The top oil and gas majors in the world are calling for the use of policies and market mechanisms to put a price on carbon and spur technologies to support the transition toward a lower carbon world.
"Recognizing the urgency of responding to the climate challenge, all OGCI member companies support the consideration and introduction by governments of appropriate policies or carbon valuation mechanisms, such as [a] tax, trading systems, incentives or other market-based instruments," the Oil and Gas Climate Initiative said in a Sept. 23 statement that coincided with the start of climate week in New York.
The OGCI, backed by 13 of the largest oil and gas companies in the world, also said Sept. 23 it intends to jump-start additional investments in carbon capture, use and storage, or CCUS, to support efforts to achieve climate and energy goals.
"The world's major integrated oil and gas companies are responding to climate change imperatives, in particular the Paris Agreement, by developing new products and technologies to optimize energy usage and reduce their carbon footprint,"
Many of the oil majors, responding to activist investor backlash to reduce emissions from their operations and move into alignment with the Paris Agreement on climate change, have been increasing their investments in low carbon technologies and cleaner energy and fuels over the past few years.
But this will need to continue in earnest. In an August report consultancy group Wood Mackenzie said increased investments in renewables and CCUS technologies, as well as carbon pricing mechanisms, will be essential to keep the rise in global temperatures to below 2 degrees Celsius as outlined in the 2015 Paris Agreement.
Like the OGCI, the Wood Mackenzie analysts said governments will also need to craft effective legislation that encourage innovation. "This is vital. It needs to be done, and done soon," said David Brown, Wood Mackenzie head of markets and transitions, Americas.
Companies like Houston-based Occidental Petroleum Corp., one of the first U.S.-based energy companies to join the OGCI, have touted investments in CCUS and enhanced oil recovery techniques. Enhanced oil recovery involves using harvested carbon to boost oil production from wells.
"Accelerating CCUS will require governments and industry as well as other stakeholders to work collaboratively to develop and deploy investable business models and supportive policies," the OGCI said.
The OGCI member companies, which collectively represent about 30% of the world's oil and gas production and nearly 20% of primary energy consumption, said Sept. 23 they reduced the methane intensity of their operations by 9% in 2018 and are on track to slash by 20% the average methane intensity of the group's collective upstream operations to below 0.25% by the end of 2025.
In addition to the methane intensity target, OGCI is working on a target to reduce by 2025 the collective average carbon intensity of member companies' upstream oil and gas operations.
In September 2018, U.S.-based oil majors Exxon Mobil Corp. and Chevron Corp. joined the OGCI. Royal Dutch Shell PLC and BP PLC are also members.
