Absent from COP26, oil companies zero in on hydrogen, CCS
Shell CEO Ben van Beurden said the oil giant and its rivals were told they weren't welcome at the pivotal COP26 meeting taking place in Glasgow over the past couple of weeks, and BP CEO Bernard Looney argues his attendance at the UN climate talks would have been a "distraction."
So, if oil companies' head honchos weren't in Glasgow, what were they up to? After all, Looney says BP is "all in" on the energy transition and van Beurden says that society is at a critical point in its history and that Shell is aiming for a "carbon-lean system." Both Shell and BP have net-zero by 2050 targets.
A flurry of announcements, some barely preceding COP26 and some during the summit illustrate where some of the world's largest energy companies are currently headed as the world's leaders and many investors press for decarbonization of energy, transportation, and every other economic sector.
Much of the biggest oil companies' energy transition focus over the duration of COP26 has been on green hydrogen and carbon capture and storage (CCS).
Shell and Norwegian aluminum and renewable energy player Norsk Hydro are teaming up to produce and supply hydrogen created from renewable electricity in hubs where they see strong potential for meeting heavy industry and transport customers' needs, the companies said 9 November.
The Anglo-Dutch energy giant is also cozying up further with German power company RWE on hydrogen in the two companies' homelands of Germany, the Netherlands, and the UK. On 10 November, the companies unveiled a deal that will see them team up on the production, use, and distribution of green hydrogen as well as decarbonizing natural gas and biomass-fired power plants in northwest Europe owned by RWE.
In yet another low-carbon deal in recent days, Shell said it had inked a memorandum of understanding with US energy services company Baker Hughes to work on energy transition projects. The initial steps in the venture will see Shell supply its partner with renewable power and credits, collaboration on low-carbon LNG strategies, and the exploration of future investments.
BP is also ramping up its green hydrogen ambitions. Just before COP26 began, the company and Daimler Truck announced plans to speed introduction of a hydrogen network in the UK. The companies also intend to work together on introducing hydrogen-powered fuel-cell trucks in the UK. The company's existing hydrogen plans in its homeland include the 1-GW H2Teesside project.
As COP26 progressed, the German automaker also revealed plans to team up with TotalEnergies. The companies envision heavy-duty truck hydrogen "ecosystems," which will involve "sourcing and logistics, dispensing of hydrogen in service stations, development of hydrogen-based trucks, establishment of a customer base as well as other areas."
All three oil companies also backed the H2Zero initiative unveiled by the World Business Council for Sustainable Development (WBCSD), which will demand growth in the demand for, and supply of, green hydrogen. The initiative was launched 9 November in Glasgow with the support of 28 of the world's largest energy, mining, and financial services companies.
Shell's van Beurden noted in materials accompanying the launch that "we brought companies together to tackle this status quo and send a strong signal to markets and governments for hydrogen to reach its full potential."
ExxonMobil's CCS ambitions
One oil giant that isn't one of the backers is ExxonMobil, but the Irving, Texas-headquartered major made its own splash with a big round number for its proposed energy transition-related investments as the great and the good gathered and bartered in Scotland's second city.
On the same day H2Zero was unveiled, ExxonMobil said it planned to invest $15 billion over the coming six years in initiatives that would reduce its GHG emissions. CEO Darren Woods said the company would hit emissions intensity targets four years ahead of schedule and as a result is working on "even more aggressive" plans.
A large percentage of the pot of cash will go toward reducing emissions in hard-to-abate sectors such as heavy industry and commercial transportation, said Woods.
ExxonMobil is "the world leader" in carbon capture, sequestering "more human-made CO2 than any other company," said Woods, adding the company is working mostly on CCS hub concepts.
Woods touted the company's role, alongside 10 other companies in supporting a large-scale CCS facility in the Houston area, where 14.3% of US oil refining capacity and 42% of US petrochemical processing capacity is located. The hub could be capturing about 100 million metric tons of CO2 a year from refineries, chemical plants and power generation facilities, he said.
