Capturing opportunity in the energy transition
Oil and gas companies can continue to thrive through greater efficiency, decarbonisation and the expansion of renewables
The world’s energy systems are the bedrock of our economies, but also account for nearly 90pc of global greenhouse gas emissions, making climate change the defining factor of the future of energy. A shift towards cleaner energy is gathering pace, so companies, governments and individuals alike must all adapt. We are confident that companies such as Equinor can shape and capture value in this energy transition.
As daunting as the task of decarbonising our energy systems may seem, we are putting it at the heart of our strategy. Delivery is backed up by ambitions centred around three areas: industry-leading carbon efficiency, growing in renewables and accelerating decarbonisation.
Building on already carbon-efficient oil and gas production, Equinor aims to reduce absolute greenhouse gas emissions from operated offshore fields and onshore plants in Norway by 40pc by 2030, 70pc by 2040 and to near-zero by 2050. Globally, the ambition is to bring down methane emissions to negligible levels, eliminate routine flaring and reach carbon-neutral global operations by 2030.
Harnessing several decades of experience in delivering technologically advanced large-scale industrial projects has forged our ability to grow profitably in renewables and develop new competitive value chains. Renewables offer viable growth opportunities where technological innovation and cost reductions can be deployed effectively.
0 Target carbon emissions by 2050
The world’s first floating wind farm Hywind Scotland provided the relevant experience for launching Hywind Tampen, an 88MW floating wind project that will provide renewable power for oil and gas installations in the Norwegian North Sea. The value creating upside was demonstrated through the sale of a 25pc of ownership stake, half of our interest, in the German Arkona offshore windfarm project. We see continued need for oil and gas in industrial processes, materials, heavy transportation and as backup capacity. Gas will remain important in Europe, providing more than 1,500TWh of flexible energy. But, in the end, it will have to be decarbonised as hydrogen through carbon capture and storage (CCS).
CCS calls for unprecedented collaboration across industries and national borders to ensure the right incentives are in place to support the development of new commercial value chains. The Northern Lights CCS project, which includes the transport and permanent storage of CO₂ in a reservoir in the North Sea, exemplifies such an endeavour, providing both the infrastructure and open access storage capacity for European third-party customers’ CO₂ volumes.
Equinor also sees the potential for future growth in hydrogen. Wide-ranging cross-sector partnerships have been formed in the UK to deliver options to decarbonise industrial clusters in Humberside and Teesside, as well as repurposing gas infrastructure to serve households and businesses with hydrogen.
In the Netherlands, Equinor is participating in converting the Magnum gas-fired power plant to run on hydrogen, potentially reducing CO₂ emissions by up to 4mn t/yr. Another cross-sector project is looking at the feasibility of replacing coal in the steelmaking process by decarbonising production of hydrogen from natural gas and permanent offshore storage of CO₂. If scaled up, the emission-reduction potential would be equivalent to 2,500mn t of CO₂ annually.
We recognise that a successful energy transition will depend on broader economic and social development. Leadership, innovation and collaboration are essential components in delivering long-term value in a low-carbon future.
This article is taken from the PE Energy Transition Review: Plotting the Course to Net-Zero Emissions. To download the full report, click here.