Discuss about the Environment Management for Sustainable Development of Oil and Fas Companies.
Background information
The oil and gas companies in UN is facing a challenge related to climate change and global warming (Davis and Diffenbaugh, 2016, pp.016001). The operational activity like production and burning of fossil fuels is the key reason associated with climatic changes, which in turn is responsible for risk including floods, the rise in sea-level, and heat waves. The mentioned risks are more reflective especially in the areas where these companies are located for extraction, having stores, and are engaged in refining their products (Hiatt, Grandy and Lee, 2015, pp.1769). There is no doubt in the statement that if the current operational activities of oil and gas companies are continued, many of the nations across the globe will be sharing the prospect of severe economic effects that are resultant from climatic changes. In particular, the government organisation and corporates are likely to face consequences related to billion dollar infrastructure. In addition to this, the future situation can also create a disruption associated with the production and delivery of energy resources (Smith and Hayes, 2013).
The issue of climate change and global warming is indeed a human-induced phenomenon that leads to rapid melting of glacier ice, variations in the ecosystem, and destruction and a decrease in the habitats of many species. The alarming issue was foreseen in late 1988 when the Intergovernmental Panel on Climate Change (IPCC) was created under the program of United Nations Environment and World Meteorological Organization, which focuses on the scientific assessment of the knowledge of global warming (Lofsted and Collier, 2014). Based on the report “UN framework conventional on climatic change”, it is important to seek change negotiation and action that can help in reducing the human-activity-induced impact on global warming (Lofsted and Collier, 2014).
Scope of present report
In conjunction with issues of global warming and climatic change, it is important for the oil and gas companies to seek diversion of the energy sources into renewable energy. The approach towards the sustainable development is thus of great importance that can contribute towards the minimization of these impacts on the environment (Hiatt, Grandy and Lee, 2015, pp.1769). The present report is thus based on an illustration of direct and indirect causes associated with the global warming thereby specifying the responsibilities of government, companies, communities, and individual itself. Note that this includes the debate over utilisation of renewable sources of energy like solar, wind, and hydraulic energy to product and supplies domestic and industrial consumable energies. Likewise, the economic and political issues are also critical importance in managing the overall implementation strategies.
The problem of climatic change and global warming: Who is responsible?
The high-level accumulation of carbon dioxide in the atmosphere act as a blanket that traps heat and is liable for the warming of the planet. The increased usage of oil and natural gas, burning of fossil fuels and cutting down forest contributes to this carbon accumulation that overloads the atmosphere (Lofsted and Collier, 2014). Scientific evidence dictates that increase in global average temperature for more than 3.6 degrees (oF) compared to the pre-industrial level is a serious risk to human health and natural ecosystem (Smith and Hayes, 2013). Over the last century, the global average temperature has increased by 1 degree (oF) that is responsible for comprehensive global temperature, recorded. This is further accompanied by a decrease in freezing days and increase in warm days (Smith and Hayes, 2013). While the record shows that some part of the world are warming faster than other, there exists an upward trend is unambiguous in the long-term global aspect. It is worth mentioning that the global warming has the potential to change rainfall and snow pattern, melting of glacial ice, disturbance in the ecosystem, severe storms, and increase in sea level (Smith and Hayes, 2013).
Initiatives were taken by oil/gas companies and government/private organisations
As an individual, we need to take action that can reduce the personal carbon emission, such as avoiding the use of chloro-fluoro carbons and aerosols (Heidari and Pearce, 2016, pp.899). On the other hand, to address the global threat, the demand action is requisite from political leaders to support the comprehensive climate solutions. In conjunction with the operational activities of oil and gas companies, it is necessary to implement a smart solution that is based on technological advances and available options in hand (Bulkeley and Betsill, 2013, pp.136). The prime objective of these smart solutions is to reduce the emission that contributes to heat-trapping into the atmosphere. These measures include
Other approaches to government and private organisation that are necessary include:
Advantage and disadvantage associated with shifting to renewable source of energy
According to Paris 2015 UN climate change conference, countries have submitted their plans to control the greenhouse gas emission that emphasis on the steps that can be implemented by oil and gas companies (Lybæk, Hansen and Andersen, 2016, pp.65). The responsibilities of these companies are thus aligned with two prime objectives (Thornton, 2014, pp.3313):
Reduce the consumption of fossil fuels and oils and making a shift towards renewable energy
Complementing the energy requirement across the globe with minimal impact on climatic risk.
