November was a blur of election strangeness. But once the dust settled, we can plainly see that the oil and gas march to net-zero targets continues to accelerate. This trend matters because your investors, employees, and stakeholders will ask about your company’s approach to net zero and your company’s role in the energy future.
Yes, there’s still a lot of uncertainty. But the game is changing. You must have an answer.
Both of these things are true:
- The path to net zero for oil and gas companies is not clear.
- You need to articulate your company’s vision and plans for net zero.
The situation:
While everyone was checking and rechecking the U.S. electoral map, here’s what happened on the net‑zero front:
- November 1. On his first day as Equinor’s new CEO, Anders Opedal, announced the company’s intention to reach net zero by 2050, including its Scope 3 emissions (all of those from its products as well as its operations).
- November 3. Engie — an energy utility partly owned by the French government — walked away from a $7B, 20-year U.S. LNG contract. The contract failure perhaps foreshadowed future difficulty selling U.S. LNG in Europe unless cutting methane emissions becomes a U.S. priority.
- November 6. Enbridge — a North American midstream company and gas utility — set its own 2050 net-zero target.
- November 19.Occidental Petroleum announced net-zero targets on an analyst call, including net-zero emissions associated with operations before 2040 and Scope 3 by 2050. Oxy also became the first U.S. oil and gas company to endorse the World Bank’s “Zero Routine Flaring by 2030” initiative. Oxy followed up their announcement with a Pathway to net-zero report.
- November 24. The incoming Biden administration signaled climate will be part of everything from geopolitics to economics. For example, by announcing former Secretary of State John Kerry as his full-time special climate envoy — with a seat on the National Security Council — Biden signaled how high-profile this position would be. Similarly, former Fed chair Janet Yellen’s appointment as his Treasury secretary may reflect her long-expressed interest in addressing climate. (Note: Yellen is a founding member of the Climate Leadership Council.)
It matters because:
In 2021, your investors, employees, and stakeholders will ask how you are creating the energy future.
By way of example, Oxy CEO Vicki Hollub said the following in a virtual CERA Week interview (as reported by Amy Harder in Axios): “Ultimately, I don’t know how many years from now, Occidental becomes a carbon management company and our oil and gas would be a support business unit for the management of that carbon.”
How are you thinking about the future?
The mistakes we make:
Many oil and gas company leaders remain stuck with the old playbook on decarbonization: rationalizing how much the world needs oil and gas, focusing on how to educate the public, and playing their part in the partisan political drama.
November showed us just how fast the world is moving on.
Seize the day:
- Set up a January 2021 strategy session (include some millennials!) to assess your company’s approach to climate, decarbonization, and the energy future. Don’t know where to start? Contact us: Adamantine can help.
- Send me your questions for my upcoming Ask Me Anything podcast.
- Read and discuss my new book The Gamechanger’s Playbook with your leadership team. (Want to order books in bulk? Reach out to Lindsey.)
- Listen to my Energy Thinks podcast episodes with Alan Armstrong, CEO of Williams Companies, and Kim Greene, chairman, president and chief executive officer of Southern Company Gas, to hear from two pragmatic, game-changing leaders.
We have much to look forward to in 2021 — let’s get it kicked off right. If this post was forwarded to you, you can subscribe here.
