In this edition of WGC Explores, Prof. Jonathan Stern from Oxford Institute for Energy Studies (OIES) shared his views on the need to meet the challenge of significantly reducing the greenhouse gas footprint and the energy transition developments in the current climate.
1. What are the biggest trends and challenges facing the oil and gas industry?
Gas is a fossil fuel and therefore the industry – or better stated the gas community – needs to meet the challenge of significantly reducing its greenhouse gas footprint. This will happen at different speeds in different countries but if the COP21 targets – which all governments have signed up to – are to be met, this must be achieved over the next 30 years. In some countries, the response may be to replace methane with low or zero-carbon gases, in others it may be that natural gas will be eliminated in favour of other forms of energy. But despite these challenges, the gas community is much better placed than other fossil fuel industries. Biomethane and especially hydrogen give natural gas stakeholders an opportunity to play a continuing role in a zero-carbon world by producing and delivering a similar product to customers through the same or similar networks.
2. Covid-19 has had a global impact and seen all leaders of companies and organisations with a new set of challenges. How big an impact has this been for you and your organisation?
Covid-19 has required all research organisations to network virtually and rethink the short term future for natural gas. The OIES has greatly increased its output since the pandemic, focussing on near-term impacts on natural gas and whether these developments will have a significant impact on the energy transition which was already well underway. Our work focusses less on what energy stakeholders should or must do in the future, and more on how we believe they will address the Covid-19 and energy transition challenges. Our research is free to download from our website www.oxfordenergy.org
3. As the world adapts to the new normal, what will the post-pandemic world look like in the gas industry?
The major debate is whether the pandemic will accelerate or hold back energy transition developments which were already underway. Many EU governments have said that the pandemic will not deter them from accelerating their carbon reduction targets for 2030, and this could impact natural gas demand faster than was anticipated. Outside Europe, where carbon reduction is not so high on government agendas, air quality is likely to favour gas as long as it is affordable. Energy transition seems likely to impact coal and oil demand more immediately than natural gas due to competition with renewables and electric vehicles. Natural gas faces competition in all of its end-uses – power, industry and residential – but probably less immediately.
4. Where do you see the industry in the next 5 to 10 years and its contribution towards the sustainable future?
The impact on natural gas over the next 5 and 10 years will be very different for different countries. Most models show that European gas demand would decline only modestly during the 2020s – although this was before the impact of COVID-19 – and global gas demand would continue to increase beyond 2030. However, those countries which have committed to net zero emissions will need to take steps to curtail natural gas use earlier than anticipated. Significant contributions to a sustainable future will mean investments in commercial-scale low and zero-carbon technologies, particularly hydrogen, must be ready to scale up massively post-2030.
5. What are the new changes and strategies that your company or organization is planning to execute post Covid-19?
We have already executed our COVID and post-COVID research strategy:
• an initially greater emphasis on short term developments and recovery of energy and gas demand;
• examining whether government and companies are backing up what they are saying with what they are doing, specifically in relation to multi-billion currency investments in low and zero-carbon transition projects;
• examining the emissions associated with fossil energy in general, and natural gas specifically, in relation to existing and new projects.
Prof. Jonathan Stern will speak at WGC2022 in Daegu, Korea from 23-27 May 2022. To hear his views on the most significant issues shaping the global energy agenda, view the WGC2022 program.