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Letters from the Directors

Deep decarbonization: A role for the oil and gas industry

Co-Directors, Stanford Precourt Institute for Energy
April 12, 2016

Trans Alaska Pipeline near pump station four.

Courtesy: Alyeska Pipeline Service Company

This is the first in a new series of commentaries from the directors of the Precourt Institute. The goal is to stimulate a conversation about the future of energy and the role that Stanford can play in helping industries, countries and society at large thrive over the coming decades. 

There is growing and unassailable evidence that the accumulation of atmospheric greenhouse gases from burning fossil fuels is changing our climate. Pressure to respond to the climate-change threat is mounting. Young people around the world are impatient with the lack of progress in reducing global carbon dioxide (CO2) emissions. Others who have been pressing the issue for decades are deeply concerned that every day we fail to act, the greater the damages and cost of addressing climate change.

More pressure is coming. Last month the National Academy of Sciences concluded that it is now possible for scientists to attribute some extreme weather events, such as heat waves and droughts, to a changing climate. The 24/7 news cycle linking these extreme events with climate change will only increase the call for urgent action.

Scientists with the Intergovernmental Panel on Climate Change (IPCC) have painted a very clear picture of what we need to do.[1] According to the Fifth IPCC Assessment Report, limiting the global average temperature increase to only 2 degrees Celsius will require keeping cumulative CO2 emissions below 2,900 gigatonnes. We have already emitted about two-thirds of this total since 1870[2]. If emissions continue at today’s rate, we will reach 2,900 GT by the late 2030s.   

The only solution is to systematically reduce CO2 emissions by deeply decarbonizing our energy system. Beginning now, we need to reduce CO2 emissions by 4 percent[1] a year and keep that up for the next 50 years. By 2050 our emissions would be reduced by 75 percent compared to today.

In February the Global Climate and Energy Project at Stanford held a Future Vision workshop with our industry colleagues to discuss preparing for and playing a leadership role in deep decarbonization of global energy systems.

Major sources of emissions in the energy arena include electricity generation, material processing and manufacturing, heating and cooking, and transportation.

Some sectors are easier to decarbonize than others, but options are available across the board. These options fall into 4 broad categories:

·      Reduce energy use by conservation

·      Reduce energy use by improving efficiency

·      Switch to low-carbon or no-carbon fuels and energy sources

·      Capture and sequester CO2

In coming months we will address each energy sector – but first, we will address the oil and gas industry.

In the short run, the oil and gas industry can contribute to decarbonization by providing natural gas as a cleaner substitute for coal. By switching from coal to natural gas, CO2 emissions from power plants can be reduced by more than 50 percent. Driven by economic reasons as well as potential regulations, this switch has begun in the U.S. and already helped reduce our emissions. For deeper decarbonization, the industry could agree to “take back” the CO2 after the natural gas has been burned to produce electricity or for industrial applications, and sequester the CO2in their oil and gas fields. The estimated 1,000 GT of storage capacity in depleting oil and gas fields could accommodate emissions from burning natural gas well into this century.

Industry expertise in large-scale gas separations and underground injection can also be used to reduce CO2  emissions from coal-fired power plants using carbon capture and storage (CCS) technology.  Currently, this costs about $60-$70 per ton of CO2 , and we need research and development to reduce it to about half that cost to make it economical for oil and gas recovery.

In the longer run, more decarbonized products will be needed. Possibilities include fossil fuel-sourced hydrogen with CCS. Stripping the carbon atoms off molecules of natural gas produces clean hydrogen gas, which can be used for generating electricity, transportation and heat. If the remaining carbon is captured and sequestered underground, more than 90 percent of CO2 emissions can be avoided. Oil and gas industry expertise in refining and synthesizing hydrocarbons could also lead the way to the scale-up of Zero Net Carbon (ZNC) fuel. ZNC fuel is made using carbon-free sources of electricity to convert water and CO2 to hydrocarbons for use in equipment that is difficult to electrify, such as airplanes and heavy trucks. While the technology for ZNC fuel is not available yet, leading research institutions around the world, including Stanford, are working hard to make this a reality.

Now is the time to get started on the long but urgent process of decarbonizing our energy system. To implement these solutions at the pace and scale needed, industry must lead.  Industry must not only reduce their own emissions, but also sell products that lead to emissions reductions by their customers.

A decarbonized future could provide many strategic opportunities for a strong and prepared oil and gas industry. Putting a tax on carbon emissions that is simple, predictable and meaningful would provide the impetus needed to drive deep decarbonization in the industry at scale.

[1] Jackson et al., 2015. “Two or Three Degrees: CO2 Emissions and Global Temperature Impacts.” The Bridge (National Academy of Engineering).

[2] That gives us a 2 in 3 chance of limiting warming to 2oC.