Former National Grid boss Steve Holliday: We can't isolate oil & gas majors on path to net-zero
Former National Grid boss Steve Holliday urged greater business and policy action to involve oil and gas firms in the power sector's low-carbon transition, arguing that such businesses must be "central" to transformation.
Speaking at a media briefing hosted by The Energy Institute this week, Holliday explained that helping the oil and gas sector to “grapple with the challenge” of decarbonisation will be “one of the themes” of his upcoming presidency at the body, due to begin next month.
“Without question, we can’t manage the transition without the oil and gas industries playing a huge role,” Holliday said. “They’ve got the capital, the intellectual slight and the engineering ability to solve so many of these problems; the more we isolate them as enemy number one, the less we’ll get them involved.
“Moreover, we’ve got another 1.5 billion people coming onto this planet over the coming decades, and they’re going to want some energy too.
“It’s a complex issue and [oil and gas majors] have got to be in the middle of this transition. We’ve got to help them step up to the plate and do more – carbon capture and storage (CCS) being an obvious area – without making them the pariah.”
Specifically, Holliday highlighted the fact that demonising oil and gas majors could stop them from attracting the talent needed to “transform” their business models at the scale necessary to respond to climate challenges.
This comment came amid a string of research proving that millennials are becoming more concerned about the environmental and social credentials of their employers than previous generations. A recent Barclays survey found that 80% of young people believe it is important that a current or prospective employer is considered a green business, compared to 70% among their parents, while a similar study by Deloitte found that almost half (49%) of millennials will refuse to work for companies that go against their personal ethics.
Touching on solutions to these challenges, Holliday emphasised the importance of the UK Government’s recent commitment to a net-zero target for 2050, and the apparent willingness of other nations to follow suit.
“I hope the new 2050 target is going to inject a huge piece of acceleration into lots of boards; they need to realise that they can’t keep going at the pace they have been and think very differently about how they do business and make investments going forwards,” he concluded.
The Energy Institute’s chief executive Louise Kingham added that the body had started the conversation around decarbonisation with its members in oil and gas around six years ago, and has, since then, been “nudging them for the public good”.
“Getting them into the conversation is the right thing to do,” Kingham said. “This year, they’ve really started talking about how they’re altering their business models through the acquisitions they’re making, the shifts changing how they deliver services and how they are tying that to the nature of how they report.
“I think there’s a real willingness and appetite to crack on with this.”
The event in London was held to mark the launch of The Energy Institute’s 2019 Energy Barometer – a document laying out the findings of a survey
Undertaken in March, the survey revealed that 32% of Institute members believe the UK will meet its upcoming fifth carbon budget, up from 14% in 2015, despite repeated predictions that the nation will fall short. Promisingly, the majority of these respondents hailed from the oil and gas sectors.
Indeed, BP has forecast that renewables are likely to account for around one-third of the world's energy production by 2040, with uptake growing faster than that of any other fuel to date. But the oil and gas major still believes fossil fuels will play a role in global energy systems for decades to come and is planning to grow its oil and gas production 16% by 2025, according to consultancy Rystad Energy.
Similarly, Royal Dutch Shell confirmed last year that it would invest in North Sea projects for the first time in six years in a move that will increase the company’s UK oil production by a third – despite its predictions surrounding, and investments in, low-carbon products and services.
Oil and gas firms to have taken more ambitious action on decarbonisation include Italian firm Eni, which has set itself a net-zero target for 2030, and DONG, which rebranded as Ørsted in 2017 when it began to switch its business model to wind power.