SINGAPORE: The economic trauma caused by the coronavirus pandemic persuaded energy companies to increase investments in renewables, hydrogen and other low-carbon alternatives, but fossil fuels will remain dominant for the foreseeable future, industry executives said.
Recovering from the onset of the pandemic, global oil consumption fell by more than 20 percent in the second quarter and prices hit their lowest level in decades, prompting companies to reconsider how quickly they should transition. to stop depending on oil and gas.
“Everyone is talking about this great reboot … What do we have to do to survive this?” Arif Mahmood, Petronas Executive Vice President and Downstream CEO, said at the Platts APPEC 2020 virtual.
“The energy transition will be promoted much faster,” he concluded.
Malaysia’s state power company posted a loss of $ 5 billion in April-June and has established a team to reshape its portfolio and expand into solar and wind for power generation.
Oil majors like BP have set themselves ambitious targets, while Chinese state energy companies tiptoed into renewables.
Felipe Bayon, executive director of Ecopetrol de Colombia, said the company wants to go from zero to 300 megawatts (MW) in renewable energy generation by 2022 for its own use.
In addition to expanding into solar and wind power for power generation, more power companies are investigating blue hydrogen produced from natural gas and using carbon capture and storage (CCS) to reduce emissions in the process. Hydrogen could be used in power plants and fuel cell vehicles.
Royal Dutch Shell is involved in biomethane, biofuels and hydrogen and has done “significant work” on CCS as the energy company strikes a balance between the energy transition and its core hydrocarbons business, said Mark Quartermain, vice president of trade and Shell’s crude supply. conference.
“We understand that the energy transition is coming. We still see, of course, a great future in our hydrocarbons business, but when it comes to energy transition we must be in these markets,” he said.
Commodity trader research heads Vitol and Citigroup expect CCS to be the next key area of development.
“Short-term hydrogen and carbon sequestration is more likely to contribute to decarbonization,” said Giovanni Serio, Vitol’s global research director, calling on the industry to invest more in CCS.
“Some countries are finding ways through credit systems and other mechanisms to price coal … It’s what it really takes to get carbon sequestration off the ground,” said Ed Morse, managing director and global head of Citigroup Commodity Research.
However, “the cost structure of hydrogen is not competitive enough … it’s there, but it could be the end of the decade phenomenon,” Morse said.