Just last month 13 of the world’s largest oil and gas majors—including ExxonMobil, BP and Shell —came together for a new commitment to reducing a key super pollutant. Methane, the primary component of natural gas, is the second leading contributor to climate change and over 80 times more potent than carbon when leaked into the atmosphere in the short-term. What’s more surprising? The coalition’s new methane target proceeded despite an uncertain regulatory landscape in the U.S.
For the first time since 2010, a Republican has introduced a climate bill. Business leaders are welcoming its market-based approach to fighting climate change.
Yesterday, 34 U.S. businesses sent a public letter thanking Rep. Carlos Curbelo (R-FL 26thDistrict) for introducing the MARKET CHOICE Act (H.R. 6463), a bill to fund infrastructure investment while cutting climate pollution. Companies that signed the letter include BP America, Campbell Soup Company, The Dow Chemical Company, DuPont, General Motors, Ingersoll Rand, Lyft, Inc., IKEA North America Services, LLC, National Grid, PG&E Corporation and Shell. The Sustainable Food Policy Alliance, which includes Danone, Mars, Nestle USA and Unilever also sent its own letter of support.
Why are these companies publicly thanking Rep. Curbelo and his cosponsors? Here are four takeaways for companies of all sizes.
A recent study from UPS and GreenBiz revealed that 95 percent of surveyed companies recognize the effect that urbanization – particularly air quality and traffic congestion – will have on business growth and sustainability.
Why? Because poor air quality costs the global economy $225 billion every year in lost labor income, according to the World Bank. Air quality also worsens with congestion, which will likely increase as 2.5 billion more people are expected to live in urban areas by 2050.
It’s no surprise then that less than half of the UPS/GreenBiz study participants feel prepared to address these challenges.
The good news is that cities and businesses can turn their anxiety into action by embracing and utilizing disruptive mobile sensor technologies that collect air quality data.
David Hone, Chief Climate Change Advisor at Shell, recently stated that it takes 25 years for a new technology to reach one percent of the energy system. At the multinational companies I have worked with as clients and partners, I have seen how much time it can take to launch a new idea or product. But, I believe we can and must accelerate the pace of technology development and adoption. This is especially crucial in the area of methane detection. Methane is the main component of natural gas and methane emissions are the cause of 25% of today’s global warming.
For the past three years, the Methane Detectors Challenge (MDC), a groundbreaking partnership between Environmental Defense Fund, oil and gas companies, technology developers, and other experts, has focused on designing and testing promising methane detection technologies. Two of the most promising technologies, both of which provide low-cost continuous methane emissions monitoring, will soon be pilot-tested by major oil and gas companies. Moving from concept to pilots in just a few years teaches us that it is possible to accelerate the adoption of new technology in the oil and gas sector.
Lesson One: Bring all stakeholders to the table around a realistic shared goal
During the initial phase of the Methane Detectors Challenge, we facilitated a series of meetings between environmentalists, scientists and oil and gas companies, including Shell, Noble Energy and Southwestern Energy. This collaborative approach set MDC up for success. We gained insights on how methane detectors would need to work in the field—simple, self-powered, able to send automated alarms—and this helped the technology entrepreneurs target key functionality.
Our environmental goal for MDC struck a balance of ambitious and pragmatic; detecting big emissions that account for the vast majority of total methane emissions. By understanding which features would deliver the most impact, we focused on key—but not all—technology gaps. This dramatically sped up the development and testing time.
Lesson Two: Cast the net widely
At the start of the Methane Detectors Challenge, we cast the net widely for initial applications. If existing providers aren’t already solving the problem, there is no reason to stick with the familiar. MDC invited applications from all over the world and from different industries. The result was technologies adapted from outer space, coal mine safety, and personal breathalyzers, to name a few: fresh ideas and new approaches brought together by entrepreneurs who are committed to slowing the tide of climate change.
Lesson Three: Small, flexible investments can pay off
Small investments in emerging technologies can yield great results, and while not all will pay off, those with promise will improve rapidly. This is a portfolio approach to innovation—much like successful Silicon Valley enterprises. This requires leadership commitment and clear communication of project goals to all stakeholders, then being flexible and creative.
