ABSTRACT

The world's energy system is experiencing a transition which DNV GL Energy Transition Outlook forecasts to be characterized by a number of key trends: final energy demand peaking around 2035 and subsequently declining over time, energy generation shifting gradually from fossil fuel to electricity, and energy use significantly decreasing in intensity and becoming more efficient. When looking at the implications of such transition on the earth's climate, the model predicts that energy use will eventually decouple from carbon emissions, and while these will halve by 2050, their decline will not be sufficiently fast to meet the Paris Agreement's target of limiting the global temperature increase to well below 2°C within this century. In this context, looking at the oil and gas sector it can be observed how companies are already acting to secure their role in the energy transition towards a lower carbon energy mix. Strategies observed across oil majors commonly include setting climate-related targets while adopting established disclosure mechanisms; achieving GHG reductions in O&G operations through a shift towards gas with some divesting from the most carbon intensive sources and the improvement and optimization of O&G assets; and a diversification to become broader "energy" companies through investments in renewables and hybrid systems. This paper aims to provide an overview of the constraints, strategies and best practices of the carbon game observed across oil majors, based on publicly available information, DNV GL's visibility of the energy market, and DNV GL's own technology research and development program results. In conclusion, the complexity of the transition to a low carbon future means there is not a single, correct strategy to adopt, but a large number of opportunities to navigate.

INTRODUCTION

The world's energy system is experiencing a transition which DNV GL Energy Transition Outlook forecasts to be characterized by a number of key trends: final energy demand peaking around 2035 and subsequently declining over time; energy generation shifting gradually from fossil fuel to electricity; and energy use significantly decreasing in intensity and becoming more efficient /1/.

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