Abstract
A new perspective on carbon economics is developed and applied to demonstrate that oil and natural gas producers in North Dakota (ND) have an opportunity to make a profitable transition to wind energy producers. ND’s oil and gas producers can fund this black into green (BIG) transition by: first, investing a fraction of their revenues into wind energy farms; and second, reinvesting a portion of revenues from the wind-generated electricity. Over a period of 40 years, 100% of the greenhouse gas emissions associated with the production and consumption of ND’s oil and gas could be offset with an investment of 10% of both hydrocarbons’ value and a reinvestment of three cents per kilowatt-hour of wind-generated electricity. At the end of the 40-year period, the resultant 155-gigawatt wind farm would have offset 13.4 × 109 tons of carbon dioxide equivalent and cost $9.90/ton of offset carbon dioxide equivalent. This BIG example demonstrates the financial and environmental benefits of ND’s oil and gas producers transforming into renewable energy producers; hence regulators, hydrocarbon producers, and utilities should take note and think BIG. The reconfigurable, Excel-based model used herein is provided to allow readers to extend this example from ND to other regions, hydrocarbons, and green energy sources.
Highlights
Climate change and global warming are estimated to put between $2.5 and $24 trillion of global assets at risk [1]
This paper develops a method for quantifying the minimum greenhouse gas (GHG)-emissions penalty required to incentivize hydrocarbon producers to participate in the proposed black into green (BIG) approach
We present a hypothesis that oil and gas companies can profitably invest in renewables, while offsetting the carbon they produce, thereby achieving an economic Black Into Green transition
Summary
Climate change and global warming are estimated to put between $2.5 and $24 trillion of global assets at risk [1]. International consensus has been building that global warming should be limited to well below 2 °C warmer than pre-industrial temperatures [5,6,7] To meet such targets, some economically recoverable reserves of fossil fuels, especially coal, must remain unused [8,9,10]. Unions, regions, and firms who depend on the existing production systems are understandably concerned about how decarbonization will affect their livelihoods [15,16,17] Such concerns are unified by narratives like ‘jobs vs environment’ [15,16] and are most polarizing in regions in which the costs of climate mitigation will be concentrated.
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