We have the power to create a future where clean energy is not just an option but the norm., says Harish G Kashyap.

Since the mid-19th century (1859), the oil and gas industry has long been the backbone of the global energy sector, fueling economies, industries, and day to day life. But then in 2015, came the Paris Agreement that set global decarbonisation targets that put this crucial industry and its key players at a major turning point. In a VUCA world like the one we live in nowadays, the journey to net zero is not just an environmental necessity anymore—it’s an existential challenge for oil and gas companies navigating the evolving energy landscape.

Many companies have already made big promises to cut down on carbon emissions. However, reaching these goals comes with many challenges. Imagine climbing a mountain. The peak represents Net Zero, and the path is filled with rocky terrain, steep climbs, and unexpected and harsh weather. For the oil and gas industry, these obstacles include the need for huge infrastructure changes and financial investments, including the societal shift in how we perceive and use energy. There's also the challenge of balancing energy security with the set environmental goals. Overcoming these challenges will require fresh ideas and strong cooperation among companies. It's a tough climb, but perseverance and resilience will help to reach the top and the view from there will be worth all the effort.

The energy transition – How are oil & gas companies adapting?

Many oil and gas companies are like seasoned explorers, adapting to new environments. They're investing in renewable energy, exploring carbon capture technologies, and diversifying their portfolios. It's like a ship changing course to navigate new waters. They're also working on making their existing operations more efficient to reduce emissions. It's a transformation from within, recognising that change is not just necessary, it's inevitable.

European giants like Shell, BP, and TotalEnergies have set aggressive targets to cut emissions and are actively investing in renewables and low-carbon solutions. Some refineries are pivoting towards biofuel production, while others are integrating digital solutions like AI and IoT to optimise operations and minimise waste. The industry is also setting emission reduction targets, with global initiatives like the Oil & Gas Decarbonisation Charter (OGDC) bringing together major players to commit to net zero goals. However, the pace of change varies widely, with some companies moving aggressively while others remain hesitant due to economic, financial and technological uncertainties.

Regulations and policies – what will drive decarbonisation?

Think of policies as the roadmaps and regulations as the traffic rules. It's crucial time to have clear, consistent policies that incentivise renewable energy and penalise excessive emissions. For the oil and gas industry, implementing carbon pricing mechanisms (assigning a tangible cost to carbon emissions), strict regulation for methane emissions, as well as incentives for carbon capture and storage, could be very effective. However, regulatory landscapes differ across markets, making it difficult for companies operating in multiple regions to navigate these policies seamlessly.

Governments to invest in R&D, offer financial support to fuel the commercialisation of the now emerging low-carbon technologies. In some geographies, mandatory emissions reporting and stricter environmental laws are forcing companies to rethink their operations.

It's about setting the right direction and ensuring everyone follows the rules – no exceptions.

The role of emerging technologies in decarbonisation

Imagine you are attending a tech fair and looking at the latest gadgets at the tech fair. Carbon capture, utilisation, and storage (CCUS) is the latest top model on display. Then there's hydrogen production using renewable energy – another flagship technology followed closely by the premium feature – advanced biofuels. Digitalisation and AI are also playing a role in optimising operations and reducing waste. Digital twins technology is a well known promising feature.

All these are very promising technologies but also demand a huge initial investment and uncertain RoI or value realisation – question is would you buy in? It’s the same situation with the companies in the oil & gas industry.

These technologies are the tools that promise to help us build a cleaner energy future but then their large-scale deployment requires significant investment and policy support.

Hydrogen – The next big bet or a costly experiment?

Now let’s talk about the next big bet, the touted game changer for the industry-Hydrogen, especially green hydrogen produced using renewable energy. It promises to have the potential to decarbonise hard-to-abate mammoth sectors like heavy industry and transportation. It can be viewed as a versatile ingredient in a recipe. Its feasibility depends on how it's produced. Green hydrogen, made from renewable energy, is the ideal. Blue hydrogen, produced from natural gas with carbon capture, is a transitional option. However, the feasibility of hydrogen remains a debatable topic and is a challenge. It's expensive to produce green hydrogen and it's too early to even discuss its storage and transportation infrastructure. The challenge is scaling up production and building the infrastructure for distribution. We are talking about investing billions or even trillions when it comes to retrofitting existing pipelines and developing hydrogen-ready refineries. While a few companies bet boldly on hydrogen, the whole industry is sceptical and hence still in a wait-and-watch mode, looking for cost reductions and policy incentives before fully committing to large-scale adoption.