Taking some early-stage risk is necessary to create opportunity for big payoffs. Oil and gas companies are familiar with this at the exploration stage; the same is true for technology innovation. MDC focused on new hardware solutions. Many entrepreneurs (as with entrepreneurs in other sectors) were often advancing personal funds to contract manufacturers or suppliers. This is a dangerous stage that many startups do not survive.
Oil and gas companies should consider offering working capital, rapid payment terms, and in-kind support for early-stage ventures. The payoff could be significant—a more efficient, more effective strategy that works with a company’s exact specifications. With the right assistance, hardware startups are still not going to turn a profit on the first units, but they might make it through their first year.
Catalyzing innovation requires flexibility and compromise on all sides. Just as entrepreneurs aim to learn about the culture, quality and safety standards and business priorities of oil and gas customers, oil and gas companies will learn and improve faster if they ask themselves what they do and do not need from an early-stage entrepreneur as compared to their expectations of an established provider. Their requirements for fast iteration of a developing technology may be different from adoption of a tested and proven technology. A lower risk, rapid improvement orientation can be reflected in product or service agreements, warranties, and the feedback offered to innovators. Similarly, for oil and gas companies, the business case for adopting a new technology may not initially outweigh their current approach. But with a portfolio of small bets, and the patience to help new ideas progress down the cost curve, these companies increase the odds that a new technology dramatically improves on the status quo.
During the Methane Developers Challenge, I have witnessed first-hand how environmentalists and oil and gas companies can learn from the portfolio approach and rapid iteration lessons of Silicon Valley innovation. In the next few months, MDC entrepreneurs will learn from deploying their technologies at major oil and gas companies. This is a powerful example of ambitious and pragmatic collaboration. This corporate leadership, with oil and gas companies taking a risk and putting their unique resources and insights to work catalyzing innovation, will enable business and the planet to thrive.
Follow Aileen Nowlan on Twitter, @aileennow
Additional information on EDF Methane Detectors Challenge
Six large European oil and gas companies recently announced a commitment to engage on climate policy, calling for a price on carbon. The now-emerging picture of their coordinated corporate talking points, however, leaves no doubt that promotion of natural gas is a core part of the group’s position.
Is this development a beneficial push to help the planet transition to a low carbon economy – or just another marketing campaign? The truth, so far, lies somewhere in between.
Here are the good, the bad and the ugly highlights of what we’ve learned over the past week and what it all means.
The good: Establishing a carbon price and cutting carbon dioxide emissions
Make no mistake about it: The world’s leading economies need to establish a price and limits on greenhouse gas emissions, and leadership from the private sector is instrumental in achieving that policy objective.
For large companies such as Shell, BP and Statoil to join forces and unequivocally state, as they now have, that a price on carbon should be a “key element” of climate policy frameworks is a refreshing boost to pre-Paris United Nations climate talks.
It is a potentially powerful validation that even some of the world’s largest corporate emitters see an upside to carbon pricing and will weigh in to make it a reality.
As to promoting natural gas a solution, it is well documented that in many cases natural gas will replace coal for power generation – a shift already underway in the United States and partly responsible for driving down carbon dioxide (CO2) emissions. Read more
Europe’s largest oil companies are reportedly working together on a policy strategy leading up to this year’s international climate talks in Paris. It’s nice to hear that some of the biggest players in the global oil and gas industry want to engage in solutions, but it remains to be seen if they will take the action needed to effectively tackle some of our most immediate climate threats – or to seize a major untapped opportunity.
That opportunity is methane. The highly potent greenhouse gas that’s been largely ignored until recently represents a solution for making real and immediate progress to slow warming. So will the group of oil companies sign on to tackle methane as a big part of its strategy, or are they going to ignore it?
Methane, the primary ingredient in natural gas, has over 80 times the warming power of CO2 and is responsible for 25 percent of the warming we are feeling today. That means tackling methane is an essential piece of the puzzle in making a real impact on greenhouse emissions. Read more