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CERAWeek: Urgency rules the day on climate change: EDF’s Krupp, Lord Browne
Oil and natural gas producers have made great strides in reducing methane emissions produced by upstream activity, but doubts linger in the minds of environmental groups and some government regulators about the accuracy of the reporting of such pollution.
Transparency is becoming a greater part of the demands placed on the oil and gas industry, and a new satellite that will be launched in 2022 by the Environmental Defense Fund (EDF) will bring greater transparency than ever before to answering any questions, Fred Krupp, EDF president, said during a Q&A session at the CERAWeek by IHS Markit conference 2 March.
Methane is responsible for a quarter of all the warming the planet is experiencing, Krupp said, due to presenting 84 times the global warming potential of carbon dioxide. "We have called for - and the International Energy Agency believes it's practical - a 50% reduction in the next few years and 75% by 2030," he said.
EDF has invested $100 million raised from donors in a new satellite that will provide greater methane tracking than ever before, and possibly answer that question, Krupp said. It is being built by Raytheon and Ball Aerospace and will be launched next year.
"It will for the first time … give us concentrations for all the major oil facilities on land - we can't promise it will detect offshore platforms," he said.
The new satellite will provide what he called "precise measurements … down to 2 parts per billion," and can measure methane across a path of 200 kilometers (about 125 miles). Importantly as well, it will be the first satellite able to detect fluctuation rates -- how much is being emitted -- not just concentrations.
"So, [this could solve the] problem we have discussed before that companies have been estimating emissions … and those have been wildly understated. There's now going to be transparency coming to every citizen, company, and government," Krupp said.
Armed with this information, Krupp said that regulation of methane could advance quickly, "and offer great rewards for those who have cleaned up, and motivation for those who haven't."
25 years of history
Krupp was questioned during his session by Lord John Browne, former chief executive of BP, who observed at the start of their discussion that he and Krupp first talked about emissions and climate change more than 25 years ago.
When asked what's changed since then, Krupp talked about recognition of the urgency of the problem, as well as equity issues in addressing it.
"Back then, when we met [25 years ago], it was still possible for politicians and business leaders to deny climate science and still be respectable. Today that's impossible," Krupp said. "Large majorities in the United States and Europe and other nations as well want their governments to act … and want oil and gas companies to do their share."
As for equity, Krupp said, "2020 has been a wakeup call…. It should have been recognized a long time ago, including by me. We didn't get it, but we now do," Krupp said. "If you invest billions to make a chemical facility carbon neutral, but you don't address the pollution at the fenceline, you are failing."
Some investors have been alert to the issue for a relatively long time, but Krupp said he detects "a tectonic shift" in their expectations and demands. "Big mainstream investors are putting pressure on global oil and gas companies to think boldly to make a transition ... The role of global asset managers and banks — I [did] not anticipate it back then," he said.
At this point, Browne observed, the matter of carbon reduction has shifted from a technology solution to a "societal problem." In other words, technology is available, but the question is whether society has the will to implement it — and to do so in integrated, comprehensive, equitable ways. "Now, we need to get the right incentives in place, as well as the right principles and societal pressure and financial pressure in place," he said.
Krupp said that technology needs to continue to improve, but he's been "pleasantly surprised" by developments such as electric vehicles. "The 20th Century was the 'age of oil,' and the 21st might prove to be the 'age of batteries,'" he declared.
Technological innovation comes from added demand and production, Brown said. "The more you manufacture, the cheaper it becomes," he said. "Sometimes, [it] needs the kickstart of incentives, but some of it just happens."
With expectations on the rise, Krupp said he's seen companies jumping on the environmental, social, and governance bandwagon, such as with net-zero commitments. "There is the possibility that for many of these companies … it's just green cover, not coupled with plans and metrics," he said. "But I'm sure for many companies it's more than that."
This is why investors and stakeholders need to take a step back and look at whether companies have concrete plans, whether their reporting is transparent, and if they have metrics by which they can be judged, he said. Importantly, the metrics have to include interim targets so that current management is held accountable. "In the oil and gas industry, the average CEO lasts a few years, so it could be five or six CEOs between now and 2050," he said.
And it's where methane detection comes into play, too, Browne observed. "Maybe that methane problem may be [revealed to be] bigger than we think," he said, thus making it even harder to meet net-zero targets.
Browne said that he believes oil and gas producers or regulators should compare land-based methane detection done close to operations with the data from the new EDF satellite. "And when you see something go wrong [with high levels of emissions], you must do something about it immediately, not wait a week or a month, or wait for someone to tell you to do it," he said.
But Browne said that it's not solely an oil and gas problem, as he believes countries will come to the Conference of the Parties 26 climate meeting in Glasgow, Scotland, in November with plans to reduce methane pollution from agriculture and livestock operations as well. "Nobody [can] use the excuse that we do not have the tools and techniques to solve the problem in front of us," he said.
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