In what’s become a February tradition, Baker Hughes held its annual meeting – AM2020 – in Florence, Italy, examining the latest industry topics and issues. The meeting’s first day took up the oil and gas industry’s role in working to expedite the current energy transition by applying new and planned technologies to reduce greenhouse gas (GHG) emissions.
In his opening keynote, Baker Hughes Chairman & CEO Lorenzo Simonelli outlined the dual challenge the industry faces – ensuring that it provides reliable, efficient, safe and productive energy, whilst continuing to transform and take on the challenge of climate change and carbon footprint reduction – saying, “As we look at the energy transition, gas isn’t just a transition fuel but a destination fuel.”
Simonelli stressed that to answer these challenges starts and ends with technology, emphasising that this conviction has led Baker Hughes to reposition and rebrand as an energy technology company.
Following its commitment to reach net zero emissions by 2050 – announced at last year’s AM –Simonelli confirmed that Baker Hughes is making great progress in reducing its GHG output. “Since 2012, we have reduced our emissions by 34% and we’re well on our way to making sure we achieve our goals and our commitment to 2050,” he said.
View from the IEA
Following Lorenzo Simonelli was Dr Fatih Birol, Executive Director of the International Energy Agency (IEA), who explored how global energy markets are characterised by three deep disparities – calm oil markets immersed in deep geopolitical tensions and uncertainties; the actual increase in emissions despite efforts to reduce them; and the promise of energy for all, including those 850 million people who currently live without access to modern energy sources.
Warning that unless governments change policies, emissions will increase, and average global temperatures will rise 4° C, with devastating impact, Dr Birol explained how energy policies are in the pipeline across multiple countries that can potentially transform the industry and reduce emissions – with the aim of limiting temperature increases within a more favourable 1.5° to 2° C range.
Dr Birol emphasised that, “The world will need oil and gas for several years to come but industry should understand that no company will be unaffected by the energy transition.” He argued that minimising emissions should be the first order of priority for all companies, as 15% of global energy related GHG emissions come from the process of getting oil and gas out of the ground and to consumers. Keeping up pace on the energy transformation and developing new technologies is vital to meeting this goal, Dr Birol explained: “Without fixing issues in the energy sector, the world has no chance of fixing the climate.”
The panel discussion – “The Path to Decarbonization”, moderated by Allyson Book, VP Energy Transition at Baker Hughes – explored issues such as how the energy sector is an increasingly competitive marketplace, as new and innovative technologies make it possible for consumers to satisfy their needs without relying as heavily on oil and gas – and how environmental performance will become key to competitive performance over the next few decades. “What is different about this energy transition is that it is no longer driven by economic aspect but value measures, including social and behavioural dynamics,” said Naomi Boness, Natural Gas Initiative, Stanford University.
A key discussion point was the critical need for industry to become engaged in supporting policies that will act as a catalyst for growth in efficiency and decarbonisation. Richard Newell, President and CEO, Resources for the Future, said, “The expression of commitment to the energy transition on behalf of companies like Baker Hughes is a great first step.” Yet, the panel agreed that the oil and gas industry has been lagging in its support for policy movement and this needs to change significantly.
“There is a real important need for getting the industry constructively engaged in supporting public policies that support the journey towards net zero carbon,” asserted Mark Brownstein, Senior Vice President of Energy, Environmental Defense Fund (EDF).
Overall, the panellists explored how the industry can be incentivised to maintain and continue improvements in lowering emissions, including reducing the price of carbon capture and storage (CCS). They also discussed how criticism of the industry may drive it to embrace best practice – otherwise, it will be defined by its worst performer.