The Future of Hydrogen and Carbon Capture in Oil and Gas Decarburization

The Future of Hydrogen and Carbon Capture in Oil and Gas Decarburization

Kadugala James Mafula Aniceto¹, Florence Masai², Joshua Matanda Wepukhulu³

^1,2Candidate,Unicaf University in Zambia, Lusaka, Zambia

³Lecturer, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

DOI: https://dx.doi.org/10.47772/IJRISS.2025.908000433

Received: 08 August 2025; Accepted: 16 August 2025; Published: 15 September 2025

ABSTRACT

Purpose: This research examined and assessed two primary methods of emission reduction in the energy sector: hydrogen technology and carbon capture and storage (CCS). Concerns encompass issues related to demand and supply, including elevated production costs, storage limitations, and insufficient infrastructure for green hydrogen technology.

Methodology: This research examined the influence of policy and regulation on the decarbonization of the oil and gas sector, employing secondary research or desk-based research as its methodology. Data sources were from academic institutions, prominent corporations, and various government entities. Academic databases such as Google Scholar, JSTOR, ScienceDirect, and Springer offered peer-reviewed literature on energy policy, climate change legislation, and decarbonization technology.

Findings: It is found out that CCUS is a vital component in reducing emissions in oil and gas operations and is incorporated into policies as a strategic measure. This greenhouse gas and the study aim to demonstrate that CCUS may potentially capture up to 90% of industrial CO₂ emissions; however, the associated costs and the underdeveloped infrastructure have impeded progress. The implementation of CCUS has been more prevalent in industrialized nations than in developing ones; therefore, it is understandable why the latter encounter obstacles such as financial constraints or a lack of policies. Emerging methods like Direct Air Capture (DAC) represent recent advancements in addressing legacy emission challenges; nonetheless, it is imperative to lower costs and improve technology. A larger quantity must be implemented, and additional resources must be supplied by worldwide governments to incentivize widespread use of CCUS.

Unique Contribution to Theory, Practice and Policy: Regulatory measures are the primary catalyst in the decarbonization process within the oil and gas sector. Measures that encompass carbon pricing, emissions trading systems, and governmental incentives that have augmented investment in low-carbon technologies are advised; however, enforcement varies by region during the implementation of these schemes. It is imperative to elevate policy standards, control the transparency of initiatives, and foster collaboration to facilitate transformation. Future research should concentrate on the synergy of an optimized combination of hydrogen and carbon capture, utilization, and storage (CCUS), along with pertinent policies, to provide a coordinated optimal strategy for cost-effectively assisting the energy industry in its decarbonization efforts.

Keywords: Decarbonization, hydrogen technology, carbon capture and storage (CCS), Energy Transition, Oil and Gas, Renewable Energy, Climate Change

INTRODUCTION

Context of the Research

The shift to a low-carbon economy is gradually gaining importance due to climate change and the necessity to decrease greenhouse gas emissions. This research examines the implementation of hydrogen technology and carbon capture technology in the oil and gas industry, which are contingent upon economic feasibility and investment, therefore serving as the dependent variable. Economic feasibility pertains to the efficiency and viability of developing and implementing hydrogen production and carbon capture systems, influenced by investment patterns and the capacity of enterprises and governments to invest in these initiatives. These solutions are constrained by production costs, efficiency, and adherence to rules that encourage their utilization. Considering hydrogen’s potential for clean energy generation and the advancement of carbon capture technologies aimed at reducing CO2 emissions, it is crucial to assess their financial viability and appeal to investors. The viability of such solutions for decarbonizing the oil and gas sector is predominantly determined by the simultaneous scalability and affordability of these solutions.

The subsequent elements may indicate the necessity for an economic feasibility analysis when a nation or industry requires hydrogen and/or carbon capture systems. Qasim et al. (2024) contended that the submerged storage of hydrogen, in conjunction with carbon capture and storage technology, is highly effective for mitigating carbon emissions. However, they noted that the pathway to widespread implementation of such technology is protracted due to the necessity for substantial capital investment and infrastructure development. Basri et al. (2024) examine the distinctions and cost implications of hydrogen-based versus hydrogen-free carbon capture and utilization systems. Consequently, they conclude that, while long-term interests lie in sustainability, short-term interests prioritize cost efficiency with minimal focus on capital value (Basri et al., 2024). These studies indicate that further research is necessary on the potential of hydrogen and carbon capture technologies to realize the economic viability of decarbonizing the oil and gas industry.

