Is the oil and gas industry serious about climate?
Hundreds of diplomats and heads of state will converge on the United Nations this week to discuss urgent actions to prevent catastrophic climate change. Just a few blocks away, CEOs and other top executives of the world’s largest oil and gas companies will host a meeting of their own, where they will also be talking about the climate, aiming to showcase the industry’s efforts to address greenhouse gas emissions.
It’s just a 10-minute walk between the two, but the symbolic journey is more like a thousand miles — and oil and gas producers are still struggling with the first steps. Their New York gathering, part of something called the Oil & Gas Climate Initiative (OGCI), could reveal important signs as to how serious they are about picking up the pace.
That challenge is stark: The world’s economy needs to reach net-zero greenhouse emissions by the end of this century if we are to have better-than-even odds of limiting warming to two degrees. Net-zero means not putting more carbon into the atmosphere than we can take out. To hit the global goal, Europe, the U.S. and other advanced economies must get to net-zero by 2050.
Convincing a rising generation
Greta Thunberg and millions of others around the world who took to the streets this past Friday have only amplified the stakes. Now the demographically dominant generation on our planet, this rising cohort is not the least bit awed by the majesty of global corporations with colorful logos and glossy marketing. They rightly fear a future of heat, drought, storms, rising seas and vanishing species, and they know that emissions from the production and use of fossil fuels are the cause.
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And they don’t believe the corporations who brought us to this point, are interested in — or capable of — now taking us in a fundamentally new direction.
By this measure, just about anything the OGCI CEOs say this week will ring hollow. These days, many oil companies try hard to talk a good talk about climate. But time and again, we see accounts of them working below decks to undermine meaningful action. And it’s not just the marchers who need convincing. Investors, policy makers and other so-called “adults” in the room are growing increasingly skeptical of gap between the industry’s words and its deeds.
Many well-meaning executives have tried to persuade me that stories like these don’t capture the nuance or truth about a particular situation. But the gap between industry rhetoric and action requires way too much explaining to be credible.
Setting the bar
So what can an oil company CEO offer up this week to be taken seriously at a climate summit? Let’s start with something easy and obvious: Methane from human activities is causing at least a quarter of the current warming and the oil and gas industry is responsible for roughly a third of this, attributable to flaring, venting and leaks.
According the International Energy Agency, the oil and gas industry can achieve a 75% reduction in methane emissions with technologies commercially available today, with two-thirds of this at no net cost to industry. Simply put, cutting oil and gas methane emissions is the single fastest, most cost-effective thing we can do to slow warming right now.
Last September OGCI companies offered up a solid commitment to reduce methane pollution from oil and gas operations — achieve a 0.25% emission rate by 2025, on the path toward 0.2% soon thereafter.
A year later, what progress have they made toward achieving this goal? Will the numbers they report be based on actual measurements at facilities, rather than engineering estimates that numerous peer-reviewed science studies have shown are often wildly inaccurate? And will OGCI companies finally make good on the need to extend their commitment beyond the facilities they operate to include all facilities in which they have an ownership share?
Answers to these questions will tell whether OGCI companies back ambition with action.
No amount of individual voluntary effort can substitute for having strong public policies in place to drive reductions across the economy. Leading oil and gas companies have said for years that if policymakers are serious about reducing greenhouse emissions, they should simply set a price on them. I agree.
Where methane is concerned, oil and gas producing nations should be looking to adopt explicit methane reduction targets as they revise their nationally determined contributions under the Paris Agreement in preparation for next year’s Glasgow climate talks. It’s time for OGCI companies to put real muscle behind support for policies that turn their individual efforts into systemic change.
Finally, achieving a net-zero carbon future means more than reducing methane. It means not putting more carbon dioxide into the atmosphere than we can take out. And the fact is, even if we achieve the most ambitious reductions in emissions, scientists say we still need to develop new and better technology to pull excess CO2 out of the atmosphere. OGCI companies have been talking up carbon capture and storage; now they need to show us their operational and investment strategies scaling up to meet net-zero milestones.
There are smart people inside these companies who know that there’s an existential challenge on their horizon. Not just from advancing climate policies, but also in the growing competition from cleaner, more efficient energy choices. They’ve seen what happened to coal, where the talk these days is about managed decline. It’s up to the industry itself to show that it’s serious about the kinds of changes it likes to talk so much about.
Is it realistic to think oil and gas companies could really be part of the solution? Lots of reasonable skeptics say no. If you’re the CEO of a company that wants to maintain a place in a sustainable economy, real and consistent actions are what is necessary to prove your case.