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Schalk Cloete's picture
Research Scientist Independent

My work on the Energy Collective is focused on the great 21st century sustainability challenge: quadrupling the size of the global economy, while reducing CO2 emissions to zero. I seek to...

  • Member since 2018
  • 1,013 items added with 414,647 views
  • Aug 19, 2022

There is little doubt that the oil & gas industry will be around for many decades to come. But it must achieve drastic CO2 cuts and do so economically. There are several pathways to this goal.

1. Keep exporting hydrocarbons and rely on importers to capture CO2 upon use. This option is problematic because many importers don't want to establish local CCS infrastructure.
2. Produce blue hydrogen for export. This option capitalizes on the exporter's capability to handle the captured CO2, but it is limited by the cost and complexity of long-distance hydrogen trade.
3. Produce various energy-intensive industrial products (e.g., steel or ammonia) for export. This option is attractive because most industrial products are easy and cheap to export and stockpile.

Our latest paper explores these different energy export avenues in a European context by modelling a future clean energy system between Norway (the exporter) and Germany (the importer). Steel is used as an example of an industrial export product.

We find that investment in steel trade is beneficial to Norway because it grants access to the global market, supporting prices and export profits. On the other hand, direct hydrogen exports are limited to the demand within Norway's Northern European neighbours, which is subject to considerable uncertainty.

Oil & gas exporters are therefore advised to invest in blue hydrogen exports to neighbouring importers and low-carbon industrial products to diversify into the global market. If hydrogen prices in importing regions are set by local green hydrogen production, such a strategy can maintain high profit margins for exporters. In this way, the oil & gas industry can rapidly decarbonize while maintaining high levels of profitability.

Rick Engebretson's picture
Rick Engebretson on Aug 23, 2022

Fun to see your work again, Schalk.

If I read your "blue/green hydrogen" article well enough I didn't see anything about biomass gasification and co-production of "syngas," and "biochar." I'm sure you can find plenty of articles on the topic that relate to your topic and rely entirely on solar storage.

Soil/water/agriculture benefits, wildfire management, and maybe reliable electric grid backup are a different economic driving force. Many see excess CO2 as a dire threat, others might see it as pulling wealth out of the air.

Thanks again.

Schalk Cloete's picture
Thank Schalk for the Post!
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