The key challenges that are associated with these requirements include:
A change in the infrastructure that uses renewable energy supply such as solar system, wind energy, and electricity generated from hydraulic units.
Change in the work procedure such that technological support can support the change of energy sources (Ellabban, Abu-Rub and Blaabjerg, 2014, pp.748).
Making a shift from coal to natural gas that can reduce approximately half of carbon dioxide and absolutely zero level methane gas release (Stigka, Paravantis, and Mihalakakou, 2014, pp.100).
Implementing strong commercial influence with the introduction of global carbon pricing policy. Companies like BG group, Royal Dutch Shell, Eni, Statoil, and BP have already implemented internal carbon price of $50/tonne that in turn had reduced half of the emission (Ellabban, Abu-Rub and Blaabjerg, 2014, pp.748).
Carbon capture and storage system is another approach that motivates the carbon price as well as offer sustainable clean energy portfolio to the companies.
The major challenge in the mentioned approach includes cost consideration and implementation of change in the work procedure (Hiatt, Grandy and Lee, 2015, pp.1769). It is important for the companies to make collaboration and combined decision for the industrial practices that in turn must be based on economic consideration and life cycle of fuel (O’Driscoll and O’Donnell, 2013, pp.53). Common example of these measures can be accounted based on below mentioned points (Chaubey, Sahu, James and Maity, 2013, pp.443):
Shell Company have supported the infrastructure change to control carbon dioxide release with making the sustainable approach in four key areas. These include biofuels, carbon capture and storage, use of natural gas, energy efficiency.
ExxonMobil Company has reduced their operational procedure that in turn reduces 40% of carbon emission. The clean fuel project enables a reduction in 98% of sulphur level within the diesel and gasoline supply.
British Petroleum supports the clean and efficient policies of lower carbon limit implemented by EU. The operational procedure includes a change in flaring and venting provision that contribute to reduces carbon emission. Likewise, the carbon cost of their investment appraisal is also a practical
The advantage of implementing these change is evident in terms of reducing the carbon emission and contribution towards the greenhouse gas accumulation in the environment. The change in the climatic condition has a significant impact on the industrial procedure and requirement. Thus a change in the working process and a shift in the use of energy sources falls within the scope of Environmental Protection Agency – cleaner power policy (Suberu, Mustafa and Bashir, 2014, pp.499). The mentioned changes and other futuristic steps are necessary to be taken by the oil and gas companies, as because they have wealth as well as experience to tackle such problem on large engineering.
Reducing the use of oil and other relevant change in the operational activity can cause the high cost to the consumers. The common policies such as carbon tax and emission control related carbon price have the potential of increasing the fuel/oil cost. The possible solution is to monitor the cost and regulates the price of fuel production by the government (Aghaei and Alizadeh, 2013, pp.64). Likewise, the government policies also need to have effort in promoting the technological development such that combination of fuel and buying efficient vehicles can be implemented. This means a regulation is necessary to maintain the revenue flow balance between the fuel industry, oil companies, and vehicle industry (Suberu, Mustafa and Bashir, 2014, pp.499).
Similarly, a paradox for the government policies also exists that drive substantial revenues from fuel taxes. If the consumption of fuel falls, the revenues will also fall which can impact the overall nation’s GDP. The solution to this problem is that oil and gas companies can adopt suitable means to produce the energy based on renewable sources and that can be supplied by the community and industrial use (Aghaei and Alizadeh, 2013, pp.64). Of note, this shift can account for huge investment, which needs to be implemented in near future.
