Latest News from the Hydrogen and Carbon Capture Industry
August 9, 2021
Era of Carbon Zero: Death of Big Oil & Gas?
In late 2020, The Financial Times examined what many had been saying – Carbon Zero will kill big oil and gas. Their conclusion? While these companies can reinvent themselves, the beginning of the end is here. In March 2021 the American Petroleum Institute, after years of challenging climate change, stated “Climate Change is Real” – was this the death chime?
Our conclusion is that oil and gas companies have a critical role in the carbon zero world and will continue to thrive. ExxonMobil agrees with us. ExxonMobil believes that carbon capture sequestration (CCS) is a $2billion dollar market by 2040. They tout their current position as number one or two in portions of that business today. They proposed a $100 billion dollar CCS project for the Houston petrochemical area. Hydrogen is a $1 billion dollar market by 2040, according to ExxonMobil and they are already producing 1.3Mta ExxonMobil links together hydrogen from natural gas with CCS as the low cost alternative.
We have seen a non-stop series of announcements from ExxonMobil and other oil and gas companies. See our News/Resources Oil and Gas Companies section at for more. They even are stepping into the renewables space – either purchasing power, or investing in projects. The industry is changing more rapidly in the last year than in some decades. Part of this acknowledgement of reality, part is public pressure, part is government incentives, and part is opportunity. A central part is ESG funding – which we will examine in an upcoming newsletter.
How does Big Oil and Gas fit?
Scale: Zero carbon emissions by 2050 is a mammoth goal. Of all the industry sectors, big oil and gas has the size, institutional expertise, and talent to manage big projects. It is what they have been successfully doing since inception.
Demand: Big oil and gas is a massive consumer of energy and hydrogen today. They use this demand to gain more scale, and influence suppliers.
Technology & Expertise: The only industry that practices CCS today, and has done so for decades is big oil and gas. They have hard won knowledge and technology to make CCS practical. They and their partners have been moving hydrogen as well.
Natural Gas: Renewables cannot get us to zero carbon emissions by 2050 without totally disrupting the economy. Natural gas fired power plants with CCS or converted to hydrogen with CCS is a practical way to significant emissions reductions. Hydrogen can be blended into existing natural gas distribution lines and at a few percent (more in future newsletters) burned in home, retail and commercial stoves, burners, hot water heaters as is. A few percent does not seem like much but reducing emissions is a game of little bit here a little bit there. It also preserves and leverages the massive investment in the massive investment this equipment and the existing pipelines. Who is in the natural gas space? – big oil and gas.
2021 EIA projections show natural gas and renewables continue to gain share through 2050 at the expense of coal, and to a much lesser extent oil.
Challenges abound for Big Oil and Gas
This is not an easy win. Big Oil and Gas needs to convince their employees and shareholders the old metrics of such as reserves are thing of the past. New success metrics to frame the new business model. Look at Chevron, which as number of corporate and employee metrics. While many of these come out of the change management handbook, the major challenge is they have yet to fully define the new model.
Business case rests on customers willing to pay a higher price. Commodity customers have proven to be unwilling to pay a higher price for ESG goals – look no further than ‘Buy American’ initiatives. Government mandates, taxes, or tax rebates need to drive this public policy. Big Oil and Gas has been vocal and needs to continue to be at this table.
Regulations for Hydrogen and CCS are limited on both federal and state level. They need to be made clear, and permitting held to timeline limits. Nothing new here. Clarity and timeliness, streamlined in our race to 2050.
Environmental groups will continue to paint the pictures as Big Oil and Gas needs to be an evil that should be exercised, and that accelerated renewables gets us to the answer. The answer is net zero by 2050. If Big Oil and Gas helps make that happen, even if they continue to extract gas and to a much reduced state oil that is okay so long as we get to 2050 finish line without totally disrupting our economy. The practical economy issue needs to become a critical discussion point. A public unable to invest in emissions reductions is a failure. Nothing less, this needs a full expression.
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