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Consultant opinion
Oil and Gas Industry in the Context of Sustainable Development |
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Sustainable development is a relatively new concept. Sustainable development is not confined to ecologic awareness, as it has been wrongly understood, but the aim is to strike a higher balance between the economic, social and environment dimensions.
Industries have been faced with environment challenges since long ago. Industries are supposed to search, find and implement innovating solutions in order to create their own competitive advantages, but also to stay within the standards that govern the protection of environment and resources. Yet, the sector approach will not suffice. When options must be chosen or when actions must be prioritized, leaders of industrial businesses have to make a distinction between these two dimensions:
• The scientific significance of the impact upon one or another activity (more specifically, the scope of the impact on the environment or on the exhaustion of resources);
• Awareness of the impact on the interested parties. Therefore, they have to become aware of the diversity of the systems of values or principles that underlie the decision-making process that various groups are using.
In circumstances where Romania will accede to the European Union, the pressure that directives and norms will be putting is likely to create frustration among companies that, although they manage their environment services properly, have been in a position to bear with very high prices and have been faced with negative reactions from the public opinion. Shell, for instance, although resorting to the most rigorous methods to get rid of the Brent Star rig, never thought of how the public opinion would react. In 1996, confronted with public protests that mostly came from Germany, the company had to give up on its project to sink that rig in the North Sea.
The environment balance sheet, as complex and intricate as it may be, is just the first part of the preparation of a strategy. The next stage is about establishing from what point of view a company may be affected, if its activities have a negative impact on the environment. On the other hand, opportunities that are inherent in an ecological strategy need to be identified, although debates on the scope of such opportunities and on the environment protection costs are likely to continue. For the time being, corporate environment-related policies are more of a reaction to new regulations rather than a scrutiny of opportunities.
The environment issues that oil industry raises and the usage of oil for purposes of power generation and transportation actually refer to the quality of air, water, clime changes and quality of fuels. In terms of the refined products, there are still differences between the type of refining which is requested on markets of EU member states and the one which sells in Central and East European countries. In acceding countries or countries that are candidates to EU membership, lower polluting oil products are in less demand than in EU countries.
But the overall demand of oil products is and will continue to be increasing. In the European Union, forecasts suggest that crude oil will cover 40% of the overall consumption of energy resources in 2020. Under these circumstances, the changes that are imposed by environment protection shall have to trigger off a closer focus on clean oil products. To that end, a genuine network of inter-relationships shall have to be built between the energy policy and the environment protection policy and a wide approach will be necessary, that should take into account the integrated and scientifically substantiated assessments and, on the other hand, the targets that are established for purposes of environment protection, within the context of sustainable development. For instance, the reduction of the polluting potential of transportation fuels could trigger off more carbon dioxide emissions that refineries could generate. That is why a closer cooperation among all involved factors seems to be the right way to approach the complexity of this issue.
As far as the environment is concerned, natural gas is considered to be “the door to sustainable development”. The environment impact that is generated by using natural gas has a local dimension (particles, smoke), regional dimension (acid rain) and a global dimension (greenhouse effect gases).
The negative impact on all dimensions may be reduced by using clean gas, whose content of sulfur and carbon is low, by using energy efficient technologies and by reducing the demand of energy (insulating technologies that should be used for all buildings, different lifestyles). Gas technologies match technologies that are used to develop renewal resources very well. Gas fuel is adequate for the technologies that are employed to increase the energetic efficiency, for instance in condensing boilers.
Burning gas for power stations can reduce the emissions of carbon dioxide. Using gas for co-generation will double the gas-based production of electrical power in the European Union. Yet this kind of situation is going to trigger off a number of malfunctions and negative developments in the field of competition, more specifically between older and less efficient power plants and newer and more efficient plants.
Now, quite a delicate issue in terms of production in candidate countries refers to nuclear energy, more specifically to the relationship between nuclear safety and environment pollution.
Promoting renewable sources is something which is very closely related to the potential of each country. For the time being, emissions of carbon dioxide in acceding and candidate countries are not considered to make a reason of concern. That is why we do not consider it necessary to have an aggressive policy to promote renewable resources within this group, especially in circumstances where the effort to invest in retooling classical power plants could lead to keeping the same structure of the energy production over the next 30 years too.
Each European country, be it a member or a candidate, is in a different situation which is due to its own natural conditions – geographical resources, natural resources, etc. - the structure of imports, the economic context and the status of the environment. In order to meet the requirements specific to sustainable development, each separate state should adjust its own structure of the energy production.
All of the acceding countries and candidate countries are no different from EU member states in terms of general trends, that is why they are not going to trigger any major quality changes in the Cardiff process (which is a wide-scope structural reform meant to lead to a better capacity and efficiency of the labor market, goods, services and capital). Yet they do strengthen these trends and that is why integration is a difficult process. From this perspective, the most sensitive issues of candidate nations are associated to:
• Nuclear security
• Energy efficiency and usage of renewable sources;
• Social problems associated to the restructuring process in some power-generation sectors;
• The economic burden which oil stocks, which are economically non-productive yet financially expensive, impose on candidate nations.
Yet still, the evolution of conditions and production costs, as well as the way in which consumers’ requirements have evolved and changed make a source of major competitive advantages that will benefit all stakeholders of energy industries, yet compliance with standards and the environment legislation and the harmonization with them should not be ignored. That is why oil industry actors may resort (and actually most oil giants do it) to specialists in this field (in order to improve the environment strategy in accordance with increased competitiveness, in order to improve the capacity and efficiency of companies, to obtain certifications and to broker the relationship with the public opinion).
Cristina Penciu
Ensight
Consultant
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