Additionally, the government and private sector organisation also need to identify other significant changes that can reduce the carbon footprint. This is important because only focusing on the operational activity of oil and gas companies can cause pressure in terms of conduct for these companies as well as in terms of financial (revenue) management. Another sector like transport and municipal solid waste nearly contribute to 22 and 25 percent of greenhouse emission. Additionally, they also contribute to 40 and 19 percent of the black carbon (soot) contribution that adds to the global warming (Dale, Osegowitsch and Collinson, 2014, pp.487). Thus, in developing economies, it is important to share the responsibility of reducing environmental impact to all sector such that the pathway of sustainability can be smoother for oil and gas companies.
The expectation of implementation measures is remarked with the assumption that oil prices can reach to newer competitive level. The incentive that is being offered to the oil and gas companies is based on the knowledge available for framing government policies, contributed to public perception and is based on information from interest groups (Mitchell and Mitchell, 2014, pp.36).
In particular, for the oil and gas companies the volume matter, which is linked with that downstream. The volume in this consideration is related to use of vehicles and other industrial practices that render an increased demand for the energy sources. According to combined summit (Howarth, 2015, pp.46) by US, EU, and Japan, the future estimated demand for the fuel requirement based on petroleum as fuel, will not be reliable until a sustainable solution for the climatic conditions are determined. The idea of adjustment to lower the oil consumption by 2020 is a significant step forward that can reduce the pressure of climatic sustainability on the oil and gas companies. Thus, these companies must focus to maintain the refineries, distribution, and other retail structures that can supplement the needs of small industries (static and slowly growing market) (Howarth, 2015, pp.46). On the other hand, public and private sector organisation must make robust technological solutions implement disruptive technology, for an industrial solution and automotive demand of world population. It is important to mention that the cost of “keeping going” is not a negligible factor. The reason is associated with the continual requirement of revenue investment that is attributed to the changes of mix production and newer environmental standards.
Potential recommendation in this downstream for the UN include the following consideration:
Concentrating core of oil refinery plant, managing networking, and using technology are important, but companies need to secure segmentation of market in terms of chemical sites, the advantage of handing crude material and investing in other sources of energy to gain profit revenue (Jenner and Lamadrid, 2013, pp.442).
Closing refineries and selling to smaller industries can show a profit to acquisition cost and biofuels, and waste management is also an effective alternative. On the other hand in many geographical locations, these options may not be possible such as in Europe. Hence, implementing a pattern of change in the trades of products will be effective (Dale, Osegowitsch and Collinson, 2014, pp.487).
It is also important to govern the policies related to retail and supply chain involving supermarkets, such that practice for environmental sustainability can be managed. Hence, carbon price and fuel selling price for all oil and gas companies across the globe can be managed (Seelke, 2015, pp.199).
De-integration of the companies is another useful The demerged downstream in terms of volume demand and consumption of fuel across the world needs to be regularised with the implementation of disruptive automobile technologies. The strategic management in conjunction with increased technological demand of consumers, growing demand for energy sources by increasing population, and increased pressure for a sustainable approach towards a climatic solution is thus required (Dale, Osegowitsch and Collinson, 2014, pp.487).
The present coursework was based on analysis of environmental issue related to global warming and climatic changes. The prime reason associated with this subject is the human-based activity such as emission of carbon, emission of gases like carbon dioxide and methane, and deforestation. As a result of these events, the consequences lead to increase in the overall temperature of the planet, which is referred to as “greenhouse effect” (Heidari and Pearce, 2016, pp.899). Based on the reading and learning, it is also learned that increase in global average temperature for more than 3.6 degrees (oF) compared to the pre-industrial level is a serious risk to human health and natural ecosystem. Importantly, the average increase in temperature over last decade has been accounted for 1 degree (oF) that is responsible for melting of glacial ice and rise in the sea level (Smith and Hayes, 2013).