Despite the emergence of these trends driven by prevailing environmental policies and net-zero objectives, the financial feasibility of such technologies must be determined. This article aims to analyze the economics of hydrogen and carbon capture, envisioning the future of the oil and gas industries and identifying essential economic and regulatory decisions required for future investment.

Statement of the Problem

Consequently, hydrogen technology and carbon capture have become essential for facilitating the oil and gas sector’s transition to a low-carbon economy and the decarbonization of its production processes. Nonetheless, these technologies have not delineated a definitive investment pattern primarily due to the capital-intensive nature of their application, insufficient supporting infrastructure, and erratic investment policies. While numerous studies address the technological feasibility of hydrogen production and post-combustion capture (Makarian et al., 2024), there is a paucity of literature concerning the economic viability and investment potential of these two systems. Most studies concentrate on comparing the economic significance of a certain technology related to hydrogen and carbon capture with the future oil and gas industries (Thapa et al., 2024). Moreover, a limited number of research are recognized to be linked to rising countries, while the alterations in investment structures and their viability in these markets continue to be examined. This poses hazards during activities like as policymaking, choices about capital inflows and outflows, and the adoption of technologies inside industries.

This debate has indicated that the prospects of hydrogen and carbon capture entail cost implications and potential incentives that can be scaled accordingly. The literature indicates that the generation of green hydrogen will remain costly due to the reliance on renewable energy feedstock, whereas blue hydrogen will necessitate significant capital investments in technology choices (Kanchiralla et al., 2024). The expense of CCS technology is significantly affected by government subsidies and policies that encompass the full spectrum of CCS programs and projects (Basri et al., 2024). The economic effects have prompted investors to question whether such technology will yield specific gains. Secondly, although many enterprises acknowledge the necessity of transitioning to low carbon energy, some have abstained from significant expenditures due to policy and market uncertainties. The lack of a clear investment signal, coupled with these master and financial frameworks, would hinder the advancement of hydrogen and carbon capture technologies, rendering them an unreachable aspiration for the global decarbonization initiative.

This research examines the following questions: It presents an economic analysis of mobility and storage technologies, hydrogen, and carbon capture technologies, while also providing a clear investment outlook for existing and prospective investors and governments.

Objectives of the paper

• To assess the role of hydrogen technology in accelerating the decarbonization of the oil and gas industry.
• To evaluate the effectiveness of carbon capture technology in reducing greenhouse gas emissions in oil and gas operations.
• To analyze the influence of policy and regulatory frameworks on the adoption of hydrogen and carbon capture technologies for oil and gas decarbonization.

LITERATURE REVIEW

Conceptual Framework

Theory of Energy Governance

As viewed from the angle of Energy Governance Theory, crucial policies and institutional arrangements intended for governing the energy sector and government interferences help bring the energy sector to a sustainable and de-carbonized state. Mentioning the role of governments, the significance of the international regulation, and the participation of interest groups involved in the process of transition towards the purpose of the energy transition that should be complemented with economic stability. For the purpose of this investigation, this theory is important as it will assist in the identification of consequences of regulation at the stages of the development of the decarbonization measures in the context of the oil and gas industry. They all explain how supply and demand interact with the climate change such as through carbon price floor, caps on emission and government subsidies on renewable energy. Consequently, the study can quantify the effects of policy instruments on the level of corporate investment in CCUS, hydrogen energy as well as the overall DE plans. Furthermore, Energy Governance Theory enlightens the effects of global climate agreements particularly the Paris Agreement on the policies at regional and national levels in a bid to predict the future plans of oil and gas sustainability policies.

Ecological Modernization Theory

The theory of ecological modernization (EMT) posits that economic progress and environmental protection are interconnected, since advancements in technology and institutions facilitate modernization. This indicates that issues such as carbon emissions from the oil and gas sectors necessitate scrutiny, which can be aligned with innovation, investment in clean energy, and the strategic efficiency of regulatory regulations. This aligns with the study’s objectives by elucidating how businesses and governments can implement low carbon energy policies without hindering growth. When broadening the area of technological solutions, one may concentrate on the following pillars: hydrogen energy, CO2 capture and storage, and digitalization. It primarily focuses on the feasibility of collaboration between the public and private sectors about decarbonization. Consequently, it examines the notion that a degree of deregulation may still be attainable despite the regulation of emissions. This theoretical framework will assist the study in analyzing how the implementation of an emissions incentive system, emissions trading, and regulatory flexibility enables the oil and gas industry to adopt environmentally sustainable practices.

