Three Reasons Oil & Gas Companies Are Planning for Net-Zero

By GHG Product Manager, Vahid Shabro

Here’s why everyone that emits carbon started paying attention to greenhouse gases (GHG).
Fossil fuels have brought cheap, abundant, reliable energy to all. They have accelerated human progress and brought about the industrial age. As a result, human life has blossomed and quality of life has drastically increased. At the same time, many people believe uncontrolled emissions from fossil fuels could pose a threat to earth’s biosphere and our quality of life. For more than two centuries, we’ve known greenhouse gasses (“GHG”) absorb and trap heat. Fossil fuel emissions from industrial growth have increased GHG concentration in the atmosphere far above pre-industrial levels. Many think this has created dramatic changes to the earth’s climate in the 21st century and see a future with a greatly reduced quality of life. This dual nature of fossil fuels is the root cause of impassioned debates about their vices and virtues. Whether or not a catastrophic climate change is on the near horizon, governments and investors have assigned emission targets to oil and gas production. Economic metrics tied to emissions now determine how much capital banks are willing to lend operators, and on what terms. Beyond investors and governments, the public demands action. If you’re still on the fence, here are 3 reasons you need to plan for net-zero.

Reduce Exposure to Regulations

GHG accounting and incentive protocols can accelerate pathways to energy transition and lower emissions. Governments have initiated tax, fee, and cap models for GHG emissions across the world. These programs offer risks and opportunities to GHG emitting entities. If you’re one of them, it’s prudent to understand your current and future GHG emissions. This way, you can plan strategies to lower emissions and chart a path to net-zero, reducing your exposure to external rules and regulations.

Create Transparent Future Emissions Forecasts to Attract Capital

While transparent GHG accounting provides a window into past results, you can’t appropriately assess the risks and rewards of future production based on previous circumstances. Operators need reliable forecasting tools to determine emission pathways within their production facilities and account for emissions alongside other business metrics. Emission targets and risks should be integrated within the planning and execution phases of all projects and development scenarios. This approach produces realistic results based on true inputs and outputs and allows for a combined optimization of best economic and emission scenarios. Since GHG accounting is becoming a common requirement to do business, forecasting emissions on a trusted platform can open the door to greater capital markets through transparent evaluation of the company’s future status.

Enable a Balanced Mix of Sustainable Energy Sources

Not all fossil fuels are created equal. The production of oil and gas can be done responsibly to have as little environmental impact as possible. On the other hand, any energy source has external effects on the environment. Nuclear power produces radioactive waste, renewables disrupt land and water usage, and all industrial activity creates lifecycle emissions. Access to cheap, abundant, reliable energy is essential for energy security and the necessities of modern life. If produced responsibly, fossil fuels and other forms of energy can coexist and provide abundant energy while reducing overall environmental impacts. By evaluating a net-zero approach to operations and identifying full lifecycle emissions and environmental impact of all sources of energy, we can offer a greater story where the public and government better understand the risks and rewards of energy security and emission reductions. Even the most ambitious energy transition plans include producing and consuming significant amounts of oil and gas until 2050 and beyond. Since access to abundant energy is a precursor to improving human quality of life, we need a balanced approach to providing abundant energy. Minimizing GHG emissions and identifying pathways to net-zero are now crucial components of this balanced approach.

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