Carbon capture and storage could ensure sufficient fossil fuel supply to avoid an energy calamity and unimaginable suffering for billions of people, Craig Golinowski, Managing Partner at Carbon Infrastructure Partners, tells OGN
The world today is in the early innings of an unprecedented, self-induced, energy crises caused by anti-fossil fuel policies from government and by financial system participants, committing to ending fossil fuel investment as part of net-zero commitments.
That misguided approach is rapidly shifting as world leaders scamper to avert this crisis, hiding behind the Russia-Ukraine conflict as the main catalyst for this shuffle and rethinking. We all know that the seismic mismatch in supply and demand was in plain sight well before that.
In fact, Russia’s invasion of Ukraine has been aided and abetted by those in government and in the financial system practicing and demanding moratoria on oil and gas investment and by those who advocated for nuclear shutdowns.
Putin is funding his war effort through exports of energy, which globally is in short supply, and he is finding willing customers among energy hungry nations like China and India.
John Dizard sums up the predicament well in his article Europe’s Energy Hole: Even now, faced with Russian energy blackmail, European utilities and major industrial users cannot get approval for long-term procurement contracts for additional fossil fuel supplies. And it’s true that such deals would be contrary to Europe’s clean energy policy commitments. But you can see how this makes foreign fossil fuel suppliers reluctant to make huge capital investments in export capacity to meet European demand, given that that Europe is committed to dumping their business as soon as possible."
We confront a fundamental decision. Will we consume ourselves in false energy choices which the realities of an interdependent global energy and food system make suicidal? Or will we acknowledge the extent to which our energy and food systems are interdependent and shape cooperative solutions?
Greenhouse gas emissions, the driver for climate change, do need to be reduced over time but a self-induced global energy crisis today is not acceptable in trying to prevent a climate catastrophe in the future.
The binary, ‘oil and gas bad’, ‘wind and solar good’ approach taken by government and investors is a false choice. Renewables cannot replace fossil fuels because renewables are made from fossil fuels.
The oil and gas industry has rationally responded to clear signals from declining commodity prices from 2014 to 2020, anti-energy government policies and the financial system’s commitment to net-zero by drastically reducing new project development.
Today, with higher commodity prices, the oil and gas industry is returning capital via debt repayment, share buy-backs and dividends rather than reinvesting into long lead time projects.
CCS: A CRITICAL COMPONENT OF THE SOLUTION
The oil and gas industry must work with government, the financial system, and the environmental movement as partners, notwithstanding that many of these stakeholders are advocating for the elimination of our industry.
Carbon capture and storage (CCS) provides a viable means to reconcile energy demands with the need to reduce emissions.
CCS is a critical technology solution that could provide long-term certainty for the oil and gas industry because we would be actively and directly addressing societies demand for lower emission energy products.
CCS is economically enabled by government placing a value on avoided emissions. By advocating for carbon prices, the oil and gas industry can work with government to set the stage for increased energy development and lower emissions.
With a defined and measurable solution to GHG emissions, CCS can unlock capital investment in energy production by providing certainty for long-term investors that energy projects are sustainable.
Critics of CCS claim the technology will prolong the fossil fuel age. Ironically, CCS is one technology that may ensure the world will have sufficient fossil fuel supply to avoid an energy calamity and unimaginable suffering for billions of people.
Financial system participants like major pension funds, university endowments and banks with net-zero commitments, can invest in fossil energy development by making a similar commitment to CCS.
The Gulf States and Middle Eastern investors can take a leading role in driving energy development, combined with CCS, to supply low emission energy products like power, hydrogen, LNG, enhanced oil recovery and ammonia fertiliser.
Carbon Infrastructure Partners has a dedicated carbon capture investment strategy that funds early-stage developers and companies to advance CCS as a new infrastructure asset class. It believes this creates an attractive long-term investment opportunity with a built-in inflation hedge and satisfying net-zero ESG component.