Empirical Analysis

Hydrogen technology and the decarbonization of the oil and gas industry

Pecoraro (2024) examines the significance of biomass conversion and hydrogenation in mitigating emission intensity within Europe’s energy-intensive sector. The analysis aimed to evaluate PEC hydrogen generation in the context of the energy transition, seen through the lens of Sustainability Transition Theory. The experimental research design was employed to assess the efficacy of photo-electrochemical hydrogen production and its feasibility for industrial application. The study focused on renewable energy businesses and industrial refineries, employing purposive sampling of hydrogen and biomass energy sectors. Comparisons were feasible, enabling data collecting via relative efficiency assessments combined with statistical modeling, laboratory experiment development, and industrial case analysis. Xiaoxing and co-authors characterize photo-electrochemical hydrogen synthesis as a significant biomass-to-energy conversion, demonstrating its efficiency in their study. Nonetheless, numerous issues persist regarding the expenses and methods of customizing this system for industrial application. The authors of this study advised the enhancement of hydrogen technology use and the allocation of funding to power-to-gas plants for commercial purposes.

López-Basto, et al (2024) have proposed the application of low-carbon hydrogen technology in the European oil refining business. The study was founded on the Diffusion of Innovation Theory, elucidating the transformation process using low-carbon hydrogen in industrial applications. The research undertaken in the study was case study research, focusing on two large samples of oil refining enterprises picked purposively based on their advancement in hydrogen application. All data samples, operational records, policies, and suggestions from the refinery, as well as information gathered from interviews with key stakeholders, were collected and analyzed. The methodology employed involved case comparison and carbon footprint simulation. The integration of low-carbon hydrogen in refineries can diminish CO₂ emissions by 30-50%; yet, obstacles such as elevated costs and the design of current systems that partially impede hydrogen utilization persist. Consequently, the study advocated for the implementation of legislative incentives to subsidize and transition to hydrogen fuel processing within the government. It also recognized the large-scale characteristic necessitating investment in the long-term storage and distribution of hydrogen. Carbon Capture and Storage (CCS) technologies are identified as a potential solution for mitigating carbon emissions in downstream oil refining facilities; however, the economic feasibility and operational efficacy of CCS technology in these facilities in Nigeria remain uncertain. The following strategies, proposed by Odor, Odey, Okiemute, and Owunna (2024), are suggested for evaluating CCS technology in Nigeria’s downstream oil refining sector. The action was undertaken concerning the Carbon Lock-in Theory, which posits that transitioning from fossil fuel energy systems to carbon-free alternatives is challenging in poor countries. The study aimed to assess the feasibility and financial benefits of CCS implementation, employing descriptive research methods. Participants were selected from the categories of downstream oil refineries using simple random sampling, which included operators, engineers, and policymakers. The data was acquired using a questionnaire survey, key informant interviews, and a cost-benefit analysis, with the study employing both descriptive and financial analytical approaches. The study indicated that CCS may reduce CO₂ emissions by fifty percent, and although the initial capital expenditure was considerable and the policy framework inadequate, it was seen as a crucial consideration for African refineries. To alleviate cost worries, the researchers have proposed partial tax exemptions, public-private partnerships, and financial assistance. They emphasized that CCS regulations must be supported by both international and domestic legislation and that carbon capture should be pertinent to Africa’s oil and gas sector.

Carbon capture technology and the decarbonization of the oil and gas industry

Zafer (2024) has particularly emphasized the application of AI in the management of CCUS technology within the European oil and gas industry. The study aimed to address the research objective of enhancing sustainability and minimizing costs through the implementation of AI in carbon capture systems. The study aimed to assess the efficacy of AI-driven optimization models and was executed as exploratory research grounded in the Technology Acceptance Model (TAM). A purposive sample technique was utilized to determine the desired number and categories of CCUS within oil and gas businesses, incorporating data from diverse industry participants, case studies, and policies in the research. The use of CCUS enhanced by AI profiling resulted in a 25-40 percent increase in operational efficiency, simultaneously reducing emissions. Consequently, those technologies encountered challenges that impeded their extensive application. The report recommended the regulation of artificial intelligence through policy and investment in incentives for the adoption of artificial intelligence in carbon capture.

