Oil and gas players and all stakeholders in the global industry need to hammer out concrete timelines for decarbonising the sector in order to reach ambitions emissions-reduction goals, according to industry stalwart Andrew Gould.

“A fundamental difficulty in the oil and gas industry is how do you move from your current product to your climate change ambitions? And how do you pay for them? And what is the actual timeline that's necessary for that to work," the former chief executive of oilfield services giant Schlumberger said on a panel at the Rio Oil & Gas 2020 digital conference on Thursday.

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“What worries me is the expectation of both politicians and the public — and investors — and the actual probable timeline that it will take to implement something that allows us to get there. We need to lay down concrete timelines," the recently appointed board member at US contracting player McDermott International added.

While the oil and gas industry continues to struggle with these expectations and rejection from sections of the investment community, the necessity increases for timelines that are measured in decades rather than years, he noted.

“I think that it's going to take a long time to resolve and there needs to be much better dialogue on behalf of the oil and gas companies with the public and with governments," Gould said.

"There are really smart investors realising that you can't just turn off fossil fuels, you need to have a transition — and that that transition needs to be carefully measured, but it also needs time.”

'The debate is over'

Mark Wiseman, former vice president for asset management giant BlackRock, said on the same panel: “Consumers throughout the value chain are demanding that the companies that they do business with exhibit some sort of a commitment to produce a more sustainable outcome.

"The debate is over. We are going to see a transition to a lower-emission economy."

In the five years since the Paris Agreement, carbon dioxide emissions have continued to increase, according to Michel Fredeau, managing director and senior partner with Boston Consulting Group and panel moderator.

“The only time, in fact, where it has decreased is this year, due to Covid when it decreased by 5%,” he said.

“To stay on the 1.5 [degrees Celsius] path, we will need to decrease by 2030 by 60% the emissions that we are currently emitting, which means roughly a Covid every two years.”

Investment opportunities

This transition to cleaner energy markets will also open up new avenues for investors.

“The transition is going to take time, but it's also going to represent perhaps the greatest investment opportunity of a generation,” Wiseman added.

“There's going to have to be billions [or] in the trillions of dollars invested to help companies in the energy sector and beyond make the transition to a lower emission environment.”

What will help unlock those dollars are better metrics and standards for the investors to evaluate companies by, noted Wiseman.

“For example, we have accounting standards, we have GAAP or IFRS, so that we can compare on some basis... There is a way that we disclose those and that then allows an investor to make an informed judgment about how to deploy capital into companies,” he said.

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“But today, we have no compatibility on non-financial factors. And we know those factors are going to be incredibly important to valuation.

“We need to see a degree of standardisation in terms of climate ESG [environmental, social and corporate governance] reporting in general, the climate reporting specifically if standard-setting bodies can't come together to do it. And I would encourage industry participants to come together and set their own benchmark.”