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There is a “future of energy” battle raging today, illustrated by the rhetoric about climate change and impending doom vs. the need to provide more energy at a competitive cost. Pick either side, and you are sure to lose. The issue requires a comprehensive set of solutions and cannot be reduced to simplistic single-minded philosophies.
Today’s reality is that concerns about climate change are more widely accepted globally. Wind, solar and other renewable energy sources have become more efficient and cost-effective, and carbon emissions can be reduced using non-fossil energy sources. At the same time, as the world’s demand for energy continues to grow – largely in developing countries – we will continue to use fossil fuels for decades to come. Global demand for 50% more energy over the next 50 years will require massive investment in renewables and technology, but that alone cannot meet global energy needs.
In fact, the use of fossil fuels will grow in the developing world as living standards there rise, while it is expected to decrease in the United States and Europe as renewable generation provides a larger share of power markets and efficiency gains will decrease overall electricity demand.
Any successful effort to build a more sustainable energy future will require us to take into account the needs of both the developed AND developing worlds. Global population will grow from 7 to 9+ billion people in less than 50 years, 90% of that in the developing world. The objective is not simply to sustain fossil fuel use but to enable global economic growth in a sustainable manner.
It’s already happening. Many of the world’s forward-thinking energy companies are listening to the market, which wants more energy and less carbon. We can’t get where we need to be without their leadership, as the scale and capacity of the industry in oil and gas, petrochemicals and electric power is critical to implementing the necessary transformation.
"The future isn’t about choosing the “right” technology or fuel to reduce emissions or the best policy to eliminate forms of energy supply"
The challenge and change has been driven by both innovative technologies and new policies. Global energy companies have invested in renewable energy and sustainable practices; and perhaps more crucially, have begun to shift from viewing reducing emissions as an added expense and a matter of regulatory compliance to thinking about it as necessary for good business. Lower carbon practices can be accretive to shareholders and investors. That is a massively important switch, because customer demands – not governmental regulation –is becoming a primary driving force.
Carbon management is no longer just about public relations. Instead it has become an opportunity to create new, accretive and competitively advantaged low-carbon offerings that have value in the marketplace.
The U.S. Energy Information Administration and International Energy Agency have identified carbon capture, utilization and storage, or CCUS, as a key tool for CO2 mitigation. The Department of Energy has requested the National Petroleum Council to identify the roadmap required for broad commercial deployment of CCUS. An analysis of early projects already has shown the technology is no longer a “concept,” but commercially proven.
Is CCUS good for the environment or good for business? Yes to both. And a supporting set of federal tax credits known as 45Q has been recently modified to support CCUS. The credits can be applied for pure carbon storage in safe and permanent geologies, reducing emissions and creating a revenue stream that is fungible, financeable and attractive to investors. The credits can also be applied to enhance oil recovery (EOR) opportunities, using the CO2 to produce additional oil in mature fields, with a requirement that the CO2 then be stored in the geologic formations – measured, monitored and verified.
Two examples of CCUS in both electricity generation and oil production create new offerings. With electricity generation, the technology captures CO2 from flue gases produced by coal- or natural gas-fired generation, resulting in carbon-free power. Not only that, the generating plants can operate 24/7, without requiring the wind to blow or sun to shine. It is a base load and carbon-free source of electric power. That’s a new value proposition.
In oil production (enhanced oil recovery, or EOR) the CO2 is injected into oil-bearing formations to produce additional recoverable oil. The life cycle analysis of oil produced from CCUS affords a near carbon-neutral next barrel of produced oil. It’s not “more oil,” it is a competitively advantaged, lower-carbon hydrocarbon.
This is real environmental impact. Less carbon, more energy and value propositions that are attractive to consumers and investors. It is the magic of technology deployed at massive scale to create massive impact.
The future isn’t about choosing the “right” technology or fuel to reduce emissions or the best policy to eliminate forms of energy supply. It must be about ensuring that we have the flexibility to take advantage of all forms of energy without harm to the environment, while allowing people to enjoy the life-changing impact of affordable energy.