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The Role of Oil & Gas Companies In Energy Transition
Oil and gas will remain part of the global energy mix during an extended period of low carbon transition. Even some of the most stringent decarbonization scenarios—such as the International Energy Agency (IEA) Sustainable Development Scenario —show an ongoing, long-term role for oil and gas, albeit at reduced levels from current demand or the business-as-usual case.
KEY INSIGHTS (THEMES & STRATEGIES)
There are five possible strategies and tools for consideration by oil & gas companies:
- Coal-to-gas fuel-switching and supporting electrification
- Decarbonization of oil and gas production
- Geographic hedges to stranded asset risk
- Renewable energy investment and diversification
- Embedding climate-based ESG principles into business models, and improving messaging
STEPS TO TAKE
Oil and gas companies must recognize the role their industry will play in global energy demand growth, and couple that role with the needs and expectations of the low-carbon system and take following steps:
- Building strategies for low carbon business
- Supporting the development of government-drafted and independently-audited ESG
- Building out the promising concepts of net zero emissions and circular economy
- Encouraging the growth of international carbon through Article 6 of the Paris Agreement
- Developing a workforce strategy that leverages the above into restoring oil and gas as an attractive destination for younger talent
The Role of Oil & Gas Companies In Energy Transition
The challenge for the oil and gas industry is to both engage and adapt to a changing policy and investment landscape, but also to evolve in ways which don’t simply support but contribute and perhaps even lead efforts to decarbonize the energy system.
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