While a growing number of global oil and gas companies step up to reduce methane emissions, many operators in Canada have hesitated to take concrete action, perhaps waiting instead for federal and provincial regulations to address the issue.
EDF’s Sean Wright recently sat down with Jamie Bonham, Manager of Corporate Engagement at NEI, a Canadian investment firm based in Toronto with $6 billion in assets under management. Bonham is concerned many Canadian operators do not understand the full scope of their oil and gas methane problem, but says there is considerable opportunity for Canadian companies to exert leadership.
President-elect Donald Trump made claims of his own business smarts a cornerstone of his campaign. Vote for him, the logic went, and send a first-rate businessman to the Oval Office to apply business acumen to make America great. Unfortunately, Trump’s actions to date on climate and energy – notably charging a climate change denier with leading the EPA transition and signaling desire to abandon the historic Paris climate accords – send a message of business obliviousness.
In contrast, a smart business approach would embrace tackling greenhouse gas emissions and supporting clean energy. Here are four reasons why:
- Create American jobs – The opportunity to create new American jobs in the transition to clean energy is tremendous. There are now more jobs in solar energy than in coal mining, and the number of solar jobs has grown more than 20 percent in each of the last three years. States like Florida and Nevada are bountiful in sun and can contribute to American energy self-sufficiency.Moreover, just as smart action to nurture domestic clean energy can accelerate jobs in the renewable sector, there are jobs on the line helping the oil and gas industry reduce its air pollution in a cost effective way. Environmental Defense Fund found that there are over 70 American firms employing Americans to help keep potent methane emissions in natural gas pipelines and out of the atmosphere. These jobs, thriving in states like Texas and Pennsylvania, are mainly small business and above average wages – exactly what we all want to see more of. Of course, it’s a competitive global economy, and taking our foot off the pedal in creating green jobs could well cede the space to others like China, which already leads the United States in clean energy investment. Whatever a politician’s personal views on climate change, it is undeniable that global demand is growing for clean energy solutions. Growing demand means growing commercial opportunity for the United States in terms of innovation and exports. But only if we seize it.
- Listen to leading American businesses – Savvy business people listen to each other. So Mr. Trump should be interested to learn that 154 American businesses supported the American Businesses Act on Climate Pledge in the run-up to the Paris climate accords. These businesses are a part of the backbone of the American economy, employing nearly 11 million people across all 50 states, with a then market capitalization of over $7 trillion. Participating companies of particular interest: 21st Century Fox, Dupont, Wal-Mart, even a name that will be familiar to any casino magnate – MGM Resorts.These companies not only voiced support for a strong Paris outcome, they committed to increase their low-carbon investments in line with the direction of America’s leadership. Pulling out the rug from American businesses investing in low-carbon would send a destabilizing signal to the market. More recently, 365 companies including Unilever, Intel, General Mills and others reinforced that “implementing the Paris Agreement will enable and encourage businesses and investors to turn the billions of dollars in existing low-carbon investments into the trillions of dollars the world needs to bring clean energy and prosperity to all”. In sum, the overwhelming voice of businesses who have weighed in on the Paris talks are supportive of climate action. This business groundswell cannot be ignored. Nor should Trump ignore his own prior signing of a 2009 letter that failure to act on climate and the environment would cause “catastrophic and irreversible consequences for humanity and our planet.”
- It hits home – Continued American leadership on climate change can help mitigate physical risks to some of Mr. Trump’s most cherished investments, for example the Mar-a-Lago golf club in Palm Beach. NOAA found that “tidal flooding is increasing in frequency within the U.S. coastal communities due to sea level rise from climate change and local land subsidence.”Just a week before the election, the Palm Beach Daily News reported that the local Shore Protection Board unanimously recommended a six-figure “coastal vulnerability evaluation” as flooding has remained long after high tide in certain cases.
- Voters want clean energy – One of many things that will change for Donald Trump is that going from CEO to President means having a boss – actually about 300 of million of them. A recent Gallup poll found that 64% of Americans worry “a fair amount” or “a great deal” about climate change, an increase from last year, and including 84% of Democrats, 64% of independents, and 40% of Republicans. Clean energy is also wildly popular, with over 80% of Americans saying they support increased wind and solar, according to a recent Pew Poll.
Early on the campaign trail, Donald Trump often used his association with his alma mater, the Wharton School at the University of Pennsylvania, as Exhibit A in establishing his business smarts. Political leaders including Mr. Trump must learn from experts like Wharton’s Professor Eric Orts, who noted that moving away from President Obama’s climate change polices would come with stiff costs.
From missing out on job creation to ignoring business leaders who have studied the issue and have a stake in its resolution, and from fueling risk to Trump’s own business interests to overlooking voter desires, the case is clear that the costs are stiff indeed. Climate action is good business, and the smart money says it’s time to stay the course.
