Energy Majors Modifying Their Policies To Climate Change
Currently, nearly all the Oil & Gas majors located across the globe including the US and Europe are reviewing their policies on climate change. The moot point is why now and what would be the outcome? There are 4 major causes for the revamping of policy statements that have existed for over a decade:
• The Paris Conference to be held in December 2015 will put the focus on the climate concerns. Though chances of significant breakthrough are slim, the Oil & Gas majors accounting for a higher percentage of the emissions would be subject to intense scrutiny. Even considering that the intensity of public/private interest differs from one nation to another, international businesses must address the requirements for meaningful and dependable communication.
• The companies are not pleased with the current policies which depend on the setting up of a cap-and-trade system and the international release of carbon capture and storage. It is not viable for both to be executed at a level that would maintain emissions under the level of serious risk.
• The issue of brand image is a cause for serious concern. The Oil & Gas majors are not too perturbed by the liability of having significant amount of stranded assets in the event of reduction in hydrocarbon usage. As per experts, Oil & Gas and coal would be required for decades to come. Under the circumstances that the sectors probable resource base has been made inaccessible due to political reasons, there is a requirement for an increase in supply. Again, brand image is critical, especially for the employee morale. In the absence of a long term strategy for climate change, companies will find it difficult to attract and retain top notch talent.
• The Oil & Gas sector on its own takes the climate change issues seriously. Oil & Gas companies are managed by engineers/scientists who are aware of the result of Intergovernmental Panel on Climate Change (IPCC) and prominent climate scientists.The response from companies varies to a large extent. Few are decreasing the effects of their operations/products. Others are realigning their portfolios - moving way from heavy oil and other functions that generate significant amount of emissions. There are companies’ emphasizing on gas, which generates less carbon. The functioning of mega Oil & Gas firms is based on taking ownership for solving problems. Hence, the companies would internally find a way out of the crisis.