By Rod Nickel and Nia Williams
CALGARY, Alberta (Reuters) -High electricity costs and patchwork regulations are holding back global efforts to reduce reliance on oil and gas, such as clean hydrogen, the CEO of Spanish oil major Repsol (BME:REP) said on Tuesday.
Carbon capture technology, however, is already cheap enough to justify large-scale construction in some places, CEO Josu Jon Imaz said at the World Petroleum Congress in Calgary. He did not identify the places where it was affordable.
"We need an open-minded regulator, not banning (some products), not promoting with a stick, promoting with a carrot," Imaz said.
High costs of electricity, used to produce hydrogen fuel without emissions, are an impediment to development, as are varying tax and regulatory policies around the world, Imaz said.
Imaz said the U.S. Inflation Reduction Act, which provides government incentives for development of low-emissions technology like carbon capture and clean hydrogen production, is a good model for the European Union to emulate.
Repsol has embarked on a broad plan to develop renewable energy and has plans to install wind, solar and hydro-power plants with a combined capacity of 20 gigawatts by 2030, and is set to invest a chunk of the $4.8 billion it raised from the sale of a 25% stake in its oil business into renewable projects.
On the same panel at the Congress - a gathering of global oil-producing companies and countries - the CEO of Canada's second-biggest airline WestJet said the aviation sector faces the biggest problem of eliminating its emissions due to the cost of sustainable aviation fuel (SAF).
"The last barrels of hydrocarbons produced on this planet are likely to be run on a jet engine," said CEO Alexis von Hoensbroech.
There is only modest SAF production currently, from feedstocks like oilseed crops, but larger-scale production is only realistic from electricity.
"I don't see this scaling up so far and the talk about sustainable aviation fuel is older than a decade," von Hoensbroech said.
Producing SAF from power would represent a need for more additional electricity than wind and solar alone can generate, but nuclear plants could in time, he said.
Aviation accounts for 3% of the world's emissions.