Energy Transition Strategy: An Evaluation of the Harder-to-Abate Sectors of International Oil & Gas Companies and the Implications for Net Zero


Authors : OFILI, METHADIUS IWEANYA

Volume/Issue : Volume 8 - 2023, Issue 1 - January

Google Scholar : https://bit.ly/3IIfn9N

Scribd : https://bit.ly/3RD42he

DOI : https://doi.org/10.5281/zenodo.7614211

This research was carried out investigate what energy transition strategies and to what extent the IOCs are addressing the harder-to-abate sectors of shipping, aviation, trucks and petrochemicals; why adopted strategies are ineffective/effective; why the sector is hard-to-abate/neglected, and what fuels have been adopted. Secondary data was collected from IRENA and the seven leading IOCs. Findings were qualitatively and quantitatively analyzed, and show that IOCs have increased their harder-to-abate sector energy transition engagements, compared to previous years. Biofuels and hydrogen are the renewable fuels adopted for this difficult-to-electrify sector, which is not easily directly amenable to other sources of renewable energy. The ‘horizontal strategies’ of direct/own investments/projects, partnerships, strategic alliances, JV, stake and fuels purchases and outright acquisitions were employed by IOCs to grow their biofuel and hydrogen portfolios, while ‘vertical strategies,’ entail short and long term strategies. Biofuels represent short term strategy because they are readily deployable fuels requiring little or no engine modifications, while hydrogen represents long term strategy, as engine re-calibration, new distribution and dispensing infrastructures are required. Through the implementation of the horizontal strategy, the vertical strategies are accomplished, leading towards 2050 net-zero target. The IOCs are producing not only grey hydrogen, but also blue (CCS/CCUS-applied) and green hydrogen. Global green hydrogen production entails the electrolysis of water, using enormous amounts of renewable electricity. They now produce, not just bioethanol and biodiesel, but through technological innovation, have developed SAF, Bio-LNG, RCNG, RNG, LCF and HVO biofuels. While these developments are commendable, they are ineffective, as current sector investments must more than triple, annually, for net zero to be attained, otherwise, it will be an illusion.

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