In November 2021, U.S. Energy Secretary Jennifer Granholm initiated a request to the National Petroleum Council (NPC) to explore the broad implementation of low- and zero-carbon hydrogen energy across sectors including power generation, industrial processes, and transportation. Established by President Harry Truman after World War II, the NPC serves as a vital link between the oil and gas industry and the federal government, having expanded its scope in 1972 to include a wider range of stakeholders while continuing to facilitate dialogue with government entities.

Responding to Secretary Granholm’s request, the NPC published a “working draft” in April 2024 titled Harnessing Hydrogen: A Key Element of the U.S. Energy Future. The report casts hydrogen in a favorable light as an energy resource, beginning with the Executive Summary, which states: “Hydrogen can play a key role in reducing U.S. carbon emissions, particularly in . . . hard-to-abate sectors, at a lower cost to society than alternative abatement methods.”

The Executive Summary outlines four principal themes, with the first reiterating the report’s opening claim. The second emphasizes the need for “significant and immediate actions beyond current policies” to unlock various low-carbon-intensity (LCI) hydrogen demand sectors in alignment with U.S. net zero goals by 2050. Notably, one of the NPC’s key recommendations is for “the administration [to] work with Congress to establish an economy-wide price on carbon well before current incentives, such as 45V, expire.”

The notion that oil and gas companies support a price on carbon may come as a surprise to many, despite the NPC being on record advocating this since 2011. This proactive stance aligns with sound business strategy, as the NPC highlights the need for a carbon pricing mechanism that provides “predictable signals for decisions about long-lived capital investment.”

Predictability is undeniably beneficial for businesses, yet it is often overlooked why that is the case. When companies commit to future planning, they recognize that unanticipated changes can derail their strategic goals. On the other hand, those focused solely on the present may not see the importance of foresight.

Future forecasting can take many forms, from budget planning to workforce projections, with strategic planning being the most complex. This approach is based on the premise that a thorough analysis of future trends will allow a company to capitalize on opportunities and mitigate competitive risks. Unfortunately, the potential benefits of a strategic plan can vanish if unforeseen changes disrupt the business environment. Predictability allows for those rewards to materialize, while unpredictability can lead to dire consequences. A current example can be seen in the challenges facing offshore wind development in the northeastern U.S.

One might wonder, “Why would an industry advocate for a measure that could increase product prices?” Basic economics suggests that rising prices lead to decreased demand. However, oil and gas companies employ technically adept managers who understand the complexities of climate change, from molecular physics to the intricate feedback loops within the geosphere. In fact, few societal entities possess a better grasp of climate dynamics than these companies, as evidenced by extensive literature on the subject. A notable example is a 2023 article from the Harvard Gazette—“Exxon disputed climate findings for years. Its scientists knew better.”

With a clear understanding of climate change—despite public obfuscation—oil and gas executives are likely motivated to pursue a sensible future for their industry, one that is “phased-in and coordinated to minimize adverse impacts on energy security, reliability, and affordability,” as articulated in Recommendation 1.

The acknowledgment of the unsustainable nature of a fossil-fuel-dependent energy economy could actually be an opportunity for oil and gas companies. History shows that when large corporations lose their leading market positions, it often stems from overconfidence in the stability of current conditions.