Increasingly stringent climate-related policies by governments, direct public and shareholder activism, and shifting investment strategies by major institutions are increasing pressure on O&G companies to reduce emissions. For Petroliam Nasional Bhd (Petronas), it means striking an equitable balance between providing low-carbon solutions and ensuring energy security.
According to Petronas Head of Climate Change Thirupathi Rao, sustainability is not just about having the licence to operate, but also a licence to grow in the low-carbon economy.
“It should demonstrate the resilience of the organisation’s business model to withstand the growing financial and physical impacts of climate change, as well as increased scrutiny of stakeholders.”
Given the urgent need to reduce greenhouse gas (GHG) emissions by 2050, Petronas is at the forefront to provide solutions in ensuring the energy transition is done in a just manner. The clear signal of this journey is marked by Petronas’ Statement of Purpose, which underscores the need to enrich lives for a sustainable future.
“This is a rallying cry for us to balance the economy, the environment and the social aspects of conducting our business responsibly in order to provide clean, low-carbon energy in a just manner.
“With our position as custodian to Malaysia’s O&G resources and being a global energy player, we are constantly seeking meaningful collaborations to provide solutions that enrich lives and pave the way for a sustainable future. We also aim to focus on the seven of the 17 United Nations Sustainable Development Goals (UNSDGs) which will have direct and indirectly contributed to the balance 10 UNSDGs,” he told The Malaysian Reserve in a recent interview.
The seven UNSDGs that Petronas prioritises are SDG 7 (Affordable and Clean Energy), SDG 9 (Industry Innovation and Infrastructure), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 3 (Good Health and Wellbeing), SDG 4 (Education) and SDG 8 (Decent Work and Economic Growth).
Further cementing the group’s commitment to sustainable development, Petronas announced its net-zero carbon emissions (NZCE) by 2050 aspiration in November 2020, embedding elements of life cycle thinking and just transition. Achieving the aspiration, continued Thirupathi, would involve three simple actions, namely measure, reduce and offset.
While Scope 1 and Scope 2 emissions are measured and verified to meet the capping of its 49.5 million tonnes of carbon dioxide equivalent (tCO2e) target by 2024, Petronas will continue to mitigate GHG emissions as planned such as through the reduction of hydrocarbon flaring, venting and fuel gas usage from its operations.
Petronas has also lined-up low-carbon technologies and innovations through renewables such as solar, wind and green hydrogen in gas and new energy business, resource circularity in petrochemical business and nature-based solutions in collaboration with the Malaysian government. At the same time, the group is also venturing into the hydrogen market, in collaboration with Sarawak Energy Bhd through a memorandum of understanding.
Technology has played an important role in Petronas’ low-carbon journey by improving energy efficiency as well as hydrocarbon flaring and venting reduction in operations over the past decades. Innovation in carbon capture and storage, energy storage and increased clean electrification of its operations will fortify Petronas’ ability to meet the ever-evolving needs of the stakeholders.
The company started its first offshore carbon capture and storage project, which is scheduled to be completed by 2025, while also developing technologies for onshore processing plants that will use the captured CO2 and convert it into petrochemical products. This method of recycling waste CO2 back into the system demonstrates the desire to promote greater circularity in their operations.
Petronas is also exploring opportunities in nature-based solutions by collaborating with the government in the conservation and restoration of forests. This is expected to generate forest carbon offsets to compensate any remaining GHG emissions, after exhausting all other efforts in the areas of operational excellence, low-carbon solutions and various technological initiatives.
Positive Outlook Despite Challenges
There is no doubt that achieving net-zero comes with its own unique set of challenges. Nevertheless, Petronas is staying committed to its pledge to create a cleaner and greener future for all.
To date, since the introduction of the Petronas Carbon Commitment in 2012, the organisation has successfully reduced 13.4 million tCO2e cumulatively till 2020. This represents an approximate 20% reduction of its current carbon footprint.
Petronas’ downstream and gas and new energy businesses have reached an overall equipment effectiveness rate of 90% and 96.8% respectively, indicating high efficiency of operations. Furthermore, its upstream business has been complying with the zero continuous flaring and venting requirements aligned to Petronas Carbon Commitment for all new projects in striving to reach world-class GHG emission intensity for their existing operations.
“These efforts will be intensified in the coming years as we are setting more stringent short-term targets,” Thirupathi said.
One of the key challenges for Petronas is to strike a balance between providing reliable, low-carbon energy, while expanding into renewable energy. To provide affordable energy to all, natural gas and renewables must complement each other in the energy transition.
In this regard, the Petronas Group will continue to deliver its Amanah of developing the nation’s hydrocarbon resources and delivering energy sustainably for the benefit of the people.
“That is why the concept of ‘just transition’ is at the heart of of our NZCE journey. We must make the energy transition in a just manner, balancing out the inequalities,” Thirupathi added.
Despite having to navigate itself through significant challenges and uncertainties posed by the ongoing Covid-19 pandemic, Petronas will continue to ramp up efforts to achieve its net-zero carbon emissions by 2050 aspiration, and to become a progressive energy and solutions partner enriching lives for a sustainable future.