The research process for the completion of this reflective log includes searching and acquisition of knowledge for the said topic from peer reviewed sources. This involves the use of specific keywords such as “oil and gas companies effort towards sustainability”, “approach to reducing global warming”, sustainability for negotiating climatic change”, government and private sector approach to climate change management”. The next method of filtering the retrieved literature was based on year of publication, which renders a selection of literature from last 5 years of publication (Booth, Sutton and Papaioannou, 2016). In addition to this, information has also been collected from blogs and other internet sources, which was first compared with information present in literature and finally included within the report. This approach is effective as it helps in collecting information that includes rationale behind the approach, historical notes, and future planning from the related summit by collaboration with international agencies (Booth, Sutton and Papaioannou, 2016). Likewise, it is also learned that the sustainability approach of oil and gas companies needs to be implemented in conjunction with activities of other sectors such as an automobile, disruptive technology, and minimization of deforestation. The effort of today is necessary, so as to manage the resource and climatic condition for a future time.
The importance of above-mentioned research approach is reflective of fact that updated approach has been collected regarding environmental sustainability. Additionally, the implementation and strategic planning that has been undertaken by various companies like BP, Royal Dutch Shell, and Eni can also be accounted. The module writing requires extensive analysis in conjunction with sustainability approach, profit-loss analysis, and economic shift that is probable to effect with managing change in infrastructure and work procedure (Suberu, Mustafa and Bashir, 2014, pp.499). Likewise, the module also demands justification associated with all the recommendation sets for the environmental sustainability approach to UN, which must be added with references. The information related to this recommendation and their associated rationale was thus collected using peer reviewed sources. The challenge related to this research work is linked with a collection of information that can dictate the financial management of companies with the arrangement of “shift” to infrastructure and work procedure (Heidari and Pearce, 2016, pp.899). It is still unclear, how the price and profitability negotiation can be managed by oil and gas companies when they will adopt a change in the source of energy to renewable form. Since this strategic analysis were kept confidential by many companies, thus they were not published in literature sources.
References:
Booth, A., Sutton, A. and Papaioannou, D., 2016. Systematic approaches to a successful literature review. Sage.
Heidari, N. and Pearce, J.M., 2016. A review of greenhouse gas emission liabilities as the value of renewable energy for mitigating lawsuits for climate change related damages. Renewable and Sustainable Energy Reviews, 55, pp.899-908.
Suberu, M.Y., Mustafa, M.W. and Bashir, N., 2014. Energy storage systems for renewable energy power sector integration and mitigation of intermittency. Renewable and Sustainable Energy Reviews, 35, pp.499-514.
Smith, K.R. and Hayes, P., 2013. The Global Greenhouse Regime: Who Pays?. Routledge.
Aghaei, J. and Alizadeh, M.I., 2013. Demand response in smart electricity grids equipped with renewable energy sources: A review. Renewable and Sustainable Energy Reviews, 18, pp.64-72.
Bulkeley, H. and Betsill, M.M., 2013. Revisiting the urban politics of climate change. Environmental Politics, 22(1), pp.136-154.
Chaubey, R., Sahu, S., James, O.O. and Maity, S., 2013. A review on development of industrial processes and emerging techniques for production of hydrogen from renewable and sustainable sources. Renewable and Sustainable Energy Reviews, 23, pp.443-462.
Dale, C., Osegowitsch, T. and Collinson, S., 2014. Disintegration and de-internationalization: changing vertical and international scope and the case of the oil and gas industry. Advances in International Management, 27(1), pp.487-516.
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Stigka, E.K., Paravantis, J.A. and Mihalakakou, G.K., 2014. Social acceptance of renewable energy sources: A review of contingent valuation applications. Renewable and Sustainable Energy Reviews, 32, pp.100-106.
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Thornton, P.K., Ericksen, P.J., Herrero, M. and Challinor, A.J., 2014. Climate variability and vulnerability to climate change: a review. Global change biology, 20(11), pp.3313-3328.
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