A climate for action

24.06.2016
Agreement on cutting greenhouse gas emissions was reached by 186 nations in Paris during December 2015. This ambitious plan can only be achieved through a major and binding commitment – which includes the oil and gas industry.

| Jorunn Braathen Eia and Monica Larsen (photo)

Photo: Monica Larsen

Five national priorities on the climate have been set by the Norwegian government, including the development of low-emission and clean production technology in industry.

The others are carbon management, strengthening Norway’s role as a renewable energy supplier, a green transition in shipping, and the transport sector – where challenges are greatest.

After signing the Paris agreement on 22 April, the government submitted a Bill on ratifying this deal to the Storting (parliament).

“Norway and Norwegian companies are [to be] early adopters of and leaders for the green transition,” the Ministry of Climate and the Environment wrote in a press
release.

 

Temperatures

A limit on how much carbon dioxide the atmosphere can absorb without the global temperature probably exceeding 2°C has been set by the UN intergovernmental panel on climate change (IPCC).

The effects of a rising greenhouse gas concentration are already visible across much of the world, and curbing such warming is essential if matters are not to get worse.

While the IPCC has set 2°C as the ceiling, the climate summit in Paris agreed to aim for a limit of 1.5°C. The global temperature in 2100 is to be no more than 2°C higher than in 1850.

Energy production accounts for the largest share of world greenhouse gas emissions, which the IPCC maintains must be cut by 90 per cent in 2040-70 compared with 2010.

The goal is for humanity to become climate-neutral at some point between 2050 and 2100, so that greenhouse gas emissions are balanced by their capture or removal.

Norway, for example, can go on producing oil and gas as long as it supports afforestation projects and other measures to eliminate carbon dioxide – and thereby becomes climate-neutral.

 

Commitment

“The Paris agreement was a stroke of genius for getting all the nations to sign up,” says Eirik Wærness, chief economist and head of market analysis and strategy at Statoil.

Noting that this boosts the probability of achieving such a commitment, he feels Europe and the USA face a big challenge while China, for example, can meet its targets more easily.

“If measures follow in the wake of targets, the Paris agreement will also have an impact on the Norwegian oil and gas sector.

“The industry hasn’t reached agreement on action yet, but there’s great willingness to do something. In Statoil, we’re prepared for higher carbon costs and stricter climate rules.”

Noting that Norway has had a carbon tax since 1991, Wærness finds it paradoxical that these emissions are regulated more strictly offshore than for land-based activities – such as the process industry or agriculture.

In his view, different sectors should be subject to the same operational parameters if the climate targets are to be reached as efficiently and cheaply as possible.

“It’s also important that we view the Paris deal in relation to other agreements,” he argues, and points to the 2030 agenda for sustainable development adopted by the UN last September.

This aims in part to ensure that the world has access to cheap, reliable and modern energy services by 2030.

 

Lack

The global population is expected to reach 10 billion by 2050. Close to 1.5 billion humans lack electricity today – including more than 90 per cent of people in Malawi, one of the planet’s poorest countries.

While world demand for energy is rising sharply, output from existing oil fields is declining by three-six per cent annually. So finding alternative sources of supply is a matter of urgency.

“The question is whether we can deliver enough energy to meet global demand,” says Wærness. “It’s therefore important that we invest in new energy while also producing oil and gas as carbon-efficiently as possible.”

Emphasising that green energy is needed to ensure sufficient supplies, he maintains that people must be positive to both sources.

Wærness is optimistic about the oil sector, and quotes Tord Lien, Norway’s petroleum and energy minister: “There’s no reason to turn off the lights yet. The people who’re going to do that aren’t born yet.”

 

Important

Coal-fired electricity generation has traditionally played an important role in boosting economic development for a number of countries.

A full transition from coal to gas could cut greenhouse gas emissions by 50 per cent while helping to meet the rising demand for energy.

The world will also have to move away from natural gas, but this fuel is set to remain important for a number of decades to come.

About 20 per cent of Norwegian gas is sold to the rest of Europe for electricity generation, helping in part to reduce the use of coal.

Just over one per cent of total global energy demand is met by solar and wind power, but how much this proportion can increase remains uncertain.

Wærness notes that the need for oil and gas as feedstock for products is also set to grow, from about 10 per cent of petroleum production today to an estimated 20-25 per cent.

“It’s difficult to find replacement raw materials for manufacturing such commodities as asphalt and plastics,” he points out.