Offshore wind turbines powered almost 40% of all the UK’s homes in 2020. The International Energy Agency says there’s enough potential accessible energy out there to power all of Europe, the US and Japan several times over. But to get at all of it, developers will have to go out into the very deep waters of the open oceans and find a way to make their turbines float safely and securely in all weather conditions. So how on earth are they going to do that? Video Transcripts available at our website http://www.justhaveathink.com Help support this channels independence at http://www.patreon.com/justhaveathink Or with a donation via Paypal by clicking here https://www.paypal.com/cgi-bin/webscr… You can also help keep my brain ticking over during the long hours of research and editing via the nice folks at BuyMeACoffee.com https://www.buymeacoffee.com/justhave… Download the Just Have a Think App from the AppStore or Google Play Interested in mastering and remembering the concepts that I present in my videos? Check out the FREE Dive Deeper mini-courses offered by the Center for Behavior and Climate. These mini-courses teach the main concepts in select JHAT videos and go beyond to help you learn additional scientific or conservation concepts. The courses are great for teachers to use or for individual learning.https://climatechange.behaviordevelop…
By Brent Potts, Senior Director, Global Marketing, Oil, Gas, and Energy, SAP
Climate change and technology are affecting almost every industry on a global scale. None more so than the oil and gas sector. The groundswell of pressure toward sustainability is driving the oil and gas industry toward a major transformation.
In fact, many traditional oil and gas companies are evolving to the point where they now consider themselves energy companies, mobility companies, or even retail companies, as they diversify and expand into new areas with innovative business models.
Sustainability and digitalization have become the laser focus of many energy and utility companies, and these industries are actually leading other sectors when it comes to adopting sustainable practices.
According to a recent survey by SAP and Oxford Economics, energy and utilities executives have made more sustainability-related changes to their operations than those in other industries. More than three-quarters (79%) say sustainability issues are a major concern or top-of-mind at all stages of the manufacturing process, and almost half (47%) have committed to a net zero carbon goal.
Drivers of Sustainable Change in the Oil, Gas, and Energy Sectors
There are several factors influencing sustainability efforts in the oil, gas, and energy industry. Companies are taking various approaches to address growing issues that are permanently impacting the industry. Some of the biggest drivers include:
1. Government regulations, incentives, and subsidies
Increasing government interventions, such as the European Commission’s European Green Deal and the United Nations’ Paris Agreement are pushing oil, gas, and energy companies to look for more circular and sustainable solutions to meet aggressive carbon-neutral targets. These agreements are in addition to various carbon taxes, incentives, and subsidies being offered by different levels of government globally.
Several renewable or alternative energy initiatives currently have government incentives, such as tax credits for the use of solar panels, electric cars, or other alternative-energy options. Some governments may also offer subsidies to businesses or consumers who choose alternative or renewable energy sources. These government incentives and subsidies artificially inflate the demand and lower the cost of these alternatives, but the cost savings may not last.
It will be interesting to see if the demand will remain high once subsidies or incentives are reduced, revealing the true cost of alternative energy sources. As more renewable energy technology is developed and mass-produced, the cost of generating renewable energy goes down, but whether or not it will be enough to offset the government subsidies remains to be seen. Renewable energy costs must go down to the point where people will choose them regardless of subsidies or incentives, because ultimately, the cost will determine if people choose a particular energy source long term.
2. Diversification and changing cost structures
Industry boundaries are blurring as several oil and gas companies extend beyond traditional revenue streams. A barrel of oil is not the central focus of many oil and gas companies anymore.
Now, many are placing a greater focus on customer needs and diversifying to include new revenue streams, such as renewable energy, electrical charging stations, advanced chemicals, biofuels, hydrogen, LNG, autonomous transport-on-demand initiatives, and even expanding retail outlets.
For example, Shell has set an ambitious goal to earn 50% of its revenue from non-fuels by 2025. The company is already the world’s largest mobility retailer, with more retail outlets than McDonald’s, and it sells $6 billion-dollars-worth of convenience retail products every year.
It also plans to ramp up its ‘power-as-a-service’ business model with an entirely new cost structure, which reflects the growing trend toward subscription or use-based business models being adopted by an increasing number of companies worldwide.
Digitalization is what makes diversification possible. Advanced technology is changing he way companies work, creating more opportunities for partner collaboration and opening doors to new options for innovative business models.
For years, the World Economic Forum has said that digitalization is allowing the oil and gas industry to redefine its boundaries. The pandemic has simply accelerated that mandate. For example, companies quickly learned that they needed to be more agile to respond to major disruptions and drastic supply and demand fluctuations when the COVID-19 crisis made demand for oil and gas disappear almost instantly as lockdowns spread across the globe.
Aside from the pandemic, as more business systems and processes move to the cloud, it becomes easier to integrate and streamline operations across entire organizations and beyond. This opens the door for diversification as well as product and service innovation.
The survey shows that energy and utilities companies are more advanced than other respondents in their use of technology, with almost half (49%) using cloud technology versus just 36% for other industries.
4. Changing customer, investor, and employee expectations
Peoples’ shifting expectations are having a huge impact on the oil, gas, and energy industry from multiple angles. Eco-conscious consumers continue to put pressure on companies to focus on sustainable practices and renewable energy sources. There is also mounting pressure from investors for companies to become more sustainable. For example, Harvard University plans to end all investments in fossil fuels and stop funding activities that drive global warming. Oil, gas, and energy companies should take note, as Harvard’s decision will no doubt influence other investors.
In addition to outside pressure from consumers and investors, many companies are also facing growing pressure from within their own workforce. As long-time employees retire, they take their traditional methods and intellectual property with them. They are being replaced with a tech-savvy, eco-conscious generation of employees who question conventional operating methods and may enter heavy-emission industries with the direct goal of promoting sustainability in the industry.
Many employees may focus on making a difference by encouraging and influencing more sustainable and purpose-driven practices within their own organizations. As a result, driving forces for sustainable change are mounting from multiple angles outside of organizations as well as from within the companies themselves.
Take Steps Toward a More Sustainable Future
As decision-makers attempt to move toward more sustainable practices, they should consider not one solution, but many. Here are a few recommendations:
Create a long-term strategy for foundational change that considers sustainability in every process.
Use data to influence decisions on implementing sustainable practices at the design, engineering, and manufacturing stages to track, measure, and reduce emissions at every stage.
Use transport and delivery methods that optimize loads and reduce mileage, emissions, and carbon footprint.
Source materials ethically and in the most sustainable way possible.
Operate assets and equipment in the most energy-efficient manner that is safe for the environment and the workforce.