added that to meet the climate goals set for 2035 as well as the Biden administration’s 2050 target for net-zero emissions economywide, “this decade, starting right now, has got to see kind of a supercharging of innovation.”

That innovation, he said, must include not only research-and-development but also demonstration projects and the implementation of “creative policies that will move along new market formation and clean energy technology deployment, unleashing huge amounts of private capital.”

Those conditions would be vital to accelerating progress and ensuring that this decade lays the groundwork for “scaling in the 2030s and 2040s a whole set of critical technologies, especially for the sectors that are more difficult to decarbonize than is electricity,” Moniz said.

Author

Jasmin Melvin

Editor

Valarie Jackson

Energy Transition, 
Natural Gas, 
Oil

Topic

Energy Transition, 
Environment and Sustainability

Source: Platts

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