The industries facing the most pressure to reduce emissions
In the battle against climate change, many industries are facing intense pressure to reduce their greenhouse emissions.
The oil and gas industry
The oil and gas industry is being pressured from all sectors to transition away from fossil fuel production. Not only are carbon intensity regulations becoming stricter, but investors are increasingly becoming more interested in sustainable assets.
In December 2020, the government of Denmark — the European Union’s leading producer of oil and gas — effectively declared an end to the fossil fuel era by canceling all future licensing for North Sea oil and gas exploration. The goal is to end all oil and gas production in the North Sea by 2050.
This dramatic move came not long after a July 2020 announcement by the Oil and Gas Climate Initiative (OGCI) that member companies — producing over 30% of global oil and gas — would reduce their combined average carbon intensity to below their 2017 average by 2025 in an effort to accelerate the transition to a low-carbon future.
Many oil and gas companies are already shifting into low-carbon business opportunities. Neste, the Finnish energy company, is switching from oil refinement to biofuel processing. And BP, one of the world’s leading oil and gas companies, announced it was transitioning into integrated energy. In the meta description for its global website, BP claims to be reimagining energy for people and our planet.
The land transportation industry
The land transportation industry in the United States and Canada is being strongly encouraged to reduce greenhouse gas emissions by gradually shifting to low-carbon fuel alternatives.
California was the first state to adopt Low Carbon Fuel Standard (LCFS) regulations, which are the most stringent on the continent. They were initially approved in 2009 and later amended to extend through 2030.
Every year, transportation fuel providers in California must prove that their fuel meets strict LCFS carbon intensity standards. Compliance is largely measured by the Carbon Intensity Score, which measures total weight of carbon emitted per unit of energy consumed (gCO₂e/MJ).
LCFS regulations quickly made a significant impact in California, convincing Oregon and British Columbia to adopt similar regulations. In Oregon, the average carbon intensity was reduced by 10% between 2009 and 2019. Both Oregon and British Columbia also require 20% reductions in average carbon intensity by 2030 (relative to 2015 in Oregon and 2010 in BC). This goal was already achieved in British Columbia by July 2020.
Washington State adopted LCFS regulations in May 2021 and similarly stringent LCFS regulations are being seriously considered for adoption in several other states, including Michigan and New York, as well as in all provinces and territories of Canada.
The shipping industry
The global war on greenhouse gases has extended to the shipping industry, which largely escaped stringent emissions regulations in the past. In support of the UN Sustainable Development Goals, the International Maritime Organization (IMO) adopted a strategy in 2018 to gradually phase out greenhouse gas emissions from ships worldwide.
As the United Nations agency responsible for the safety and security of shipping, as well as the prevention of ship pollution, the IMO has the authority to introduce legally binding regulations across the entire global shipping industry. It took advantage of this power in 2020 to introduce specific targets including a 40% reduction in the carbon intensity of international shipping by 2030 and a 70% reduction by 2050.
To meet these goals, large ships must reduce their carbon intensity by 2% every year from 2024. The IMO is expected to start passing even more stringent emissions regulations from here on. It may even introduce a substantial carbon tax to further encourage the use of eco-friendly fuel alternatives such as hydrogen and ammonia.
To meet these goals, large ships must reduce their carbon intensity by 2% every year from 2024. The IMO is expected to start passing even more stringent emissions regulations from here on. It may even introduce a substantial carbon tax to further encourage the use of eco-friendly fuel alternatives such as hydrogen and ammonia.
https://www.mckinsey.com/industries/oil-and-gas/our-insights/the-big-choices-for-oil-and-gas-in-navigating-the-energy-transition
https://thejacobsen.com/news_items/states-considering-lcfs/
https://ww2.arb.ca.gov/our-work/programs/low-carbon-fuel-standard/about
https://www.reuters.com/business/sustainable-business/eu-presses-shipping-regulator-tougher-carbon-reduction-standards-2021-06-03/
https://ihsmarkit.com/research-analysis/IMO-2023-impact-on-lpg-shipping.html
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