Oil & Gas Sector's Big Role in New Energy Future

By Jared Lazerson

Last month, President Donald Trump announced a decision that surprised few: the U.S. will withdraw from the Paris Agreement, the accord signed by nearly every country in the world to implement climate change mitigation and adaption measures.

What was surprising about the decision was the ensuing public disapproval from the world’s largest and most influential oil and gas companies. In response to the announcement, the CEOs of ExxonMobil, Conoco and BP (among others) publicly reiterated their support for international climate action.

But in fact, oil and gas supermajors have acted to address climate change – and embrace renewables—on several occasions in recent decades. Oil companies have invested in renewable energy since the 1970s, initially as a hedge against the oil price shock and resulting upheavals of that era. The industry’s first major step toward climate action occurred in 1997, when BP became the first oil company to acknowledge its contributions to climate change.

The industry has come a long way since then. Companies such as Shell, Total and Statoil have invested billions of dollars in in solar panels, energy storage and wind farms, among other technologies. And last November, the Oil and Gas Climate Initiative (OGCI), which is led by the CEOs of 10 major oil and gas companies, announced a $1 billion fund to “support start-ups and help develop and demonstrate innovative technologies that have the potential to reduce greenhouse gas emissions significantly.”

Specifically, the OGCI fund focuses on efforts to reduce methane emissions from natural gas operations, facilitate the deployment of carbon capture and storage, and increase the energy efficiency of operations.

These are necessary steps for the industry to make good on its public commitment to climate action. But for the oil and gas industry, lowering its operational footprint is just the starting point. The industry should leverage its global infrastructure and engineering prowess to play a more active and central role in the new energy economy. In our changing world, bold and innovative steps in energy diversification that go beyond investment may be necessary to ensure the long-term viability of the industry.

For example, some oil companies now use solar or wind energy to increase oil production and power their operations, seeing the same economic advantages that homeowners who switched to solar have seen. Companies that use these systems understand that renewable energy technologies should not be seen only as competition in energy production, but also as opportunities to add economic value.

Lithium is in a unique position in the minerals marketplace: it is essential to the battery storage technologies needed to avert global climate disaster, yet supply of this resource is underdeveloped. The current supply simply does not meet the high and growing demand. In fact, current and projected scarcity have led lithium prices to double since 2015. Just as technological advancements in consumer and energy products are driving up demand for lithium, new technologies are the key to meeting that demand with new supplies. Novel approaches to lithium (and other clean energy resource) production can unlock supplies in unexpected places—like oil and gas fields.

Our goal at MGX is to transform a waste product that oil companies spend millions of dollars to dispose of into a source of lithium that is essential to meeting the mission of the Paris agreement, regardless of which countries maintain or rescind their commitments. Extraction of petrolithium is just one innovation oil companies can adopt and build upon to make climate action work for them.

In short, the clean energy future need not be bleak for oil and gas companies. As the industry works to reduce its greenhouse gas emissions, it can also act on opportunities in the renewables industry that are beneficial to the climate, the global economy and the industry itself. With so much at stake, the oil and gas industry should bring its technical expertise and considerable resources to bear as it continues to meet the climate change crisis.

Jared Lazerson is CEO of MGX Minerals.

Image credit: Clinton Steeds, Flickr