Net zero by choice? Oil and gas industry motivations for the energy transition and public policy in Scotland

Eilidh Hughes and Aiora Zabala

Climate Policy, 2023, vol. 23, issue 9, 1115-1131

Abstract: Many oil and gas (O&G) companies began, in recent years, to increase their renewable and low-carbon energy (R&LCE) operations – crucial for climate mitigation. In Scotland, renewable electricity generation has tripled since 2009. However, this progress remains insufficient to meet carbon reduction targets. More effective public policies are needed to accelerate this trend while meeting energy needs and retaining energy industry employment, which is essential for a just transition. This study analyzes drivers of O&G industry investment into R&LCE to understand how government intervention can steer corporate decision-making. We develop and apply a conceptual framework of drivers of decisions for such investments. We conducted semi-structured interviews with 12 individuals in strategic positions working in O&G companies in Scotland, which are exemplary of similar O&G-intensive regions in the global North. We find that the energy transition narrative within the industry mostly supports developing R&LCE projects that build on existing O&G assets and expertise, such as blue hydrogen and carbon capture and storage. Industry-wide narratives encourage investment in R&LCE across the sector, not only in companies facing the most scrutiny. The findings suggest the need to tailor public policy to increase the pressure of drivers of change, including increasing restrictions on access to financial capital for O&G, emphasizing narratives that promote R&LCE, and working to lower the costs of accessing expertise and retraining employees in R&LCE technology. Transitioning employment without job loss through retraining workers synergizes private and social interests, so an emphasis on (re)training and education for capacity building can be an immediate successful policy approach for a just transition.Diverse factors influence O&G companies’ decision-making on R&LCE.O&G industry perceives government support (fiscal and non-financial, like knowledge-exchange networks) is important to drive private investment in R&LCE.Industry paradigm evolving towards a more favourable view of the energy transition.Industry perceives the need to continue O&G production alongside emissions-reduction technology (CCS and blue hydrogen).Key factors to facilitate the transition are individual leadership and retraining to retain employment.

Date: 2023
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DOI: 10.1080/14693062.2023.2262439

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