Pactat et al. (2024) examined the carbon sinks in offshore floating power plants to regulate the constrained carbon emissions in offshore energy generation in Europe. Independent experimental research was conducted to analyze exhaust gas recirculation and CO₂ absorption offshore, utilizing samples from EMT. The purposive sampling encompassed offshore energy firms and a marine engineer, incorporating surveys from laboratory-scale CO₂ capture simulations alongside observations from the offshore environment. Comparative analysis of CO₂ capture through performance modeling mechanisms revealed that crossflow absorption reduces emissions by around 60-70% without compromising energy efficiency. Consequently, due to these difficulties combined with elevated costs and lack of infrastructure, it became nearly geometrically unfeasible to integrate the cabinet design into the general population. Considering these challenges, the study advocated for two offshore processes with design modifications, CO₂ storage, the implementation of modular carbon capture units, and the integration of legislative incentives to improve offshore decarbonization.

Saldaña et al. indicate that the implementation of CCS at a wide scale encounters economic and policy obstacles in African oil refineries. Consequently, in accordance with the Carbon Lock-in Theory, this study employed a descriptive research approach to analyze the financial, technological, and regulatory aspects. The respondents comprised refinery managers, laboratory personnel, ministers, and policymakers identified through organizations, questionnaires, and interviews with key participant managers from various operational refinery companies and government case studies. Analysis of the existing US policy gap by statistical modeling revealed that CCS might decrease refinery emissions by 50%; however, its initial expenditures were substantial, and government-supported policies were little. The CCS study recommends that authors advocate for more subsidies for CCS, enhancement of policy tools, and public-private partnerships as methods for CCS developers in Africa to advance. These factors indicate that economic viability and regulation are crucial in the global decarbonization process.

Regulatory Framework and Decarbonization of the Oil and Gas Industry

Hoxha (2024) examined the effects of transition policies within the EU concerning oil and natural gas, specifically on the degree to which legislative measures facilitate decarbonization. The study employed Regulatory Transition Theory to examine changes in contingent environments associated with the establishment and administration of more complex systems in industry during energy transformation eras. A descriptive research design was employed to collect data to assess the impact of various regulations on sustainability across different businesses. This study was carried out in Europe and employed purposive sampling to pick organizations from the oil sector and other experts involved in policy management and emissions reduction. This study employed policies, interviews, and regulatory impact evaluations for its documentary analysis. In summary, the report commended the policy change aimed at urging the oil and gas industry to adopt cleaner energy; however, it highlighted that achieving this objective remains a significant challenge due to various factors, including elevated compliance costs and inconsistent law enforcement globally. The study indicated that such policies ought to be enacted in EU nations, accompanied by improved policy implementation through financial incentives and enhanced monitoring tools to achieve the EU’s energy decarbonization objectives related to the oil and gas industry.

Babber (2024) examined the effects of decarbonization initiatives on the oil tanker sector within the European shipping industry. This study especially aims to examine the effects of carbon legislation on the operating costs of activities in the transport sector, investment in the transport fleet, and operational performance. This study focused on the tactics employed by shipping corporations for emission reduction programs, in accordance with the theoretical framework. The questionnaire survey was administered to 60 participants, comprising shipping companies, regulatory agencies, and marine economists, specifically chosen from industries utilizing low-carbon fuel alternatives. This information was obtained through personal interviews with industry personnel, policy examination, and market trend analysis. Surveys indicated that additional measures, aside from increasing emission standards, resulted in a 15-25% rise in both variable and fixed operational costs; concurrently, the long-term efficacy of LNG and hydrogen-powered vessels was demonstrated. The study delineates the efficacy of financial incentives for green ship conversions, a phased implementation of regulations, and further research on advanced maritime fuels to enhance financial viability and reduce emissions.

