BLOG: The Climate Crisis – a decade of delivery from the oil & gas industry?

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“Companies are fundamental, but the government sets the pace, and the electorate gives the government a mandate.”

I recently attended the International Petroleum Week which was, astonishingly, all about climate change. I remember a few years ago I attended the annual conference and the CEO of Shell Ben Van Beurden stood in front of the suited and booted audience for his keynote speech and said: ‘the oil and gas industry needs to talk about climate change’ and it felt like an important moment.

Anyway, this year it was no-holds-barred lobbying of the oil industry to actually do something significant about climate change now most fossil fuel companies (I say most as ExxonMobil and Chevron were highlighted as notable exceptions) do, finally, acknowledge its existence.

Do something or die, was the overriding theme. (FYI in terms of dying I am referring the oil companies and not the human race). This motif was perhaps best illustrated by Andy Kinsella from Mainstream Renewable Energy when he played the opening to The Doors’ “This is the end”- ‘this is the end, my beautiful friend, the end…’ to an infographic that showed the increase in anomaly climate events globally since the mid-20th century. It started with sparse little dots and ended with huge blobs all over the screen.

DECADE OF DELIVERY 

Besides Kinsella’s little show, what I did think was particularly catchy was The Climate Group’s Joan MacNaughten calling this a ‘decade of delivery’.

A decade of delivery. I like it very much. It has all the oomph, positiveness and ‘get things done chuptz’ needed for a perfect campaign slogan. I’m sure the Tories would adopt it if they haven’t already. It’s just what’s needed in what will surely be a defining decade for climate change mitigation.

If I was an environmental group, I’d resist talking about abandoning fossil fuels altogether (an impossibility at this point considering they provide around 80% of the world’s energy) and adopt this slogan to lobby Big Oil to meet its net zero emissions targets sooner, to cut their methane emissions and to make serious investments in low carbon technologies such as carbon capture storage. Currently, oil and gas companies are investing less than 1% of their CAPEX budgets. Around 15% of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers.

WHO WILL PAY?

Although the conversation on the role of oil and gas in climate change was very frank, particularly compared to the past, one thing many were skirting around was, what everyone always skirts around; who is going to pay for the transition?

Deborah Byers from EY touched on one of the big issues: people don’t like paying tax. Tax is often political suicide, especially in America. She noted that in the US gasoline tax hadn’t been raised since Bill Clinton was in office – which was in the 1990s people! –  as no Senator will vote through an increase, lest the public punishes them in the next election. Yet in the US the transport sector has overtaken the electricity sector as the chief carbon emitter.

CARBON CAPTURE STORAGE

Carbon capture storage (CCS), which reduces carbon emissions from fossil fuels being used to make electricity and other industrial processes, was discussed as vital; but again, who will pay for it? The companies say the government need to share the cost. Governments say the companies should pay for it and factor it in as a cost of doing business.

The idea of a proper carbon tax (the current one in Europe is not high enough to be effective and is not global) was floated many times. Perhaps one of the best things that could come out of the upcoming UN Climate Change Conference 2020 (COP 2020), if the Coronavirus doesn’t derail it, is a proper globally agreed-upon carbon tax. This could raise some of the much-needed money to pay for development and adoption of the technologies needed to reduce emissions and a global price would make competition fair. A necessity as gas and oil operate in global markets. Energy company,Equinor also highlighted the need for international standards on methane emission reductions.

CARBON TAX 

Shell has been advocating for a price on carbon for a little while now, presumably because it will level the playing field between companies which are keen to do something to reduce their emissions and those that aren’t. Or because, as a more cynical colleague pointed out to me the other day, it knows it will likely never happen.

MacNaughten said that COP 2020 should show how the economics for many of these carbon-reducing technological solutions, such as CCS, increasing renewable penetration and hydrogen etc, can work.

Bob Ward, policy and communications director and the London School of Economics and Political science, however, laid the task squarely at the oil and gas industry’s feet. “This is your job; to actively lead us to net-zero emissions,” he said. Just before he had reminded delegates that we are already at 1-degree warming and if we reached 3 degrees the sea level will rise by 20 – 30 feet.

PUBLIC PRESSURE

There were warnings that public pressure would become too great to ignore. But Sinead Lynch, UK country chair at Shell, noted that as energy demand grows globally, which it will, oil and gas will be needed and its use may not decline as quickly as it should.

She said something that I think is important: ‘Polarisation can be negative and can make the industry hunker down in our corner’. Lynch is probably right, and that’s the last thing we need. We can’t solve this issue without Big Oil and so we must engage the sector. And in this respect transparency about associations and affiliations is really important for gaining trust, she added.

GOVERNMENT ‘S ROLE

Al Cook from Equinor said we need to “Eliminate emissions without eliminating profits” and so we should “make economies the service of climate change; we need a positive approach, not a blame game.”

But Mathios Rigas, CEO of oil and gas company Energean, noted that if the government changes its policy the companies and investors will follow.

“Policy makes it easier for companies to change because it levels the playing field,” agreed Ben Ratner, senior director of energy provider EDF business, environmental defence fund.

ACTION NEEDED

I applaud the Energy Institute for making IP Week about climate change. It felt a little absurd at times, but it also felt like progress. It also highlighted that the industry is engaging in a way it has never done before, which is great. But it was shy to point out that, so far, its efforts are woefully inadequate but the task at hand is huge:  around 70 billion barrels of oil a day need to be replaced with a less polluting fuel, not to mention gas. Meanwhile, energy demand is expected to grow by 13% globally.

As the conference went at pains to highlight, the industry needs to do exponentially more and it’s within its power to do so.

I’m not sure who said this at the conference, but it seems about right: “Companies are fundamental, but the government sets the pace – and the electorate gives the government a mandate.”

What can we do? 

  1. Support renewables by switching to a renewable energy provider
  2. Use less energy!
  3. Stay up to date on the issues highlighted above
  4. Write to the government/ your local MP and ask them to work harder and make stronger commitments to lower emissions.