A massive wave of market and societal forces is changing the oil and gas industry. Low commodity prices are driving out weaker players with excessive debt, and forcing those that remain to become leaner and more efficient. As climate change effects worsen and countries move to fulfill their commitments from the Paris climate agreement, public scrutiny of oil and natural gas and their impacts only intensifies.
The question is not will industry change to meet these challenges — it’s how. It’s about what opportunities can propel industry to come back stronger out of the depths of the commodity slide, as a leaner, cleaner industry standing on firm ground that it can play a meaningful role as societies work to transition to lower-carbon economies.
While natural gas remains a fact of life, and switching from coal to natural gas has helped reduce greenhouse gas emissions, scientific research has demonstrated that potent methane emissions from the oil and gas system are undermining that climate benefit. The latest U.S. inventory shows over 9 million metric tons of oil and gas methane emissions, packing the same climate impact over a 20 year timeframe as over 200 coal-fired power plants. That’s a lot of methane no matter how you slice it.
Methane standards like the rule announced today by EPA can aid industry, for three reasons: Read more
Infrared footage of the leak from the Aliso Canyon gas storage facility
After more than four months of spewing potent methane pollution, the massive Aliso Canyon gas leak has finally been plugged. But now the state of California and the utility that owns the site, SoCalGas, are left with the responsibility of ensuring a disaster like this doesn’t happen again.
While Aliso Canyon has captured the attention of the nation, it’s important to remember that there are smaller—and far more prevalent—leaks happening throughout the country’s oil and gas supply chain every day. In fact, those emissions add up to more than 7 million metric tons of methane pollution every year. That equals over $1 billion worth of wasted natural gas at 2015 prices.
Map of leaks around the Porter Ranch area
Methane leaks aren’t just wasteful—they have real impacts on communities. In Wyoming, for example, oil and gas pollution has driven up respiratory illness and smog levels to rival those in famously polluted Los Angeles. In California, residents living near the Aliso Canyon leak have already experienced headaches and vomiting; the long-term health impacts of their exposure to these leaks are a big unknown.
While solutions to detect leaks—like the infrared cameras that made the Aliso Canyon geyser visible to the world—are readily available today, a group of technology developers and oil and gas companies are collaborating with EDF to develop even more cost-effective–and automated–technologies to dramatically speed up leak detection. Read more
As oil and gas leaders converge on Houston for the year’s largest industry conference, CERA Week, falling oil and gas prices are understandably top of mind and a cause for concern for the industry. But there is another decline story underway in industry, one that poses a risk to the future of hydrocarbons in a carbon constrained world – a story of falling trust.
While today’s $30 oil price is disruptive in the short-term, new information on the very low level of public trust in the oil and gas industry should prompt concern from executives and investors about possible longer-term disruption to companies’ social license to operate.
The Industry’s Public Trust Problem
Recent polling conducted by KRC Research for EDF found that a mere 29 percent of Americans trust oil and gas companies to operate responsibly. Strikingly, even among Republicans, the trust rate is under 40 percent.
Digging deeper into the numbers, just 15 percent of Americans trust the oil and gas industry to be accurate in disclosing how much pollution they cause.
So what do these results mean?
They mean that a basic ingredient essential to the long-term viability of any industry – societal trust – is sorely lacking. When 197 nations agree to an ambitious framework and goal to cut greenhouse gas pollution, but very few Americans trust oil and gas operators to even disclose their pollution accurately, a collision course develops. Read more
No one likes uncertainty, least of all investors. From changes in interest rates, to supply chain disruptions, the list of risks investors must monitor is long and growing. Good, actionable information is investors’ most important tool for risk management and integral to successful investing. Without proper data, investors are flying blind.
A new report published by EDF this week throws the spotlight on a growing risk for investors—methane emissions from the oil and gas sector. As so clearly demonstrated by the ongoing and massive leak at Aliso Canyon, methane emissions pose a multitude of expanding risks, with both short and long-term consequences.
Three key risks from oil & gas methane
At 84 times more powerful than carbon dioxide in the short-term, methane emissions represent a potent and fast-emerging form of carbon risk. In a world looking to reduce carbon pollution, methane emissions pose regulatory, reputational and economic risks. Preparedness to comply with forthcoming rules varies across the industry, methane undercuts natural gas’ ability to play a role in a carbon-constrained world, and emissions of methane are lost product amounting to $30 billion a year globally.
Investors should be asking themselves these questions:
- Do you know how much money your oil and gas companies are losing?
- Do you know if they have a plan to reduce emissions to limit impacts?
- Do you know how prepared they are to comply with forthcoming regulation?
It’s difficult to find out, and that’s a problem. Read more
Heath Consultants' methane-measuring drone
Dr. Jason Gu was still a graduate student when he developed the technology behind SenSevere, a start-up that creates laser-based gas sensors for use in heavy industry and power plants. Today, he’s working to apply this technology to methane emissions from the oil and gas industry, making him one of the many entrepreneurs developing solutions to tackle the problem. His fascination with innovation isn’t just making his clients more efficient—it may also be saving the planet.