Oruwari et al. (2024) performed an evaluation of the legal framework and sustainable practices within Nigeria’s oil and gas sector, focusing on energy security and decarbonization. The Energy Governance Theory facilitated the application of a descriptive research methodology to assess policy successes and failures, as well as regulatory shortcomings, which necessitated the prioritization of Nigeria’s oil-dominated industry. The study’s subject was chosen from the primary sectors of oil exploration, encompassing oil companies, decision-makers, and the principal regulatory authorities. This study utilized surveys, interviews, and policy analysis to gather pertinent statistical data about the Nigerian energy sector. The challenges associated with decarbonization attempts and adopted legislation are attributed to inadequate enforcement, insufficient investment in renewable energy, and a significant reliance on fossil fuel sources. The study recommended that regulatory authorities enhance current regulations and enforcement in the sector to provide clearer guidance on implementing a specific carbon price. Additionally, it suggested increasing the private sector’s budget allocation for low-carbon energy to facilitate the transformation of Nigeria’s oil industry.

Evaluation of Current Literature

This paper, similar to other analyses of policies and regulations in the decarbonization of the oil and gas industry, addresses regulatory concerns and their effects on the economy and technology. The text discusses the impact of geopolitical factors, energy security risks and prospects, trade policies, and political instability on the decarbonization process. It has become evident that much of the literature originates from rich economies, disregarding the impact of decarbonization policies and initiatives on oil-importing emerging economies, notably those in Africa and Latin America. Moreover, there is a scarcity of research analyzing the influence of volatile global oil prices, regional crises, and diplomatic trade ties on the execution of decarbonization legislation. Consequently, it is essential to foster a constructive comprehension of the geopolitical lessons to enhance regulatory effectiveness.

These pertain to the rationale in the literature regarding the feasibility of decarbonization policies. Some findings suggest that carbon pricing and enhanced environmental regulations generate incentives that promote sustainable revenues and innovation, while other reports highlight that high compliance costs deter investment in clean energy technology. This similarly applies to long-term decarbonization, as uncertainty persists on the preference for market-driven versus government-driven decisions concerning the most effective policy instruments. Furthermore, while numerous overviews address macro-level changes, scant information exists concerning organizational decarbonization. These issues can be partially addressed through locally grounded research, multidisciplinary analysis of existing difficulties, and a literature assessment of potential strategies to facilitate the decarbonization of the oil and gas sector for greater global impact.

Knowledge Gap

In terms of policy and regulation, it was demonstrated that existing measures and actions aimed at decarbonizing the oil and gas industry mostly focus on governmental initiatives and regulations, alongside technological advancements. Nevertheless, there is a paucity of material about the enforcement of compliance with established decarbonization regulations, particularly in developing nations. Such publications place significant focus on policy formulation, but scant attention is given to the implementation process, monitoring mechanisms, and enforcement timelines; hence, doubt persists over the efficacy of these policies in mitigating emissions.

Two areas have still to be explored in research: geopolitics and its impact on decarbonization plans. Although extensive research exists on climate and regulatory announcements and policies, significantly less has been published regarding trade policy, political instability, and energy security challenges in decarbonizing oil-exporting nations. This aids in recognizing geopolitical challenges to enhance the development of improved global cooperative rule of law in response to political or economic shifts.

Special attention must be directed towards the inadequate examination of the economic factors related to the decarbonization of the oil and gas industry. Carbon pricing and incentives for clean energy investments present capital investment hurdles. As previously noted, there exists information regarding carbon price and incentives, as well as compliance costs associated with the transition to clean energy, which serve as barriers. Nonetheless, decarbonization measures frequently provide short- to mid-term effects, and the majority of studies fail to present affirmative evidence about the feasibility of maintaining substantial profits for oil and gas companies without transitioning intermediates to carbon-neutral alternatives.

Nevertheless, several articles emphasize government-level initiatives while neglecting corporate-level ones. Consequently, there is a want for additional case studies examining the effectiveness of decarbonization policies and the implementation of these strategies by oil and gas companies through technological advancements, financial restructuring, and emissions reporting. To this end, a comprehensive and interdisciplinary research program is essential to provide policy research, cost-benefit analysis, and actual company case studies to enhance the efficiency and economic feasibility of existing and necessary decarbonization policies and actions.

METHODOLOGY

Research Methodology

This research examined the influence of policy and regulation on the decarbonization of the oil and gas sector, employing secondary research or desk-based research as its methodology. The assessment of regulatory consequences on the decarbonization process utilizes publications, business intelligence reports, government documents, international journals, and archives. The study has dismissed the use of primary data gathering, as it does not obtain first-hand and original data; rather, it relies solely on data sourced from scholarly journals, institutions, and policy assessments (Bryman, 2022).