It's a promising solution, but it needs careful planning and investment to become a reality. Present policies for green hydrogen do not make it a commercially viable investment.

Strategies for reducing emissions across the entire value chain

Think of it like managing a complex supply chain. In upstream, reducing flaring and leaks, electrifying drilling rigs and implementing carbon capture solutions is crucial. Norway, for example, is leading the way in electrifying its offshore oil and gas platforms to reduce reliance on fossil fuel-powered generators. In midstream, optimising pipeline efficiency, introducing advanced pipeline monitoring systems and reducing energy consumption are key. In Downstream, increasing energy efficiency and transitioning to cleaner fuels (biofuels) and CCUS projects at refineries are important. Each segment has its specific challenges but also unique opportunities for emission reduction.

Funding the transition – Where is the money coming from?

Any journey to happen needs fuel (money). The net zero journey is expensive and financial support is critical to make it viable. Governments are offering various incentives and funding mechanisms such as tax credits, grants, and subsidies for renewable energy projects and carbon capture technologies. At present, private Investors are focusing on sustainable business models—ESG investing is influencing boardroom decisions, and companies that fail to show a credible net zero plan risk losing investor confidence. Green bonds and sustainability-linked loans are gaining traction, allowing companies to raise funds for climate-friendly initiatives.

However, despite these efforts, financial uncertainty remains one of the biggest barriers to rapid decarbonisation. It's about creating a financial ecosystem that supports and accelerates change – to put it simply – more funding is needed to accelerate the transition.

Collaboration is key – The role of cross-industry partnerships

Imagine preparing a city/venue for a FIFA world cup match. No single person or club can organise it alone. You need to team up and you need the best of the best on that team. You will need to collaborate with many external stakeholders and partner with many sectors to make it a success. Similarly, no single company or industry can decarbonise in silos. Cross industry collaboration between oil and gas companies, renewable energy providers, technology companies, and governments is essential. Many oil majors are joining hands with renewable energy firms to integrate solar, wind, and battery storage solutions into their operations. Partnerships in the carbon market are also gaining momentum, where companies offset their emissions by investing in forest conservation or direct air capture projects.

Knowledge-sharing across industries is accelerating the adoption of best practices, helping companies learn from each other’s successes and failures. It's about leveraging collective strength to achieve a common goal.

A tough road ahead, but a defining moment for the industry

The journey to net zero in oil and gas is neither straightforward nor easy. Some companies are embracing the challenge head-on, while others are taking a more cautious approach, waiting for clearer policy signals and technological breakthroughs. Companies that proactively innovate, invest in low-carbon technologies, and collaborate with stakeholders will not only survive but thrive in the new energy era.

So, where does this story end? Well, that's the beauty of it – it's still being written. We're in the middle of the action, and every choice we make shapes the outcome. We have the power to create a future where clean energy is not just an option but the norm. We can build a world where sustainability is woven into the fabric of our lives.

It's a story of hope, of innovation, of collective action. It's a story that's still unfolding, and we all have a role to play. Let's continue to ask questions, challenge assumptions, and work together to create a brighter, cleaner future.

This isn't just about energy; it's about our planet, our future, and the legacy we leave for generations to come. It's a story worth telling, and it's a story worth living.

Harish G. Kashyap is a Principal Consultant – Oil & Gas, currently based in Finland, working with a leading Nordic oil and gas major. With 15+ years of experience, he has led techno-functional roles in plant engineering, process optimisation, and digital transformation, bridging technology and business. Holding an MBA in Strategy & Leadership from Deakin University, he blends technical expertise with strategic thinking to drive data-driven decision-making and business growth. Harish has authored multiple cover story articles on digital transformation, IIoT, additive manufacturing, and sustainability, showcasing his deep industry insights. Passionate about the oil and gas sector, he focuses on leveraging digital and sustainable strategies to shape industry transformation.