What are the trade-offs between GHG mitigation and economic performance in the oil and gas industry?

2023 was the hottest year on record and 2024 is expected to be hotter. In 2023, record number of forest fires in Alberta due to the heat and low snowfall in the winter. 2024 is already looking worse than 2023. CCS with the tax credit given by the US IRA can cover 75 to 85% of the costs. ExxonMobil bought Denbury for its CCS. As CCS is used more the cost will decrease. In the Permian and Bakken seeing less flaring because of new pipelines or storage facilities for associated gas and an appreciation of the need for climate action pushed by investors. Many oil and gas companies striving to be net zero due to the value in doing so to continue to operate. Trade off between meeting demand and reducing emissions through CCS for the stakeholders.

Greenhouse gases emissions are inevitable with respect to our way of life. Demand for power has grown exponential, stake holders won't budge on profits and the general public is ever excited in experiencing newer inventions most of which require surge power. The petroleum organizations have power to steer in direction to curb the taste buds of us all. Research and investment in strategic alternatives and public education is the win. Rich governments could incentivize poor countries to lower carbon footprints. There is one earth's atmosphere affected by a vast difference in geoeconomic objectives and limitations. OPEC could annex this focus. This effort could promote new frontiers in job creations and purify the air.

From what I have experienced, conducting a cost-benefit analysis (CBA) is a pragmatic approach to assess the trade-offs. CBA allows for a systematic evaluation of the financial implications associated with adopting various mitigation strategies. By quantifying both the costs and benefits in monetary terms, decision-makers can make informed choices that align with the company's economic goals and environmental responsibilities. In my experience, CBA provides a transparent framework to prioritize mitigation options based on their financial viability and environmental impact. This tool enables companies to identify win-win scenarios where the economic benefits of certain mitigation measures outweigh the costs.

In my belief, the oil and gas industry can indeed adopt strategies to manage the trade-offs effectively and achieve a balance between GHG mitigation and economic performance. One such strategy involves embracing technological innovation to optimize existing processes and reduce emissions. For instance, investing in advanced drilling technologies and digitalization can enhance operational efficiency, thereby mitigating GHG emissions without compromising economic performance. Additionally, diversifying energy portfolios by incorporating renewable sources and investing in sustainable practices can contribute to a win-win situation. This not only aligns with the global shift but also positions companies to capitalize on emerging markets.

Achieving net-zero emissions by 2050 is our ultimate dream, but before jump-starting the transition, we shall first agree that a successful transition involves a shift in the sources of energy to satisfy global energy demand, balancing sustainability & socio-economic impacts. Mostly all the transition strategies are driven by sustainability concerns, however, such strategies shall not overlook other dimensions, i.e., energy security, affordability and access, while retaining economic development. There is no one-size fit all strategy, it is crucial to develop a mix of solutions that address the unique region/sector carbon footprint. Such solutions shall focus on all the dimensions of the energy trilemma, including their economic viability.

Perhaps Governments should offer lucrative tax breaks which encourage investment in projects that mitigate global warming. The Government's could adopt a position of ' if we don't do something quick we may end up with nothing to govern.' Global warming needs a worldwide governmental approach. We may end up going backwards rather than forwards.

Consider also some other factors that can significantly impact the decision making process: Exploring government subsidies, carbon credits, and other financial instruments that can offset the costs of GHG mitigation. Understanding how international and national policies on climate change and emissions might impact the industry. Net zero tracker (world economic forum) initiatives where industry is working towards meeting goals which include over 50% reduction in scope 1 and 2 emissions intensity, 75% reduction in methane emissions, and 95% reduction in flaring emissions. Assessing and preparing for risks associated with GHG mitigation strategies, such as technology failure, regulatory changes, or public perception shifts.

In my experience, the trade-offs between greenhouse gas (GHG) mitigation and economic performance are complex and multifaceted. On one hand, implementing rigorous GHG mitigation measures, such as carbon capture and storage (CCS) or transitioning to cleaner energy sources, can result in substantial upfront costs. These costs may impact the economic performance in the short term, potentially leading to decreased profitability and increased operational expenses. However, the long-term benefits of reduced environmental impact and improved sustainability can be significant, fostering a positive corporate image and ensuring regulatory compliance.