The Oil and Gas Industry's Role in the Energy Transition Khushbu Patel

When I tell people I want to work in oil and gas, I’m greeted with bafflement. They look at me as if I have betrayed them. “Now why would you want to do that?” they’d ask, puzzled. Being an environmentalist myself, I see the promising potential the oil and gas industry has to help the environmental movement The oil and gas industry is not an enemy In fact, it can be the most powerful ally in the transition to a lowcarbon future In the coming years, it will play a vital role in developing technologies and investing in renewable energy The fact of the matter is that the oil and gas industry is established It has researchers, technology, capital, resources, and a motive to lead the clean energy transition.

The oil and gas industry is actively trying to make a sustainable transition. BP has more than 2200 megawatts of wind capacity in the US. In 2018, BP invested $20 million in StoreDot, an Israeli developer of rapid-charging batteries, then made a $5 million investment in US company FreeWire, which develops fast-charging infrastructure for electric vehicles. Finally, BP spent $160 million on acquiring Chargemaster, the UK’s leading network of charging points. Shell spent a reported $2 billion on setting up a low-carbon energy and electricity generation business in 2016. The following year, it acquired UK-based electricity and gas provider First Utility, as well as Europe’s largest electric vehicle charging company NewMotion. In 2018, Shell bought a 44% stake in US solar power firm Silicon Ranch for $200 million and made a $20 million equity investment in India-based renewable power company Husk Power Systems (Murray 2020). ExxonMobil plans to invest about $17 billion through 2027 in initiatives to lower greenhouse gas emissions in support of a net-zero future. This investment will help them in commercializing and scaling carbon capture and storage, hydrogen, and biofuels. Halliburton executes geothermal development programs and has developed a data-driven machine learning solution for estimating carbon storage capacity volume. greenhouse gas emissions could threaten their long-term social acceptability and profitability” (IEA 2020). With the emergence of new, cheaper sources of energy eating away at their market share, oil and gas companies must diversify their energy operations to remain competitive. The rise of electric vehicles further diminishes their demand. “California is now aiming to phase out

All these actions are not greenwashing, and here’s why: The oil and gas industry knows that its business model is not sustainable: “Oil and gas companies are facing a critical challenge as the world increasingly shifts towards clean energy transitions. Fossil fuels drive the companies’ near-term returns,but failure to address growing calls to reduce cars that run on oil by 2035. The United Kingdom set the same goal for 2030. Norway, a reliable overachiever when it comes to EVs, is aiming for 2025” (Deaton 2021). The Biden administration has paused new oil and gas leases on federal lands and waters. Lending institutions are making more socially responsible investments. Governments are taking action on climate change and ending bailouts and subsidies for the oil and gas industry. Oil companies made astonishing record-breaking profits in 2022, but even then, they know they are in trouble.

As of 2021, “In five of the past seven years the oil and gas industry ranked last among all sectors of the S&P 500, falling to less than 3 percent of total value of the index at the end of 2020 This is a far cry from the 16 percent a decade ago and 30 percent a few decades earlier Since 2015, industry analysts Haynes and Boone have listed nearly 800 exploration and production, oilfield services and midstream oil and gas companies that have filed for bankruptcy, with a debt load of more than $300 billion” (Williams & Smith 2021). “Over the last decade, the cost of wind turbines, solar panels, and batteries fell off a cliff. Renewables are now generally as cheap as or cheaper than natural gas. And this year, wind, solar, and batteries will account for around 80% of new power capacity, dwarfing additions from gas,” suggesting that the United States might soon reach peak gas usage (Deaton 2021).

The oil and gas industry is not inherently sustainable, but in the coming years, it will continue its efforts to polish its sustainability strategies, reduce emissions, and invest in renewable energy. If the clean energy transition is to happen, it is best that it happens with the help of the oil and gas industry.