Corporate responsibility: When corporations improve their own footprint and provide better alternatives to the consumer to help them reduce theirs (e.g. zero net carbon products)
Corporate accountability: When corporations improve their own footprint and that of their consumers, providing better choices without passing on regressive costs
We share the world – the good, the bad, and the ugly, but can we share the blame? Global warming is here, but is any single entity responsible for rising emissions that lead to shifting ecology, extreme weather, and other larger, yet unclear, impacts? It’s easy to point the finger on greedy corporations, peddling their evil goods on the unsuspecting public, but the public isn’t blameless, driving to the protest in their gas-engine cars, idling in line at Starbucks, and returning home to their large, air-conditioned homes.
While there is enough blame to go around, society already picked the villain. It’s up to common enemy #1, Oil & Gas, to seek redemption. Numerous call-to-actions including protests and shareholder mandates, have led to small steps, such as efficiency targets, 30-year emissions reduction goals, and HSE-performance dependent bonuses.
This, of course, is not enough. The industry realizes it, and the money realizes it, too. Blackrock and JPMorgan Chase are dictating the need for meaningful progress towards climate goals, and industry goliaths are coming around. BP, BHP, and Repsol are just a few corporations that have “net-zero” announcements. But what does this really mean? Surely, they are not shutting down.
Net-zero operations in the core business can be achieved, albeit at a cost. For upstream producers, the low-hanging fruit is wide deployment of lead detection and repair (LDAR) and renewable electrification. Reaching net-zero also means stopping all but emergency flaring through investment in gas infrastructure and only working with midstream partners with adequate and redundant gas processing facilities. In some cases, these improvements help the bottom line through energy efficiency and operational savings. In others, especially once emission penalties are in place, poorly operated companies will fail. This is what we call table stakes, and we expect that all O&G upstream and midstream companies will achieve this before 2030 or risk losing their license to operate.
But, let’s not forget O&G’s little brother – downstream refineries, petrochemical facilities, and transport – responsible for end-use products like gasoline, diesel and liquefied natural gas (LNG). Low cost and (ideally) profitable carbon capture, utilization and sequestration (CCUS) – a holy-grail for the energy industry – would allow these emissions to be captured, sequestered underground for millennia, or up-cycled to new products. Even power plants could use CCUS to balance renewable intermittency while committing to carbon -free power. The path to net-zero is a lot less straightforward for this sector, but the science is compelling, and a new industry is burgeoning.
Operational improvements will define responsible corporations, and responsibility is quickly becoming the barrier to entry. True accountability, though, can only be achieved through net-zero products, providing consumers with a reasonable choice for reduced impact at the use-phase. Regardless of how they are made, consumers are demanding cleaner products, and corporations are on the hook to deliver. First mover’s advantage is at play – who will win the accountability game? Repsol already drew a line, announcing net-zero operations AND end-use by 2050. BP followed suit, and the markets, the money, and the public are watching the rest of the industry.
Is there such thing as carbon-negative oil and gas? Maybe. Can O&G create a business around it? Probably. Will shareholders pay for it? Probably not.
So, while corporations continue to peddle their evil goods to the people lounging in their AC homes, consumers must begin take ownership of their choices. As they become more willing to make lifestyle changes, corporations can meet those needs with better choices and reduced impact. After all, climate change doesn’t discriminate; corporations, individuals, municipalities – we are all adversely impacted, and we are all accountable. So maybe next time, we walk to the protest?