The hidden cost of methane
Methane, the main component of natural gas, is a powerful pollutant responsible for a quarter of the global warming we feel today. The oil and gas industry releases 7 million tons of it into the atmosphere every year through emissions from oil and gas fields and associated pipelines, resulting in over a billion dollars’ worth of wasted American energy resources. And, toxic chemicals like benzene, a known carcinogen, can accompany methane emissions, posing a potential threat to public health.
“The industry is beginning to become more sensitized to the fact that methane is an aggressive greenhouse gas,” said James Armstrong, president of Apogee Scientific, a Colorado-based methane mitigation company. For more than 15 years, Apogee has manufactured a methane detection system that uses a vacuum and infrared sensors and can be mounted to trucks, ATVs and helicopters to identify leaks in the field. “If you find the leaks and repair them, you’re not only helping the environment…you’re extending the resource.” Read more
Bill Gates, in an interview with The Atlantic, reminded us that if Thomas Edison were alive today, he’d probably recognize a lot of our energy infrastructure – batteries and most coal plants, for example. Gates argued in the interview that we need to drastically speed up the pace of innovation to bring our energy infrastructure out of the Victorian era. But how do we change how we make and use energy? It touches everything we do, but in less than a decade we will be living, working, and traveling differently.
That’s where I – and EDF – come in. I joined EDF this fall after working as a lawyer, consultant and accelerator for business-social collaborations, and I’ve found that it takes all kinds of skills and experiences to set ambitious targets and turn the impossible into the inevitable. From energy retrofits for churches to starting a clean energy incubator with global energy companies, I’ve attacked the challenge of achieving a low-carbon future from many angles. I’ve been drawing on all of that experience since joining EDF, at what’s proving to be an exciting time for climate change leadership.
Methane: a challenge we have to tackle today
One area where we know we have to innovate – like people stranded on a desert island – is methane emissions from oil and gas. Methane is the most powerful greenhouse gas that almost no one has heard of. And more importantly from a climate perspective, methane emissions from the oil and gas industry are cheap to eliminate, if you can find them. The recently-announced regulations on methane emissions from the oil and gas industry won’t take us all the way to the 40-45% reduction in methane emissions the administration has set as a priority. We need action at hundreds of thousands of oil and gas facilities, and that’s just for U.S. onshore oil and gas. Worldwide, methane leaks amount to 8% of global greenhouse gas emissions in 2012, or the equivalent of 40% of the total CO2 emissions from burning coal.
How do you innovate fast enough to attack this challenge? One approach we at EDF have taken with the Methane Detectors Challenge is to identify a need – invisible methane leaks – and envision a tool that didn’t yet exist that could enable the action we need – operators finding and fixing leaks faster. The ultimate goal is to make tools like that a reality, and bring to market continuous methane detection systems that are so affordable they can be deployed throughout the oil and gas supply chain. Read more
What a difference a year can make. Even before the last weeks tick away, 2015 stands out as a remarkable and dynamic year for climate and energy in the United States.
Read on for five bold trends that are beginning to reshape our economy – and our national discourse on climate change.
1. Investments in renewables soar
I admit it: For years, I thought renewable energy was more hype than reality. I’m happy to report that recent data proves me wrong.
In just five years, solar panel prices have fallen 80 percent, and solar capacity installed worldwide grew more than six-fold. The overall cost of solar per kilowatt-hour, meanwhile, plummeted 50 percent.
For the first time in history, energy from the sun is as cheap as traditional energy in states such as Arizona, California and Texas.
The proof is in the pudding. Apple, for example, recently signed an $848-million power agreement with a solar provider – bypassing the electric grid. A deal of this magnitude shows where solar is today, and where it is headed. Read more
People often think of the energy sector as a great place to find jobs, but some of the best, most stable job opportunities in the sector aren’t what you’d think. They’re not dedicated to resource production, but to minimizing the millions of tons of natural gas and associated pollution that leaks as the product is produced and delivered, wasting resources and causing a serious environmental problem.
Each year, more than 7 million tons of methane – the main component of natural gas and a powerful pollutant – escapes from oil and gas operations. These emissions pack the same short-term warming punch as pollution from 160 coal-fired power plants, and equal enough wasted natural gas to heat and cook meals for 5 million American homes.
Companies across the country are already harnessing the power of American innovation to solve this problem, creating new job opportunities in the process. And, a growing trend toward stronger state and federal safeguards to standardize methane reduction best practices is putting more wind in the sails of this growing industry.
Many of the positions being created are skilled, high-paying jobs for workers such as engineers and welders, according to a 2014 Datu Research report on the emerging methane mitigation industry. But these companies need a variety of other positions filled too, from sales to accounting to general labor.
Many of these companies have their roots in traditional equipment manufacturing, such as valves and sealing technologies that keep industrial systems running as efficiently as possible. Others, such as makers of optical gas imaging, are on the cutting edge of new technologies that allow users to identify methane leaks that are invisible to the naked eye. Read more