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Future of oil industry: From Fossil Fuel to Renewable Sources

One of the international oil companies, BP, calls out that oil demand will peak by 2030. Bp’s annual energy outlook was published during September 2020, insights into the changes that would take place in global energy demand needs.

The dramatic change in different industries will be observed during the coming years. The pace by which oil demand is declining will push the oil and gas companies to follow and adopt an alternative route to proceed with their business, that too, in a more environmentally friendly manner. 

The report says that the only option left with such companies is to shift to producing alternative or renewable energy sources. Some of the major oil companies have already invested in renewable energy sources. This includes BP, Shell, Chevron, Total, Exxon, and Eni. They have started to change the strategies from oil to energy, such as wind energy, solar energy, etc.

Energy obtained from clean sources has been in demand by most of the public. There is a serious concern for increasing carbon footprint, rising global warming, and greenhouse gases. Taking a drive from harming the environment into changing the environment’s recent conditions may be a major role by which these companies can shift themselves. 

Moreover, the pandemic also decreased the demand for oil to a great extent, and it is expected that this demand would further get reduced over a few decades and what people will be enjoying is clean fuel sources.

Energy transition may become a challenge for most of the oil and gas companies. The two main problems that may arise can be of adapting to a new or changing policy. Secondly, they have to overcome the challenge of engaging and investing in decarbonizing energy systems. Investing in low carbon hydrogen, biomethane, and biofuels can deliver the power of a hydrocarbon. Still, at the same time, it promises to leave no net carbon emissions into the atmosphere. 

Instead of facing an extinction threat, these companies can only opt to support global energy transitions. But uncertainty will sure follow them. The IEA also believes that to make oil companies cooperate towards a greener global economy, the sector can reduce methane getting leaked into the atmosphere. This can reduce the transmissions to a higher level.  Another option is to integrate the sector with low carbon emission electricity production.

Dr. Birol has also commended to suggest some measures. He claimed that the sector could use ‘extensive know-how and deep pockets’ to speed up renewable sources into effective actions. Clean energy technologies such as carbon capture, storage can help the sector to enable these into action. The development of offshore winds using the company’s skills can help tackle the emissions of carbon sources’ emissions. 

Some reports also point out that it’s still necessary to invest in oil and gas projects despite shifting to a completely clean energy transition. This is because the energy output per year would decrease to 8% if oil and gas investments are stopped completely. 

What’s your company’s take on this?