Decarbonization in the Oil and Gas Sector: The Role of Power Purchase Agreements and Renewable Energy Certificates

Abstract

This study examines the adoption of Power Purchase Agreements (PPAs) and Renewable Energy Certificates (RECs) as strategic tools for decarbonization in the oil and gas sector. Focusing on the 21 largest oil and gas companies across Europe, North America, and South America, the analysis reveals varied adoption rates and strategic emphases between regions. European companies exhibit robust integration of PPAs and RECs to expand renewable energy capacities and reduce emissions, aligning closely with aggressive EU climate policies. In contrast, American companies show a cautious approach, focusing more on emission reduction from existing operations than on renewable expansions. The study’s findings indicate that, while both regions are advancing in their decarbonization efforts, European companies are leading with more defined renewable energy targets and comprehensive low-carbon strategies. This research contributes to understanding how different regulatory environments and market conditions influence corporate strategies towards sustainable energy transitions in traditionally hard-to-abate industries.