Supporting the oil and gas sector and investing in the energy transition are not contradictory, says BNDES. WEF warns that current mechanisms are insufficient for decarbonization.
O oil and gas sector is playing a crucial role in promoting the global energy transition. According to BNDES, supporting this industry and investing in sustainable alternatives are not mutually exclusive actions. The World Economic Forum (WEF) has issued significant warnings that current mechanisms are insufficient to achieve effective decarbonization, highlighting the need for more innovation and investment in this regard.
In the context of oil industry, the challenges are multiple, but the opportunities are equally vast. The oil and gas sector has the capacity to lead a significant transformation, not only in the way energy is produced, but also in the way it is consumed. The need to decarbonize the global economy implies that sectors such as Oil and Gas implement more sustainable and efficient solutions as soon as possible.
Financing and Energy Transition
For BNDES, there is no contradiction in providing support to the oil and gas sector and, at the same time, investing in the energy transition. Elisa Lage, head of the bank's Oil, Gas and Shipping department, mentioned during the panel financeability of Energy Transition, held on Wednesday (25), part of ROG.e, one of the largest energy events in the world, which takes place at Boulevard Olímpico, in Rio de Janeiro, until Thursday (26). Over the last 20 years, BNDES has financed the oil and gas sector through numerous projects in the areas of gas transportation and distribution, fuel refining and distribution, among other ventures.
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Natural gas is an essential component of the energy transition agenda as it is needed to meet demand during periods of intermittency. The executive stressed that the bank is also focusing its efforts on decarbonisation of the oil industry on several fronts, including refining, transportation, distribution and energy efficiency.
Challenges in Emerging Countries
Present at the panel, Thales Panza de Paula, responsible for Latin America's engagement at the World Economic Forum (WEF), highlighted that the current financing mechanisms are insufficient to meet the decarbonization goals established in the Paris Agreement. 'The great challenge currently lies in emerging countries, where it is necessary to double the investments', he pointed out. In these regions, the main difficulties include the high cost of financing, the limited government borrowing capacity (more than 50% of financing comes from the public sector), the low development capital markets (with Brazil as an exception), and exchange rate risk.
Despite these adversities, the flow of investments in projects in the energy sector shows a growing trend, with an expectation of US$ 3 trillion in 2024, of which US$ 2 trillion will be dedicated to clean energies and US$1 trillion to fossils. These investments are particularly prominent in China, the US and Europe, while emerging markets attract around 15% of total investments. The panel also included Bruno Aranha, FIA professor and founder of YvY Capital; Victor Santos, associate director at BTG Pactual; and Gilberta Lucchesi, CFO of Repsol Sinopec Brasil, who served as moderator.
Industry Decarbonization
The challenges of decarbonization in industrial sectors such as steel, cement and fertilizers were discussed in the panel 'Industry hard to abbot'. Jorge Oliveira, CEO of ArcelorMittal, indicated that the company is accelerating the use of green solutions, such as charcoal and scrap, and investing in energy efficiency. However, he stressed that the application of renewable technologies on a large scale still faces cost barriers. 'Brazil has renewable energy at the base of its energy matrix, which can be a competitive advantage globally,' he said, highlighting the importance of public policies and market regulations to attract investment.
Osvaldo Ayres, CEO of Votorantim Cimentos, shared that the company has accumulated knowledge with decarbonization pilot projects in several countries, including electrification e CCUS in the US and Europe. Daniel Hubner, senior vice president of Yara Fertilizantes, acknowledged the difficulties faced by some sectors in the decarbonization process but sees potential in local solutions, such as biomethane in Brazil. 'We reduced 45% of our emissions globally from 2005 to 2018, with improvements in catalysts and energy efficiency. Now, we need to look for new routes,' he said, highlighting biomethane as a promising avenue to be explored.
The Quantum Computer Revolution
Claudio Makarovsky, Industrial Director of Energy and Natural Resources at Microsoft, announced at the panel 'Artificial Intelligence e Quantum Computing: the future of the O&G industry', held during iUP Innovation Connections, a side event of ROG.e, that by 2030 we will have a global quantum computer, focused on molecular mapping and the development of new drugs. Flavio Waltz, Digital Operations partner at E&Y, commented that, in a 2022 survey of more than 500 European executives, 48% believed in practical applications of this technology by 2030.
Clécio de Bom, professor at the Brazilian Center for Physics Research (CBPF), highlighted that, in the future, companies will find their own routes to develop disruptive technologies, while Marc Spieler, NVIDIA's Energy Director, predicts that the quantum computing boom is yet to come, and in the future everyone will have both a classical and a quantum computer.
Gender Equity in Industry
Efforts to promote gender equality in the O&G industry are reflected in the sector's figures. A 2023 study by the International Association of Oil and Gas Producers (IOGP) indicates that there is an average of 23% female participation in companies in the segment. Luciara Queiroz, SLB's Brazil Sustainability Manager, mentioned this data in the panel 'Women in the energy industry: challenges and opportunities for gender equality', held at the DE&I Forum. Ana Gati, president and founder of the Women and Operations Institute (MEO), emphasized that representativeness Female participation is associated with better financial results, commenting that, according to McKinsey, companies with a high presence of women have a 25% higher performance.
In addition, professional development is crucial. Camila Santiago, Maintenance and Reliability Manager at Constellation, identified four essential factors for success: communication, resilience, emotional intelligence, and technical competence. The combination of these elements led to the promotion of Eduarda Lacerda, general manager of Petrobras’ Espírito Santo business unit, even during her pregnancy. Luisa Moura, IT analyst Diversity at Wilson Sons, he added that the key to diversity is the intentional exposure of different groups to the challenges they want to face, which he defines as social representation.
About ROG.e
ROG.e is one of the largest energy industry events in the world, organized by IBP. The event is expected to attract more than 70 visitors from 65 different countries, including industry leaders, authorities, investors and academics. Occupying eight warehouses, with more than 550 exhibitors, seven side events and a Congress, ROG.e 2024 is sponsored by renowned companies such as Petrobras, Shell, TotalEnergies, Equinor, Galp, Origem, Brava, Petronas, Prio, bp, Chevron, ExxonMobil, Modec, Repsol Sinopec Brasil, SBM Offshore, Acelen, Eletrobras, Excelerate Energy, Ipiranga, Pan American Energy, Vibra, Dell, Nvidia, Naturgy, TechnipFMC, TBG, Trident Energy, ABB, Construtora Elevação, Compass, Foresea, Huawei, Karoon Energy, OceanPact, Perbras, Subsea7, TAG, Transpetro, Vallourec, Renave, and the participation of the Federal Government.
Source: Bruno Postiga