BP plc CEO Bob Dudley made a forceful argument on Wednesday for the natural gas industry to go on the offense and make the case that it deserves to be part of the global decarbonization solution.
At the 40th annual Oil & Money conference underway in London, the outgoing BP chief spent his time on stage talking about natural gas, which he said is “being increasingly marginalized...even vilified and demonized. Some folks are saying that a role for gas conflicts with the world's climate ambitions. But this is a misconception. Worse than that, it’s misleading.”
Gas has a vital role to play in the energy transition to a net-zero carbon economy, “but only if we take the right steps now.”
The industry is under “intense scrutiny” around the world, which opens the door to “not only to say we agree that the world is on an unsustainable path and that we need to move to a low-carbon energy system, but to show how much we're already doing, and that we are going to do even more in the future.”
The global energy system now in place serves billions of people with gas, oil, coal, nuclear power, solar, wind, geothermal and more. Still, for every six families with power, one family has none, Dudley noted.
“The question is not just how do we get to net-zero, it’s also how do you get to net-zero while meeting the needs of every family? And there's no single answer. How we decarbonize heat in London requires a different answer than it does in Beijing or Boston.”
To exclude natural gas, as some local economies have begun to do in the UK, California and beyond, “is to take a huge and unnecessary risk,” as the sun does not always shine nor does the wind always blow.
To figure in the net-zero carbon system, however, gas has to be decarbonized, he said. Industry already is working on solutions via niche products that include carbon-neutral biogases and carbon-neutral synthetic gas, however, “gas more broadly will play its role through carbon capture and hydrogen. And these no longer are niche products.”
The industry is investing in carbon capture to decarbonize gas at the source, with projects announced last month to accelerate development through the Oil and Gas Climate Initiative.
However, “the biggest obstacle to decarbonized gas is not technical,” the BP chief added. “It's political.”
In the UK, gas heating for new houses is set to be banned by 2025. In the United States, “at least 12 big cities have banned or plan to ban gas in new buildings.” A $500 million campaign led by former New York Mayor Michael Bloomberg would halt building gas-fired power plants.
“These efforts may be well intentioned,” Dudley said. “But they are misguided. They rest on a false equivalence between gas and coal, and an assumption that an all-electric economy will emerge just as soon as we close the alternatives.”
New gas infrastructure could pave the way for decarbonization. “And ultimately, there is no other way to go than gas.”
In a renewables-led economy, there has to be a backup, and while battery storage technology is improving, it still does not last for days.
“That's why you need hydrogen,” said Dudley, “the most scalable form of decarbonized gas. To remove gas from buildings or other infrastructure risks pushing the world down a single path, only for us to find too late that the path falls short of the destination. It's an attempt to achieve the energy transition with one hand tied behind our back.”
One estimate puts decarbonizing the European energy system at around $1 trillion -- or more if decarbonized gas were excluded from the mix. Still industry has to prove through scaled demonstration projects that decarbonized gas is not only viable in a net-zero carbon system but essential.
In addition, gas has to be produced in the existing system in a “much cleaner way” by introducing higher proportions of biogas into the blend and cutting down on methane leaks and flaring,” which today is the “Achilles' heel of gas.”
BP today is continuously measuring methane emissions at all of its new major oil and gas sites using drones, cameras and lasers to detect leaks that previously could have been invisible.
“It's a global first, but it needs to become the global norm,” Dudley told the audience.
He also wants methane emissions to be directly regulated across the value chain, from production to transportation.
“The more gas we keep in our pipes, the more we can provide to the market. But governments should go further.” He again advocated for carbon pricing, a stand that BP has taken for more than 20 years. In addition, he said infrastructure has to be ready for decarbonized gas.
“We need flexible industrial processes that can work equally well with methane and hydrogen,” which is not an expensive proposition. There also should be more investments in CCUS, aka carbon capture utilization and storage so that it becomes commercially viable.
“We have the necessary technology, resources and ambition,” Dudley said. “The hardest challenge is to win round skeptical minds and then to bring people together on a common set of solutions.
It won't be done by demonization or vilification -- from either side” but rather by “advocacy, evidence-building, shaping and promoting legislation, deploying new technology and developing new markets.
“It requires a recognition that there isn't one road to net-zero, but many paths, and we need to pursue them all.”