Oil and gas companies are one of the major emitters, if not the major emitter, of carbon in the world today. With climate change now the greatest environmental challenge, it has become imperative to reduce carbon emissions dramatically in the future.
Therefore, oil and gas companies are facing one of the biggest upheavals they have ever experienced, with renewable energy gaining key importance in their market strategies.
Frost & Sullivan has recently created Green Energy, a new division within its Energy department that will focus on the green energy industry. One of the projects Frost & Sullivan’s researchers are working on is the impact and the emerging relevance of renewable energy on the integrated oil and gas companies, especially within Europe.
“The Renewable Energy industry has gained prominence in the recent past for a number of reasons,” explains Frost & Sullivan research analyst Bobby James. “The major factors are increasing fuel prices, environmental concerns with regard to greenhouse gas (GHG) emissions, dwindling crude supply, ever-increasing demand for energy and so on.”
The European Union has set an ambitious and binding target of achieving 20percent of all energy consumption to come from renewable energy sources by the year 2020, from a current level of less than 7percent. The 27-member EU also agreed to cut carbon dioxide emissions by 20percent below 1990 levels by the year 2020. The major factors driving the European Union are the need to tackle global warming caused by the emission of greenhouse gases (GHG).
“Over the last decade the integrated oil and gas companies have started focusing on this emerging trend and the majority of these companies already have ventures and projects on the ground,” says Bobby James.
The underlying reasons for increased focus on the renewable energy industry are driven by:
“The challenges facing the oil companies are similar to those being faced by other renewable energy market players,” explains the analyst. “One of the major constraints is the high initial investment cost in renewable energy. Another issue is the price of energy produced compared with that from conventional energy sources. This challenge has softened in the recent past owing to the current high price of crude oil. With certain renewable energy segments like wind and solar energy, the regular and continuous supply of energy is also a constraint.”
But what are the alternative sources of energy that are prevailing in the oil and gas industry?
Wind and solar photovoltaic are the sectors in which these companies are investing most as these are comparatively more matured in terms of commercial viability and technology. A significant proportion of R&D investment is also being routed into emerging alternative energy sectors such as hydrogen and biofuels.
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