In a study on Oil and Gas Diversification for Scottish Enterprise, Pale Blue Dot Energy highlighted the opportunity for Scotland to deploy surplus oil and gas capability on emerging future energy sectors including Wave and Tidal, CCS, Hydrogen and Heat. There is too little focus on Diversification, particularly in the North East. Oil and gas businesses should develop Diversification strategies in order to manage the long-term decline in oil and gas driven by price uncertainty and the Low Carbon transition.
The oil and gas industry is currently in crisis — supply exceeds demand and has resulted in oil prices falling to less than half their value of 12 months ago. According to the Financial Times in June 2015, this has led to postponement or cancellation of ca. $200 billion worth of projects worldwide (Adams, 2015). The industry is restructuring and many staff are being laid off; figures quoted in June 2015 indicate 150,000 worldwide (Eaton, 2015).
Recently, the fossil fuel divestment movement has appeared frequently in the public domain. It has grown significantly since its introduction as a radical student-driven campaign. With the support of established organisations and institutions, fossil fuel divestment has grown into a mainstream movement that is demanding the attention and response of individuals, institutions, investment houses, companies and governments across the globe.
Are fossil fuels the sub-prime assets of the future? The debate about the long term risk of investments in fossil fuel businesses is moving from a fringe moral debate initiated by the CarbonTracker team in 2011 into a mainstream investment risk debate. Recently, powerful interventions from Bank of England Governor Mark Carney, Energy Secretary Ed Davey and even former BP CEO John Browne have highlighted the issue. Climate change negotiations for Paris 2015 could be pivotal.