The upside for oil and gas companies investing in the transition starts to materialise when more than 40% of their total portfolios are low carbon, according to new McKinsey research.
While many oil and gas companies are well positioned to become leaders in the energy transition, the industry needs to develop sustainable power value chains, the How oil and gas companies can be successful in renewable power paper found. Currently leading oil and gas majors typically allocate less than 25% of their new investments into new energies.
“The success of these investments has been mixed, but there is evidence that momentum will not falter as customer demand for cleaner energy grows and regulatory incentives to decarbonise strengthen,” it notes.
Shifting toward Net Zero emissions requires replacing fossil-based electricity and heat with renewable energy and hydrogen power while balancing the demand for affordable energy as the world transitions. Projections to 2030 and 2050 illustrate how this shift could also further the electrification of industry, transportation, and construction while adding new sustainable fuel and hydrogen to industrial processes and transport.
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