Adapting Innovation Strategy of Major International Oil and Gas Companies to the Evolving Climate Agenda

Abstract

AbstractAchieving international climate goals depends on scaling up the use of clean energy technologies to reduce greenhouse gas emissions. International oil and gas companies disposing of considerable R&D budgets and deep expertise in innovation management could contribute to the development of a wide range of technologies to minimize emissions from the energy sector in which they operate. Adapting innovation strategy to climate agenda can in turn provide higher sustainability. This study aims to identify best practices enabling efficient integration of clean energy technology projects in innovation portfolios to support decarbonization and diversification efforts of oil and gas companies. Research has been conducted through a comprehensive comparative analysis of innovation strategies of major international oil and gas companies in the following areas: approaches to the organization of the management system of innovation activities; directions of technological development. Aspects considered throughout innovation development life cycle include strategic planning of innovation activities, technology forecasting system, elements of innovation ecosystem and role of open innovation, financing of innovation activity, commercialization of innovations. Authors identify four main strategic directions of climate agenda adaptation, which determine the focus of technological development: offsetting emissions from existing operations, transforming current operating activities, transforming product supply and transforming business model. Relevant R&D projects are implemented through a variety of mechanisms including in-house research and open innovation. Authors have revealed the increasing importance of corporate venture capital investments and multilateral technological partnerships for the development of clean energy technologies. The analysis of the innovative development directions of leading foreign oil and gas companies permits to conclude that the innovation programs include a range of technologies that are essential in the context of the energy transition, decarbonization trends and the development of a circular economy. Meanwhile, decisive energy technology landscape supporting energy transition is highly uncertain due to existence of a wide range of alternative technological options based on early-stage technologies.KeywordsClimate agendaDecarbonizationTechnology developmentInnovation managementCorporate venture capitalJEL ClassificationO32P18Q20Q42Q55