Don’t know about you but my patience with certain politicians, the oil and gas industry and indeed a few entire countries is running just a tad thin nowadays. Why? Because I am not seeing the progress in dealing with climate change that I should be seeing.
What brought it to a head for me is the behaviour of countries like Brazil in allowing the destruction of the Amazon rainforest and the Australian government in continuing to export huge amounts of coal along with its generally negative attitude towards net-zero energy production.
French President Emmanuel Macron has declared that he will not sign trade agreements with countries not honouring the Paris Agreement on climate action. This statement was directed at Australia, but it could be equally applied to others, including the US, which has announced its intention to pull out of the agreement altogether.
I would also happily add Brazil to President Macron’s blacklist plus the Philippines, Madagascar and others for allowing habitat to be destroyed to increase farm production.
If it’s now acceptable for governments to impose sanctions on other governments because of their inaction over climate change then shouldn’t we be punishing companies as well?
The chairman of the Oil and Gas Authority, Tim Eggar, said recently “the biggest challenge facing the (oil and gas) industry has been the speed of the shift in opinion on climate change”. He went on to accuse firms of not doing enough “to help ease concerns”.
Now it’s possible that Eggar’s view of what constitutes “easing concerns” is different to mine, which is that the industry is simply not putting its hands deep enough into its pockets to make things happen.
For example, I’ve said before and I still believe it to be true that we can produce as much oil and gas as we want provided we move to stop burning the stuff and use it entirely as a feedstock.
The problem is I don’t see any of the companies operating on the UKCS putting any real effort into making that a reality. And, let me be clear that I’m not interested in what they’re doing in other countries but in what they’re doing here, particularly in Scotland.
I’m also not interested in what operators are doing to clean up their own oil and gas production offshore.
So, here’s the plan. We’ve talked for a good few years about building a CCS plant at Peterhead. There is a live project there being run by Pale Blue Dot. It wants to reform gas to produce hydrogen and sequestrate the carbon dioxide produced.
I’ve always thought sequestration was an unnecessary cost and that using the carbon dioxide to manufacture new products was a smarter and financially more sensible answer. The German company Covestro is doing this now, so I must ask why we’re not.
The answer is, of course, a lack of vision and no willingness to invest.
Others though are not so timid. Enagas has put forward a €2.2 billion plan to make Spain a hydrogen exporting nation.
France has also launched an ambitious plan to develop hydrogen for use in industry and transport. Surprisingly, even the French bank Societe Generale has joined the Hydrogen Council with the intention of supporting the development of hydrogen production and application.
In contrast, Forestry and Land Scotland has a deal with Shell under which it will receive £5m over five years to fund the planting of more than a million trees in Scotland. This project has been described by some as “Greenwash”. I believe it is.
BP has set up a subsidiary called “Launchpad” whose aim is to build “$5bn businesses which tackle the dual energy challenge by 2025”. Unfortunately, some of the first companies on its portfolio list are oil and gas related, which makes it difficult to take the “dual energy” bit of its raison d’etre seriously.
The asset manager Blackrock believes climate change is leading to a fundamental reappraisal of investment strategies. This will inevitably lead to the oil and gas industry finding it increasingly difficult to access funds unless they show that they genuinely intend to transform the industry.
Collaborating to build a hydrogen production and CCU facility at Peterhead would help reassure us that this is indeed the case, so assuming it’s viable, getting behind the Acorn project could be a good first step.
We need a genuine net zero supply chain in Scotland and establishing a gas to hydrogen and CCU petrochemical capability could help build that.
Tim Eggar rightly says the oil and gas industry’s licence to operate is “under serious threat”. Time it dumped the rhetoric and started taking real action. It really is in last-chance saloon territory and lots of jobs depend on it doing the right thing.
Dick Winchester is on the Scottish Government energy advisory board