ExxonMobil's CCS ambitions extend much further than its home state though. On 8 November, the company inked a deal with Petronas to investigate CCS opportunities in the state-owned Malaysian oil and gas company's homeland. A few days earlier, as COP26 was just getting going, ExxonMobil said it had signed a similar deal with state-owned Indonesian energy company Pertamina.
Indonesia is also working with Repsol and Petronas on CCS. Indonesia wants to hike oil production by 1 million b/d and gas output by 12 billion cubic feet per day by 2030 while also capturing as much of the CO2 produced as possible. The country, one of the world's top 10 GHG emitters, said in its latest Nationally Determined Contribution that CCS projects could help it achieve net-zero emissions by 2060.
ExxonMobil's appetite for CCS also currently extends existing or potential projects in Wyoming; Alberta, Canada; northern and southeastern Scotland; Normandy, France; Russia; Qatar; Belgium; the Netherlands; and Australia.
Russian, Saudi CCS initiatives
Russia's biggest oil company is also investing in CCS, although Rosneft's latest announcements came a couple of days before events Glasgow began in earnest.
Rosneft on 28 October said it had signed a deal with DeGolyer & MacNaughton to estimate CO2 geological storage resources in its license areas. The same day, the company said it would work with trading house Trafigura to assess the GHG emissions along its crude oil supply chain, and identify projects to cut the GHG emissions of its Urals crude value chain.
In addition, the Russian company has teamed up with ExxonMobil, BOP, Baker Hughes and the Japanese Ministry of Economy, Trade and Industry to work on CO2 emissions reduction, including CCS technology.
Saudi Aramco, the world's biggest corporate oil producer, also sought to front-run the Glasgow summit by announcing green hydrogen, green ammonia, nature-based solutions, "advanced" building materials, and digitalization initiatives.
The announcement by the state-controlled company came as part of a wider decarbonization push by Saudi Arabia. The de-facto ruler of the world's largest crude exporter, Crown Prince Mohammad bin Salman, said the country aims to achieve carbon neutrality by 2060, with initial investments of more than $187 billion.
The country will initially target cutting CO2 emissions by 278 million metric tons (mt) annually by 2030, more than doubling its previous reduction goal of up to 130 million mt, according to the crown prince. According to the latest International Energy Agency data, Saudi Arabia emitted 495.2 million mt of CO2 in 2019. Speaking at the same Saudi Green Initiative Forum, Energy Minister Prince Abdulaziz bin Salman said Saudi Arabia will reduce its emissions via carbon capture, utilization, and storage, and direct air capture, among other means.
Is it enough?
Promises involving CCS don't always work out though—just ask Chevron. The US' second-largest oil producer said 11 November it will spend A$40 million ($29.17 million) on carbon offsets after failing to meet CO2 injection targets at its Gorgon CCS project in Western Australia.
Exactly a month earlier, Chevron announced an updated "Climate Change Resilience" plan that involves lowering its Scope 3 carbon intensity by 5% by 2028, compared with 2016 levels. This followed a shareholder resolution from activist group Follow This requiring the company to reduce its Scope 3 emissions—those resulting from the end-use of its products. That resolution received 61% of the vote in May.
The number of announcements from oil companies in the run-up to COP26 came as no surprise to analysts.
"It's not a coincidence that we're seeing an acceleration of [corporate] announcements going into COP26," said Chris Elsner, IHS Markit research and analysis associate director, energy-wide perspectives. "COP26 is designed as an event to create urgency … and there are at least indications that companies are approaching the event with that perspective, as governments are."
But sometimes that's not enough for activists. "The world needs to reduce absolute emissions by around 40% by 2030 to have any chance to achieve the Paris accord. Until Chevron's targets reflect this fact, their strategy falls short of Paris alignment. [A 5% carbon intensity reduction] is disappointing tokenism, not a serious attempt to confront the climate crisis," Follow This said.
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