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“In the age of decarbonisation, investors everywhere are questioning whether it makes sense for them to invest in oil and gas.”

Lord Browne, Executive Chairman L1 Energy

The oil and gas industry is cyclical, but something is happening which goes beyond the usual economic cycle and which means that this time really might be different. On the one hand, demand for energy is rising and will continue to do so. The world consumes 15% more energy than it did just 10 years ago and is expected to consume 15% more again within the next 20 years. The proportion that comes from fossil fuels is falling, albeit slowly – and this could mean that demand for oil and gas does not grow much in the years ahead. Nevertheless, fossil fuels will be the most important part of the energy system for many decades.

But on the other hand, concern about climate change is rising. Within the past year, what used to be a European phenomenon has started to spread across the Atlantic. In the age of decarbonisation, investors everywhere are questioning whether it makes sense for them to invest in oil and gas.

Renewable energy will never be enough to replace oil and gas. The only realistic route to decarbonisation is for oil and gas companies to take greater responsibility for the emissions they and their customers produce, and start doing things which take the carbon out of hydrocarbons.

This means engineered solutions such as carbon capture and storage, which is on an exciting new learning curve as next-generation processes generate better results for lower cost; or the creation of a hydrogen economy, which is gathering momentum in Europe. Solutions like these already exist; it is now a question of bringing them up the learning curve and down the cost curve by investing in their growth and deployment. All oil and gas companies – not just the largest – should play a role here, providing they can make relevant investments and competitive returns.