This article provides an introduction to the concept of Net Zero by 2050, and how it could affect the energy and process industries.
The phrase ‘Net Zero by 2050’ comes from a report published by the IPCC — the Intergovernmental Panel on Climate Change. The IPCC is one of the world’s leading authorities on climate change trends.
This organization <the IPCC> was founded in the year 1988 by the World Meteorological Organization and the United Nations Environment Programme. The organization selects hundreds of scientists from across the world to evaluate peer-reviewed scientific literature to do with climate change. The IPCC does not conduct original research or analysis; it simply reviews and evaluates the work of other organizations.
Nearly every single major national scientific body around the world supports the work and findings of the IPCC. If there is a criticism of the organization, particularly from environmental and activist groups, it is that the IPCC is too conservative and cautious. In other words, these groups maintain that climate change is more serious and is having a greater impact than the IPCC forecasts. It is felt that climate change is moving more quickly than projected because it takes the organization quite a long time to collect and evaluate the reports that are published.
A Clunky Sentence
One of the most important of the IPCC reports, and the one that was the source of the ‘Net Zero’ phrase, is Global Warming of 1.5°C. Here is a picture of some of the report’s authors celebrating their achievement.
The report contains this “memorable” sentence.
In model pathways with no or limited overshoot of 1.5°C, global net anthropogenic CO2 emissions decline by about 45% from 2010 levels by 2030 (40–60% interquartile range), reaching net zero around 2050 (2045–2055 interquartile range). [my emphasis]
This clunky sentence created the catchy phrase, “Net Zero by 2050’. It caught peoples’ imaginations, even though there is really nothing special about the figure of zero or the year 2050.
What does the sentence mean in plain English? Actually, it’s frighteningly simple. The report says that carbon dioxide emissions need to be reduced to zero by the year 2050. Any emissions that do occur by that time will have to be removed by some form of carbon capture technology. In fact the only way that companies can achieve this goal without shutting down completely (and taking the whole economy with them) is to quickly ramp up the technology needed to remove CO2 from the atmosphere. (So far, carbon capture technology has only been proven on a limited scale. Not only are there technical issues to be resolved, if the technology is to be implemented on a world scale it will require a huge investment in a business that generates no revenue.)
Energy and Process Industry Companies
The ‘Net Zero’ theme has been picked up by many companies in the energy and process industries. They recognize that their fossil fuel business will decline. One reason for this decline is that it is becoming ever more expensive to find and develop new sources of oil and gas. Here is an example from BP, , as quoted by CNBC.
Oil and gas major BP said Wednesday it was aiming to become “a net zero company by 2050 or sooner,” adding that it also wanted to “help the world get to net zero.”
Another reason for the industry response is that environmental organizations, governments and the public in general are demanding action on climate change. For example, in June/July of the year 2021 ExxonMobil and Chevron were subject to successful challenges from activist shareholders, while the Shell oil company was ordered by a Dutch court to reduce its emissions.
Here, for example, is how Vicki Hollub, CEO of Occidental, talks about the future direction of her company. She now describes her company as being a ‘carbon management company’ that will change its operations so as to achieve net zero greenhouse gas emissions.
“Every energy company should strive to become carbon neutral. Addressing climate change is a turning point for the industry.”
The Business Challenge
The challenge that the leaders of oil companies face is that they need to maintain their existing revenues and profits from a business that they are committed to leaving. They face their own Kodak Moment.
The articles and posts at this section of the web site seek to address many of the questions that this sudden change is likely to create. These questions and issues include:
- Which alternative energy technologies offer the most promise?
- How do the oil refining companies continue to supply feedstocks to the petrochemical plants?
- What are the realities to do with carbon capture technology?
- How can individuals working in the energy and process industries adapt their careers so as to remain relevant?
We also consider the downside to all these plans. What happens if we do not meet these goals? What impact is this immense effort likely to have on the economies of the world? To what extent could resource limitations be a factor in achieving these goals? Will other stakeholders buy into these plans?
Some of these concerns are summarized at the post Net Zero by 2050: The Reality.
The next few years promise to be very challenging for society as a whole, and for companies in the energy and process industries. How all these initiatives and programs will play out is anyone’s guess. All that we can be sure of is that change is in the air.