The Unlikely Net-Zero Heroes?

As the world moves towards a net-zero future, are oil and gas companies part of the problem or part of the solution? A pragmatic change of direction and philosophy could transform them into unlikely heroes in the fight against climate change.

The Unlikely Net-Zero Heroes?

By Dr Jeanne Ng, Director – CLP Research Institute



In a climate science report published in August 2021, the Intergovernmental Panel on Climate Change highlighted that “human influence has warmed the climate at a rate that is unprecedented in at least the last 2,000 years”. The largest contributor to this human influence is the energy sector, which accounted for more than 73% of global greenhouse gas emissions in 2016.  


The need to decarbonise our energy sources is urgent. The power sector started decarbonising almost two decades ago, and the oil and gas industry is now following suit. As the major source of global greenhouse gas emissions, it holds the key to the energy transition. Here are some of the reasons why I believe oil and gas companies can be heroes on the journey to a net-zero energy future.


Pie chart showing global greenhouse gas emissions by sector
The need to decarbonise our energy sources is urgent.

They have the know-how

Due to the explorative nature of their business, oil and gas companies have research and development facilities and teams with profound technological expertise. For instance, they have used carbon capture and storage (CCS) techniques for decades, pumping out as much residual oil and gas as possible to strengthen revenues. It would not be a great leap for these companies to tailor and develop CCS technology for the power sector and reduce methane leakage from operations and pipelines.


What’s more, if hydrogen is seen to be the net-zero carbon fuel of the future, it would only be logical for oil and gas companies to consider switching from providing oil and gas to supplying low-carbon hydrogen produced from fossil fuels with CCS, for example. They could even move into the power production space and use renewable energy to produce green hydrogen.


Symbol of hydrogen gas floating against a blue sky and on a green field
The oil and gas industry has the financial strength to invest in the technologies needed for a net-zero energy future.

They have deep pockets

The technical expertise of the largest oil and gas companies is typically supported by company research and development budgets of hundreds of millions of US dollars a year. Needle-moving technologies will be needed for a net-zero energy future based on CCS, renewable energy, and hydrogen, and those budgets could help provide the huge levels of investment required to further develop and commercialise these technologies, in particular over the coming one to two decades.


The annual revenues of a major oil and gas company are typically over US$100 billion per annum, according to data company Statista. Even if profits are usually between 3% and 6% of revenues, research and development expenditures typically account for only a few percent of annual profits. Major oil and gas companies are therefore expected to have the financial capability to move much deeper into carbon-reducing technologies.


They have political clout

The oil and gas industry has a long history of effectively managing its most influential stakeholders, particularly governments, in the jurisdictions in which they operate. This capability is critical for the industry’s ability to maintain market share where they own and operate assets, and to enter new markets.


The existence of fossil fuel subsidies illustrates how well oil and gas industry players engage and lobby governments to ensure affordable fuel prices for customers as well as a sustainable business model. Political contributions, as well as the financial support of pressure groups aligned with the industry’s philosophies, help cement that influence.


They just need the right signals

The oil and gas industry operates in the way it does because existing policies and regulations in some economies currently allow it to use fossil fuels to provide affordable access to energy. However, if policies and regulations continue to evolve and set a reasonable timeframe for penalising fossil fuels and rewarding low and zero-carbon technologies, the pragmatic oil and gas industry will transition towards net-zero energy.


Some countries are already sending the right signals. For example, France plans to spend more than US$8 billion on a decarbonised hydrogen economy between now and 2030, starting with a European hydrogen project this year. South Korea has announced plans to invest 220 trillion won, or around US$191 billion, by 2025 in digital technology and green energy projects. Furthermore, a global push is underway to remove fossil-fuel subsidies that encourage wasteful consumption, helping drive the transition of the oil and gas industry to a more sustainable model.


Emissions from oil and gas-fueled power generation
The oil and gas industry are currently allowed to use fossil fuels to provide affordable access to energy.



Can major oil and gas companies really be champions in the movement against climate change? The jury is still out, but it does seem they are waking up to the potential benefits of an energy transition. The chief executive officers of the European oil and gas companies involved in the Oil and Gas Climate Initiative have committed to accelerate emissions reduction efforts, support the development of low-carbon technologies, and advance opportunities to scale up carbon capture, use and storage.


If they continue on this path, oil and gas companies can become unlikely heroes in tackling climate change as they use their ample resources to adapt to the imperatives of a net-zero future.