What if Big Oil promoted—and profited from—the green transition? Here’s how it might work

Like the oil industry itself, households are heavily invested in existing transportation technologies. Getting oil and gas companies – and consumers – to switch to zero-emissions transport is a huge challenge.

We cannot assume that battery electric vehicles (EVs) will replace fossil fuel vehicles anytime soon. They are not affordable for most households and do not offer radically better transport services. They drive the same busy roads with the same speed limits.

On the supply side, the electrification of the entire transport fleet requires major infrastructure expansions. Even with strong demand, such infrastructures will struggle to replace Big Oil’s dominant and affordable alternative.

It’s a classic chicken and egg situation. Consumers and vehicle manufacturers will not switch unless they are confident that the necessary refueling infrastructures will be available. But those infrastructures will not materialize without sufficient demand.

Repurposing existing infrastructure to deliver clean fuels could convince both consumers and vehicle manufacturers to make the switch. But what would that take?

Clean fuel alternatives

Major economies (including the United States, the European Union, and Japan) and car manufacturers such as Toyota and BMW are actively promoting clean hydrogen-based technologies such as hydrogen fuel cell vehicles. Toyota and some heavy vehicle manufacturers are also investing in vehicles that could burn clean hydrogen.

Whether “green hydrogen” could work for mass transportation remains hotly debated. But it is not the only possibility – biofuels obtained from renewable raw materials have the potential to at least partially decarbonize transport (especially aviation).

And so-called “introduced fuels” could also replace fossil fuels. Known as e-fuels, these are synthetic fuels made by combining hydrogen with carbon dioxide.

As such, they could decarbonize transport faster and more widely, as they can be used in existing vehicles and delivered through existing infrastructures. A recent EU ban on sales of new fossil fuel vehicles from 2035 has been eased to allow this.

As with electric vehicles, vehicles that run on clean hydrogen, biofuels, or e-fuels do not revolutionize transportation beyond reducing emissions. But it could have a head start on EVs by solving that chicken-and-egg problem: making it possible to convert the entire fleet of vehicles to run on clean fuels while developing the necessary refueling infrastructures.

Accessibility and scale

Repurposing existing fossil fuel infrastructure to provide clean fuels could be faster and cheaper than building new ones, such as the massively expanded electricity systems needed for mass adoption of electric vehicles.

For example, zero-emission hydrogen can be produced from natural gas, but the process itself produces greenhouse gas emissions. Carbon capture storage (CCS) – removing emissions and storing them safely in geological structures such as gas-depleted reservoirs – is one possible solution.

The Intergovernmental Panel on Climate Change believes that CCS is feasible and plays a significant role in reducing greenhouse emissions. This would mean that oil companies could adapt to zero-emission hydrogen production while renewable hydrogen or e-fuel production is developed.

The necessary geological structures are located near oil and gas infrastructures, which could also be converted to transport the resulting clean fuels.

These technologies may not yet be economically viable. But the same was true of electric vehicles just 20 years ago. Concerted investment – ​​and scaled production – was instrumental in improving their economy.

Repurposing fossil fuel infrastructures also opens the door to converting existing vehicles to run on clean fuels. This requires little or no change to the introduced fuels, which are interchangeable with existing fuels by design. Alternatively, the vehicles can be converted to burn pure hydrogen (or bi-fuel blends).

This could be much more affordable and attractive to vehicle owners than buying new vehicles (even assuming suitable options were available).

Putting coal out of business

In the process, Big Oil could avoid its existing assets becoming defense investments. Critically, it could also benefit from the reuse of its infrastructures, decarbonizing sectors currently dominated by the other major carbon polluter, coal.

For example, hydrogen is a more credible substitute than electrification in some large coal-consuming industries such as steel production.

However, given the need for scale and coordination, it is unlikely that individual oil and gas companies can profitably reuse their infrastructures on their own.

But industry-wide agreement and coordination to produce some clean energy (or mix of energies) could substantially reduce investment risks. Anti-collusion laws would likely prohibit such agreements, so targeted waivers and strict regulatory oversight would be required.

Similarly, firms could commit to accelerating the green transition in exchange for regulated but guaranteed rates of return. While not perfect, this strategy has precedent in how US electric utilities have become regulated monopolies.

Alternatively, franchise bidding could make firms pay to win a time-limited monopoly to achieve an accelerated green transition.

It was used to support the rollout of other natural monopoly infrastructure such as water networks, toll roads, cable TV and fiber broadband. It was creating a contest that Big Oil could not afford to lose.

Reusing the past

History offers relevant lessons. Electric vehicles were once a dominant automotive technology over a century ago. But they were quickly replaced with the arrival of affordable and convenient fossil fuel vehicles.

Emerging clean fuels hold the promise of quick refueling and long ranges combined with zero emissions, meaning the days of electric vehicles could once again be numbered.

Also remember that 19th century investors accelerated the transition to rail by buying canals that competed with trains. Then they either withdrew them or reused them as railway routes.

If these investors had anticipated motorized vehicles and roads replacing rail, they probably would have invested less. That is not to say that current generations have access to more railways than would otherwise be available.

The same is potentially true for the fossil fuel industry. Past investments in polluting infrastructures could benefit current and future generations if the reuse of these infrastructures accelerates the ecological transition.

This article is republished from The Conversation under a Creative Commons license. Read the original article.