How net zero policies threaten the oil and gas industry and boost green hydrogen

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The oil and gas industry is facing a major challenge as the world moves towards net zero emissions, a target that aims to balance the amount of greenhouse gases emitted and removed from the atmosphere by 2050. According to a recent report by the International Energy Agency (IEA), the industry could lose more than $3 trillion in revenues by 2050 if net zero policies are implemented globally. The IEA warns that oil and gas companies will become less profitable and more risky investments as the demand for fossil fuels declines and the competition from cleaner energy sources increases.

The IEA urges the oil and gas industry to adapt to the changing energy landscape and invest in low-carbon technologies, such as carbon capture and storage (CCS), hydrogen, and renewables. The IEA also says that the industry needs to commit to helping the world meet its energy needs and climate goals, and not to rely on unrealistic assumptions about CCS. CCS is a process that captures carbon dioxide from power plants and industrial facilities and stores it underground or uses it for other purposes. However, the IEA notes that CCS is still not widely deployed and faces technical, economic, and regulatory barriers.

One of the low-carbon technologies that the IEA highlights as a potential game-changer for the energy transition is green hydrogen. Green hydrogen is produced by using renewable electricity to split water into hydrogen and oxygen, without emitting any carbon dioxide. Green hydrogen can be used to store and transport renewable energy, and to replace fossil fuels in hard-to-decarbonize sectors, such as industry, transport, and power generation. Green hydrogen is considered a promising alternative for reducing emissions, enhancing energy security, and creating new economic opportunities.

Several countries and initiatives are promoting green hydrogen as a key element of their net zero strategies. For example, the European Union has launched a hydrogen strategy that aims to produce 10 million tonnes of renewable hydrogen by 2030 and 40 million tonnes by 2050. The United Arab Emirates has announced plans to build the world’s largest green hydrogen plant, which will produce 650,000 tonnes of green hydrogen per year. Japan has set a target to achieve carbon neutrality by 2050, with hydrogen playing a vital role in its energy mix. The Green Hydrogen Catapult is a global initiative that brings together seven leading companies to accelerate the scale and production of green hydrogen, with the goal of reducing the cost by 50% by 2026.

The oil and gas industry faces a critical choice: to embrace the net zero transition and invest in low-carbon technologies, or to risk losing its market share and value in a decarbonizing world. Green hydrogen offers a unique opportunity for the industry to diversify its portfolio, reduce its emissions, and contribute to the global climate action. The IEA report shows that the net zero policies are not only necessary, but also inevitable, and that the oil and gas industry must adapt or perish.



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Source: Yahoo Finance

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