A global energy transition is underway, but the shift from fossil fuels to renewables will not happen overnight.
No single solution or energy source is the answer — a multi-faceted approach can balance short-term energy needs with long-term sustainability goals.
Companies in the oil and gas industry are familiar with change, and the energy transition is yet another chance to adapt. In fact, many oil and gas companies are gradually investing in renewables and lower-carbon energy sources to diversify and prepare for a future that’s less dependent on fossil fuels.
As a finance professional working in the oil and gas industry, you can help determine which investments and strategies offer the right blend of short- and long-term benefits for your organization and for humanity.
So, why natural gas?
According to the International Energy Agency, switching from coal to natural gas can reduce CO2 emissions by up to 40% for each unit of energy output. Natural gas emissions can be further reduced by using carbon capture, utilization, and storage (CCUS) technologies and by preventing methane leaks, which would also save money.
Over the past few years in some parts of the world, there has been a shift away from coal and toward natural gas to reduce emissions and air pollution in the short term.
The role of natural gas in the energy transition is part of an ongoing debate
Those in favor of natural gas as a bridge to more sustainable energy sources argue that natural gas is a “cleaner” alternative to other fossil fuels and can aid in the energy transition.
Those opposed to the use of natural gas as a bridge argue that gas still creates emissions and should not be used to prolong a transition to renewables.
According to Mark Radka, head of the United Nations Environment Program’s (UNEP) Energy and Climate Branch, natural gas acts as a “bad bridge” when it requires investment in new infrastructure, but it can be a good backup for renewable-based power systems. In an interview for UNEP, he pointed out that not all technologies can run on renewables yet, including aircraft and shipping methods, which still rely primarily on fossil fuels. So, it seems some sort of bridge is necessary in the short term.
The best energy source for the job also depends on location, available resources, and many other factors. Natural gas could make sense as a bridge fuel for one country and not for another.
For example, a coal-to-gas switch is a viable short-term option for reducing emissions in the United States and the European Union, according to the International Energy Agency, but would be more difficult for countries like India.
As a finance professional, you can be better prepared to offer insights on these types of strategic decisions when you understand all the options.
Hear from leaders, network with fellow experts, and discover new industry developments at the AICPA & CIMA Oil & Gas Conference, Nov. 8–10, in Las Vegas and live online.