Desktop research can be justified as it is more cost-effective and dependable for doing extensive data analysis without the necessity of fieldwork. Furthermore, particularly regarding policies and regulatory frameworks that compete globally over varying timeframes, a secondary data research approach provides an almost contemporaneous perspective on the latest legal mandates and energy transformation strategies in different nations (Creswell & Creswell, 2023). Decarbonization in the oil and gas sector is a substantial and intricate endeavor, influenced by geopolitical variables; this approach facilitates the evaluation of potential regulatory conditions in specific states or groups of states (IEA, 2023).

Methods of Data Collection

To enhance the credibility of the data utilized in this study, it can be sourced from many origins, thereby providing a diverse yet comprehensive perspective on oil and gas decarbonization programs. The cited references originate from academic institutions, prominent corporations, and various government entities. Academic databases such as Google Scholar, JSTOR, ScienceDirect, and Springer offer peer-reviewed literature on energy policy, climate change legislation, and decarbonization technology, as noted by Wang et al. (2022). These materials will be essential in understanding the diverse theoretical postulates and actual study evidence of oil and gas policies. He deemed it imperative to acquire further insights into energy advancements, regulations, and fluctuations in the global oil market from several research agencies, including the IEA, OPEC, EIA, and the World Bank (IEA, 2022). The papers reveal the indices of regulatory effectiveness from analytical and methodological perspectives.

This research utilizes data from national energy agencies globally, the European Union, the African Union, and other regulatory authorities to analyze regional inequalities in decarbonization efforts. This encompasses mechanisms reliant on carbon pricing, emission ceilings, and the allocation of subsidies and incentives for low-carbon technologies (World Bank, 2023). The use of many sources will ensure that the study provides a comprehensive analysis of the policy framework and the economic and geopolitical ramifications of decarbonization activities.

Criteria for Literature Selection

A critical approach to literature is adopted to ensure the data acquired is sufficient and precise. Only scholarly articles from the years 2022 to 2024 will be utilized, as the information required pertains exclusively to the current year. The criteria are described as follows: They appear to facilitate the targeting of published studies about the magnitude of oil price volatility and its implications for supply networks and geopolitical threats. The research undertaken by Creswell & Creswell (2023) identifies the policy measures that influence changes in industries and technologies during the decarbonization process. To enhance comprehension of these flexible rules, comparing policies across various regions are also favored in the decadal research.

Consequently, articles published prior to 2022 and those not related to decarbonization initiatives in the oil and gas sector were omitted. The omission of publications presenting the technically abstract theoretical framework of engineering in oil extraction, devoid of a policy perspective (Wang et al., 2022). The identification of inclusion and exclusion criteria enhances the validity of the literature by concentrating the research on publications published during the last five years pertinent to the study’s subject.

Methodology for Data Analysis

In summary, Thematic Analysis is a prevalent method for qualitative data analysis that emphasizes patterns and trends in concepts related to regulatory control policies, market reactions, and the geopolitical implications of decarbonization. The subsequent sections of this research delineate the literature findings categorized by policy effectiveness, economic cost, and international harmonization to ascertain the observed experiences and perspectives. The comparative technique is employed to assess the decarbonization levels of oil and gas regulations in Europe, Africa, and globally. This facilitates the assessment of disparities in gaps, practices, and economic factors to achieve carbon emission neutrality across several sectors (IEA, 2023). This study of decarbonization categorizes it topically and comparatively analyzes how policies influence industrial development regarding economic impact and social responsibility (Creswell & Creswell, 2023).

Constraints of the Research

Consequently, secondary research can be beneficial in the process; yet, it possesses certain limits when examining global decarbonization programs. Nonetheless, secondary data has considerable dependability; nonetheless, the sources of such data may be untrustworthy and inconsistent. In this context, it is essential to verify information pertaining to this position to prevent disparate institutions from disclosing inconsistent statistics and policy impacts (Bryman, 2022).

Moreover, geopolitical hazards and energy policies influence the development of wind power plants, potentially leading to a revised framework during or subsequent to the study. This constraint restricts long-term generalizability primarily due to the influence of political factors, potential economic downturns, and innovations on policy decisions (World Bank, 2023). A limitation is the absence of direct engagement with other industry players. The study will utilize secondary data sources, focusing on articles, reports, and journals, indicating that the analyzed results may not reflect the current strategies employed by corporations or the latest modifications in regulatory systems (Hudson & Heritage House, 2022).

