Originally published on Forbes.com on September 29, 2021

What may change this is that the demand for oil and gas in the US will fall if the Biden administration achieves its goals of greening electricity and changing cars and trucks to electric vehicles.

Fossil fuels are responsible for 73% of global greenhouse gases (GHG) while the oil and gas industry causes close to 50% of global GHG.

One way to cut GHG is by cutting production of oil and gas, and one way to cut production is by diversifying and investing in renewable energies (i.e. change the product). In the US, companies have focused on less direct methods to reduce GHG (i.e. change the process).

• One way for reducing GHG is by companies greening their own operations – using wind or solar electricity to pump frac jobs, for instance. But at most this is only 25% of a company’s GHG – the other 75% is due to combustion of oil and gas products.
• A less direct way to reduce GHG is by cleaning up methane leaks from wells, pipelines, and processing facilities. To repeal rules installed last September the US Senate passed at end of June a new bill to remove methane leaks as a cause of air pollution in oil and gas operations and allow EPA to enact stricter methane regulations. 

According to EDF, methane is responsible for 25% of the warming that we are experiencing now. The fastest, lowest cost avenue to slow down the rate of warming today is by restricting methane emissions from the oil and gas industry.

A key element of the “moment” that methane is now having lies in the hands of the Environmental Protection Agency (EPA) as they grapple with new rules for controlling methane emissions. Their proposed new rules are expected by early October 2021.

• Carbon capture and storage (CCS). ExxonMobil is storing 9 million metric tons of CO2 each year, equal to 11 million car exhausts each year. The company plans to invest $3 billion for 20 new CCS facilities. The company envisages a $100 billion consortium of oil and gas entities and government to capture then bury GHG under the Gulf of Mexico. “Bury” in CCS means to inject CO2 deep underground where it’s contained by non-leaking rock layers, and eventually merges chemically with the rock.

CCS is a non-direct approach because it doesn’t stop the emission of GHG from fossil fuels. It just captures and buries the resulting GHG. But CCS will be important for the net-zero concept because it’s an escape hatch to get rid of any leftover fossil GHG.

In contrast, the European continent is brimming with examples of integrating renewables into their future:

• Denmark, leading the world in wind power, recently stopped exploration for oil and gas, and plans to close its oil production by 2050.
• Norway has a vibrant oil and gas industry, most of it exported along with a high carbon footprint. But Equinor are developing offshore wind systems, even partnering with the UK’s bp to supply electricity to New York City. They also lead the world in uptake of electric vehicles (EVs), now at 60% of new sales, due to national policy incentives like VAT and carbon tax reductions for EVs.
• Bp has committed to be 40% invested in renewables by 2030, and are studying plans for a large blue hydrogen plant at Teesside in the UK.
• In France, TotalEnergies have invested $8 billion in renewables since 2016, including $2.5 billion in Adani Green Energy, where they share a 50% partnership in the company’s solar power systems.
• By 2021, Shell in Germany will provide 10 MW of green hydrogen. In Ireland, they will be a 51% stakeholder in a 300 MW wind farm.

US oil and gas production has largely stayed focused on their previous successes — including the remarkable shale revolution of the past 20 years.

What may change this is that the demand for oil and gas in the US will fall if the Biden administration achieves its goals of greening electricity and changing cars and trucks to electric vehicles. If supply follows demand, oil and gas could fall by 30% from 2020 to 2030-2035.

Any of the dozens of oil and gas companies thriving in the Delaware basin of southeast New Mexico could invest in wind/solar systems right there in the Chihuahuan desert. New Mexico has committed to 80% electricity from renewables by 2040.

There is money to do it – the basin made roughly $24 billion/year at the wellhead in 2019, and makes even more now in 2021. The January 2021 federal moratorium on new oil and gas well leases on federal lands provides an opportunity and motivation to do this down there in the desert.