The Oil and Gas Climate Initiative, a group of 10 oil and gas CEOs representing 25 percent of the industry’s global production, came together in London to sign an agreement committing to invest $1 billion over the next ten years to accelerate commercial deployment of low carbon energy technologies. Their primary focus will be carbon capture and storage and reducing oil and gas methane emissions.
Not coincidentally, this accord came the same day that the Paris Climate Agreement enters into force.
Is $1 billion enough? Of course not. The emission reduction goals the world has set in Paris require nothing less than a fundamental transformation of our global energy system. We must dramatically reduce the total amount of fossil fuels we use – coal, oil, and natural gas – and dramatically ramp up deployment of renewable resources – solar, wind – and aggressively pursue energy efficiency and vehicle electrification.
Jeremy Legget, chairman of the Carbon Tracker Initiative, points out that “the world has to mobilize trillions of dollars a year for clean energy” within a 10 year time frame if the Paris goals are to be realized. Collectively, the ten OGCI CEOs signing today’s accord already plan to spend more than $90 Billion in capital this year alone just doing business as usual, so even by the standards of their own capital budgets, a $1 billion commitment over a decade is a drop in the bucket.
As Global Leaders Step Forward, U.S. Companies Dig In
But make no mistake, the OGCI accord is a big deal. I say this for two reasons. First, a core group of the world’s largest oil and gas companies are now squarely on record in support of the Paris goals. And the OGCI is more than just a European old boys club. Besides leading European producers like BP, Shell, and Total, the group includes China National Petroleum Company, Saudi Aramco, and Mexico’s PEMEX (and the CEO of BP happens to be an American).
The global oil and gas industry may not yet be playing to full potential, but they are now clearly in the climate game, and that deserves applause.
It’s equally important to note that not a single American-based oil and gas producer has joined this initiative. This speaks volumes about just how out of step the U.S. oil and gas industry is with global peers. If I were an investor, I’d be worried about whether the U.S. companies are taking the necessary steps to survive in the new energy future. Today’s announcement certainly suggests they are working hard at being left behind.
Methane in the Mix
The new OGCI accord is also significant in that it specifically highlights the importance oil and gas methane emissions. Methane is responsible for 25 percent of the warming our planet is experiencing today, and the global oil and gas industry is a major source of these emissions. EDF’s work on this issue in North America has shown over and over again that there abundant, low cost opportunities for the industry to make major methane reductions, and we expect the same is true is globally.
OGCI’s express commitment to pursue better science on the magnitude and sources of oil and gas methane emissions is important. The scientific studies we’ve been part of in the United States clearly show that the official U.S. government methane inventory was understating the magnitude of the problem. A global effort to better measure and report oil and gas methane emissions is likely to show similar results.
Transparent Accounting, New Measurement Technology
Better data and greater transparency is critical to understanding the full dimensions of the problem and achieving accountability for both emissions and reduction commitments. The 10 OGCI companies assert that they have already achieved a 55% reduction in their methane emissions since 2008. But absent greater disclosure of both the methods of data collection and the data itself, we have no way of knowing whether this is true. Parallel efforts, like the Oil and Gas Methane Partnership (OGMP) should help improve the quality and transparency of oil and gas methane data, but OGCI’s commitment to better science is essential.
Similarly, the OGCI commitment to pursue the commercialization of methane reduction technologies and practices can only help make a low-cost reduction opportunity even more affordable, paving the way for methane emission reductions beyond what we know to be cost effective today. Several OGCI members are participants in our Methane Detectors Challenge, which is pioneering innovative methane detection technology that can lower the cost of leak detection and repair at oil and gas facilities, one of the most critical methane reduction strategies we know of.
The three countries of North America – Canada, the United States, and Mexico – have each committed to achieving a 40-45% reduction in oil and gas methane emissions by 2025. To put that in context, a 45% reduction in global oil and gas methane emissions will have the same impact on the climate over 20 years as closing one-third of the world’s coal fired plants. OGCI’s efforts to lower the cost of reducing oil and gas methane emissions could enable us to get beyond to a 45% reduction and beyond, even faster, and at less cost.
CO2 + CH4
Let’s be clear. The global oil and gas industry must take aggressive action to reduce methane emissions and carbon dioxide emissions simultaneously. Both are essential. There is no avoiding the fact that are limits to how much fossil fuels can be burned consistent with achieving the goals of the Paris Agreement. No amount of methane emissions reductions will change this essential fact.
But OGCI’s commitment to reducing oil and gas methane emissions demonstrates that leading global oil and gas companies are aware of the necessary steps that need to be taken to slow the rate of warming now, even as they wrestle with the transition to a fundamentally lower carbon energy future over the long term. We’re ready to help them do both.
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