Renewables are key to decarbonisation

Energy transition will be the biggest challenge for players in the oil and gas industry in the coming decades. Major companies have already embarked on this path, as have fledgling start-ups with an increasing focus on innovation in a market regarded as 'traditional'

The diagnosis of the Oil & Gas business model as we know it today has been made. It has been given a life expectancy of around 30 years but, until then, the traditional players will continue to face challenges. On Energy Day, which is celebrated today, it is important to remember the growing importance of renewable energies and energy efficiency, in order to guarantee a more sustainable and better-balanced planet on the road to decarbonisation.

Four years have passed since Portugal undertook the goal of achieving carbon neutrality by 2050. The mission entails reducing greenhouse gas (GHG) emissions by more than half and applies both to industry and all sectors of activity as consumers of energy, and to all areas of society.

However, the next decade will be crucial if this mission is to succeed. The 2030 National Energy and Climate Plan (PNEC by its acronym in Portuguese) sets forth the first phase of the energy transition strategy conceived by the Government, which is expected to be implemented over the next ten years. Pursuant to a combination of political options and technology, the priority is energy efficiency, achieved with an increase in the electrification of consumption and the increasing use of renewable sources of energy.

The winds of change in the energy sector are blowing in the same direction both in Portugal and the rest of Europe. Many of the incumbent operators are acquiring assets in renewable energies, particularly solar and green hydrogen – with an increasing number of projects under development all over the world - and markets are changing the way in which they operate. The challenges are similar, and the strategies common. Furthermore, the conviction that current products will have to be adapted to other uses and that the decarbonisation of operations is one of the first steps applies to all the different players in the industry.

Moreover, the arrival of new players in the energy business is also bringing greater innovation to the market, in addition to new business models, as well as 'forcing' the sector to react and adapt faster.

LONG-TERM COMMITMENT

As in a marriage striving for stability, Galp has also said 'yes' to the challenge of energy transition, and has made a long-term commitment. The company is active in a wide range of business areas, and pursuant to what Susana Quintana-Plaza, a member of Galp's Executive Committee, says, “don't put all your eggs in one basket”, the energy company is currently active in different sectors such as electricity, oil and gas, solar energy and renewable energy, and has registered “faster growth than the competition”. The manager of the areas of Renewable Energy and New Business was speaking at the Go Net-Zero Carbon Energy Virtual Summit, held online this week, where he shared challenges and barriers common to other international players in this industry.

Galp has been ramping up investment in the field of renewable energy and became the biggest solar energy producer in the Iberian Peninsula this year.

The additional challenge of the covid-19 pandemic was also discussed at this conference, with participants acknowledging the global impact of this crisis on all sectors, with a consequent reduction in many operators' investment capacity. In this regard, Susana Quinta-Plaza expressed her satisfaction with Galp's financial equilibrium, emphasising that companies with healthy balance sheets are more capable of dealing with adversity. “Galp hasn´t cancelled a single project, but we've changed the investment schedule a little”, she revealed. Nevertheless, “the commitment to decarbonisation remains”.

However, this approach is taking place in an increasingly unstable market, which is an additional challenge as far as Susana Quintana-Plaza is concerned. “We need to focus on the direction in which the market is going and invest in one or more areas”. The secret, she believes, lies in intelligent portfolio management in a diversified, interesting and innovative manner. “It isn't our technology that matters, but what we are doing differently from the rest”.