FUTURE OF HYDROCARBONS

FUTURE OF HYDROCARBONS | La Jolla Conference 30 th Anniversary Policy Brief

At the end of May 2021, a series of momentous events rocked the global oil sector. Shareholder demands and climate activism altered the composition of corporate boards at Chevron and ExxonMobil, while a judicial ruling in the Netherlands took aim at Shell’s greenhouse gas emissions profile, setting legally binding reductions. Headlines screamed that it was the week that shook Big Oil. Others, even more dramatically, called it Big Oil’s bad, bad d O a n y ly . days before these developments, the International Energy Agency (IEA) released Net-Zero by 2050 – A Roadmap for the Global Energy Sector, which was arguably an even larger quake across the industry. This followed on from 2020 – a year in which both the pandemic and extreme weather events had given pause for thought – leading to widespread calls to ‘build back better; build back greener’ in the energy sector. Looking beyond the rhetorical flourishes and scenarios, the signals and trends are clear as to the climate imperative. And demands for the oil and gas industry, regulators and governments to act faster are increasing. This Policy Brief is based upon discussions that took place in May as part of the Institute of the Americas 30th La Jolla Energy Conference and a Virtual Roundtable held under Chatham House Rules. The Policy Brief summarizes and adds context to discussions held just as the oil and gas industry was being shaken up. Thought-leaders and experts discussed the issue of the future of hydrocarbons including net-zero

commitments and targets, climate action and activism, energy security and demands faced by many countries and governments in the Americas. Net-Zero – The Environment and Climate Imperative

The publication of the IEA Net-Zero report and pathway set off extensive discussion emphasizing its importance. For starters, the report shows the sheer scale of effort needed to accomplish Net-Zero. It also is very forthright with the aim to ramp up renewables quickly. The boldness of the pathway grabbed attention, specifically arguing for no new developments of oil and gas fields and coal mines as of now! However, it also shows that even in the most aggressive scenarios, fossil fuels have a role. At the same time, it is essential to note that it is a scenario but not the only way toward Net-Zero. Furthermore, the IEA scenario

FUTURE OF HYDROCARBONS | INSTITUTE OF THE AMERICAS