Achieving Net Zero: Strategies in the Oil & Gas Industry

As climate catastrophes continue to escalate, the urgency to reach net zero emissions by 2050 is becoming more critical than ever. A growing number of oil and gas companies have committed to achieving net zero by 2050. However, the increasing levels of CO2 emissions underscore the need for immediate action.  

In September 2021, 12 of the world's largest oil and gas companies pledged to reach net zero emissions from operations under their control (Scopes 1 and 2, Greenhouse Gas Protocol). Additionally, targets for reducing the intensity of methane and carbon emissions in their upstream operations have also been revised.  

Sia Partners examined the key initiatives adopted by 8 major oil companies (ADNOC, Chevron, Total Energies, Shell, British Petroleum, ENI, Exxon Mobil and Saudi Aramco) and analyzed the current state assessment in terms of Greenhouse Gas (GHG) emissions, GHG emission set targets (including intermediate targets) along with the roadmap outlined to reach net zero emissions by 2050 for each company.  

The Oil Majors have committed to achieving net zero for Scope 1 and Scope 2 greenhouse gas emissions. However, in order to comprehensively analyze the full picture, Scope 3 emissions have also been included in the study. 

The study found that not all oil majors have integrated Scope 3 emissions into their net zero strategy. However, it is important to note that the majority of the benchmarked companies' greenhouse gas emissions originate from Scope 3. 

Moreover, the study discovered that some oil majors have defined targets for reducing GHG emissions for the long term only (~2050), while others have already outlined detailed plans for the coming decades.  

The study examined the initiatives taken by the oil majors to achieve net zero, such as reducing operation emissions, investing in Hydrogen energy and focusing on Carbon Capture, Usage and Storage (CCUS). The study also revealed that some oil majors are expanding into new businesses, such as investing in power generation and EV charging stations.  

There is a consensus among the studied companies that both Hydrogen and CCUS technologies are effective approaches to achieving net zero. The study also found that all the benchmarked companies are working on expanding carbon capture to reach net zero.  

The study also established that most of the companies are focusing on carbon reduction by reducing operation emissions, focusing on electric vehicles and changing and adding new offerings. 

In order to transition to clean energy, Oil & Gas companies should invest more to reduce their operational emissions, improve their capital use for upstream assets and build their capabilities to become clean energy champions by sustaining important investments in new ventures such as the electrification (EV Charging, Electricity Generation, Power Supply…) or Biofuels.