Likewise, the recognition of many sources, the integration of new samples, and the rigorous review of policy assessments contribute to mitigating the study’s hazards. Consequently, more study should involve conducting stakeholder interviews and evaluating present policies to render the suggestions about the viability of decarbonization measures more realistic and feasible (IEA, 2023).

RESULTS AND DISCUSSION

Hydrogen Technology and the Decarbonization of the Oil and Gas Industry

Hydrogen has been recognized as a potential alternative for the oil and gas industry to mitigate its carbon footprint, alongside the exploration of green hydrocarbons. Green hydrogen, generated through water electrolysis utilizing renewable energy, is the most efficient variant; however, its production remains costly, necessitates substantial infrastructure development, and faces storage limitations that hinder its widespread international adoption (IEA, 2023). Germany and Japan have implemented policies to promote the building of hydrogen production facilities and distribution stations (World Bank, 2023). However, hydrogen lacks a global market that would allow these expenses to be distributed to achieve economies of scale, as proposed by Wang et al., 2022. Initially, regarding energy density, it was found that hydrogen fuel is less dense compared to fossil fuels, necessitating further improvements in the various storage and transit compartments (Creswell & Creswell, 2023).

The implementation of hydrogen technology in the oil and gas sector is influenced by governmental policies and regulations, as well as carbon allowances established by the Paris Agreement (IEA, 2022). Developed countries have allocated resources to support the product through subsidies and laws; but, in developing nations, the substantial costs associated with procuring hydrogen goods represent the most significant impediments to their development (OPEC, 2023). The contemporary oil and gas sector is contemplating the integration of hydrogen into its production processes; yet, the cost-effectiveness of hydrogen compared to natural gas remains uncertain (Bryman, 2022). Nonetheless, the adoption of green hydrogen remains in its developmental phase; certain necessary investments for its expansion, such as hydrogen pipelines and filling stations, are constrained (IEA, 2023). To identify the critical challenges necessary for becoming a prominent market participant in the decarbonization of the oil and gas sector, it is vital to highlight the challenge associated with establishing an effective hydrogen supply chain.

Blue hydrogen, generated from natural gas through carbon capture technology, is one of the most frequently proposed strategies for the quick advancement of hydrogen use (Wang, 2022). Proponents of blue hydrogen contend that it serves as an effective transitional fuel to supply energy until green hydrogen can be developed and established (International Energy Agency, 2022). However, skeptics argue that methane emissions during the manufacture of natural gas utilized in blue hydrogen synthesis may be equally detrimental as the consumption of conventional gas (OPEC, 2023). Secondly, the capital intensity associated with blue hydrogen production is low due to uncertainties over future legislation that could potentially prohibit hydrogen derived from fossil fuels (World Bank, 2023). This complicates long-term planning within the hydrogen energy value chain (Bryman, 2022).

Nonetheless, hydrogen technology remains integral to the oil and gas sector, which aims to eradicate carbon emissions; consequently, research persists on optimizing the production of hydrogen to enhance its efficiency and cost-effectiveness (2023). Methods such as solid-state hydrogen storage, high-temperature electrolysis, and hydrogen fuel cells have significantly facilitated the practical application of hydrogen (Wang et al., 2022). The alteration in policy on the increased exposure of additional policies addressing hydrogen adoption, particularly in emerging markets, will be a crucial element in the transition (IEA 2023). The subsequent recommendations for further study include the improvement of hydrogen storage, the establishment of global hydrogen markets, and the assessment of hydrogen production efficiency in future decarbonization efforts (World Bank, 2023).

Carbon Capture Technology and the Decarbonization of the Oil and Gas Industry

Carbon capture technology employed to address emissions from the oil and gas sectors involves trapping these pollutants to avert their release into the atmosphere (IEA, 2023). Various Carbon Capture Utilization Technologies (CCUS) are currently implemented in oil refineries and power plants, demonstrating the potential to reduce CO₂ emissions from industrial sources by 80-90% (OPEC, 2023). Consequently, some issues associated with CCUS include: A significant drawback of CCUS is its demand for supplementary capital, energy consumption, and infrastructure, which complicates the technology’s global application (Wang et al., 2022). The phrase CCUS projects is utilized in industrialized metropolitan regions like North America and Europe through government funding and carbon pricing policies, but poor nations face challenges in adopting CCUS due to financial and technical limitations (World Bank, 2023).

