The greening of oil companies

In this interview given to Maya Hojeij from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, commented on the Dutch court’s decision to force Shell to reduce its carbon emissions by 45% by 2030 compared to 2019 levels and activist investor Engine No. 1 securing two seats on ExxonMobil’s board.

Dr Nakhle warned that such adjudications will become more frequent though their impact on the reduction of CO2 will be symbolic. Besides, national oil companies (NOCs) will be shielded from such pressures.

That said, some NOCs, particularly in the Middle East, are pursuing various means to reduce their carbon footprint but this does not mean that they are shifting away from oil and gas. They are exploring and deploying technologies such as Carbon Capture and Storage (CCS) or Hydrogen. They also know that if the private oil companies continue to be squeezed, someone else will have to continue to meet oil demand for years to come.

Dr Nakhle further added that the focus should not just be on oil and gas; coal is a bigger culprit when it comes to greenhouse gas emissions. A simple switch from coal to gas in power generation can significantly support the climate agenda. Between 2008 and 2018, for instance, the US government succeeded in reducing emissions by more than 1% each year largely thanks to coal-to-gas switching in power generation.

Finally, she stressed the importance of regulations and legislation to accelerate the energy transition. Carbon pricing remains key but it remains a thorny issue for politicians around the world.