CCUS is regarded as a factor that perpetuates reliance on fossil fuels rather than adopting renewable energy sources, as indicated by the IEA in 2022. According to certain individuals, it is necessary in situations where full electrification is now unfeasible, such as in the cement and steel industries. The aforementioned research demonstrates the feasibility of integrating CCUS with hydrogen technologies and renewable energy to mitigate the identified disadvantages, hence facilitating a balanced approach to global economic decarbonization (Bryman, 2022). This is applicable to numerous programs, and the challenge thus lies in becoming CCUS economically viable, as many of these initiatives now rely on subsidies (World Bank, 2023).

The previously indicated strategy has several obstacles; nonetheless, the novel technique of Direct Air Capture (DAC) has emerged as a viable method for directly removing CO₂ from the atmosphere (IEA, 2023). While Carbon Capture, Utilization, and Storage (CCUS) demonstrates a reduction in CO₂ emissions at specific industrial processes, Direct Air Capture (DAC) possesses the ability to capture CO₂ that has already been released, rendering it highly effective for carbon neutralization (OPEC, 2023). Despite its efficacy, DAC is energy-inefficient and has not gained widespread adoption in regions with elevated energy costs, which are common in developing countries (Wang et al., 2022). Consequently, it is imperative for the bank to augment DAC while reducing its expenses in the continuous pursuit of decarbonization (World Bank, 2023).

The IEA (2022) delineates various policy measures essential for enhancing the adoption of CCUS. The primary level of policy support involves creating a conducive environment for the technology within the country. The secondary level entails financial assistance, while the tertiary level focuses on facilitating the transfer of CCUS technologies to emerging markets. This indicates that enterprises should engage in diverse collaborations to minimize costs, hence facilitating the implementation of CCUS and achieving the established emission reduction targets as proposed by Wang et al., 2022. The document asserts that greater emphasis must be placed on issues concerning carbon storage safety, the further reduction of costs associated with CCUS, and the enhancement of carbon capture and storage technologies to ensure their viability for future global decarbonization efforts (World Bank, 2023).

CONCLUSION

This study elucidates the necessity for transformation within the oil and gas sector, emphasizing the imperative to decarbonize through the adoption of hydrogen technology, which is contingent upon effective carbon capture technologies and robust legislative frameworks. Consequently, regarding emissions, the hydrogen strategy can be considered effective when green hydrogen is produced from renewable energy sources. Nonetheless, the constraints favor somewhat large-scale production because to elevated production costs, minimal infrastructure, and a restricted global supply network. Research indicates that blue hydrogen represents a compromise; yet, issues related to methane emissions and product longevity render it unfavorable in the long term. The government’s subsidization of hydrogen and the improvement of storage and supply chain systems are key aspects that will facilitate the decarbonization of oil and gas by 2023, as indicated by the IEA.

CCUS is a vital component in reducing emissions in oil and gas operations and is incorporated into policies as a strategic measure. This greenhouse gas and the study aim to demonstrate that CCUS may potentially capture up to 90% of industrial CO₂ emissions; however, the associated costs and the underdeveloped infrastructure have impeded progress. The implementation of CCUS has been more prevalent in industrialized nations than in developing ones; therefore, it is understandable why the latter encounter obstacles such as financial constraints or a lack of policies. Emerging methods like Direct Air Capture (DAC) represent recent advancements in addressing legacy emission challenges; nonetheless, it is imperative to lower costs and improve technology (World Bank, 2023). A larger quantity must be implemented, and additional resources must be supplied by worldwide governments to incentivize widespread use of CCUS.

Consequently, one can ascertain that regulatory measures are the primary catalyst in the decarbonization process within the oil and gas sector. Measures encompass carbon pricing, emissions trading systems, and governmental incentives that have augmented investment in low-carbon technologies; however, enforcement varies by region during the implementation of these schemes. This study seeks to compare and analyze the obstacles faced by emerging countries, particularly oil-exporting nations, in the pursuit of sustainable development expansion. It is imperative to elevate policy standards, control the transparency of initiatives, and foster collaboration to facilitate transformation. Future research should concentrate on the synergy of an optimized combination of hydrogen and carbon capture, utilization, and storage (CCUS), along with pertinent policies, to provide a coordinated optimal strategy for cost-effectively assisting the energy industry in its decarbonization efforts (OPEC, 2023).

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