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?

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Combating and adapting to climate change is a lofty goal and though the global track record on positive impact is all over the map (literally), we see collaboration as the key to meaningful progress. Recognizing that proactive organizations will survive and thrive, many of you are already on your journey and some of you will embark in this new decade. In either case, we hope to join you and to collaborate with you in 2020! Below, we highlight some of the major climate & energy trends of the last 10 years and share our outlook for the new decade. We hope you will engage with us as we work together to create the bridge to the low-carbon future.

2010s: The Decade of Disjointed Acceptance
In the 2010s, most of us agreed on climate change science and accepted that action is necessary. Globally, we witnessed emerging nationalistic sentiments, putting self-interest above the greater good. Climate consensus led to only fragmented actions toward (somewhat) mutual climate goals. In the midst of geopolitical turmoil, protesting (climate) inaction, greenwashing empty action, and public rioting against expensive action confused us, scared us, but most of all, pushed us to expect more. What happened in the 2010s:

• Fracking: The shale boom boosted the role of gas in the global economy, made the USA into a net energy exporter, and caused coal to downturn domestically.
• Energy access: Developing nations vowed to increase energy access, and major health concerns from urban air pollution directed this push largely toward clean energy.
• EVs: Hybrids and all-electric vehicles emerged and became a must-have sales item for all car manufacturers. We think this trend will continue, with all sectors moving towards EVs and abandoning ICEs altogether by 2030.
• Renewables: Technological advancements in renewable power lead to the dropping cost of wind and solar, making clean energy portfolios (and the obsolescence of coal in the short term and natural gas thereafter) a solid bet for the future.
• Big data: Data became a valuable currency with IoT allowing data aggregation, analysis, and insights on a monumental scale. Its unregulated distribution, though, left consumers feeling a loss of privacy.
• Extreme weather: The world faced 100-yr and 500-yr weather events on a scale never-before-seen. The increased prevalence of mega-storms tested infrastructure and readiness, which in most cases, did not hold up.

2020s: The Decade of the Climate Emergency
In a true prediction of the next decade, Oxford Dictionary declared ‘climate emergency’ the word of 2019. We expect that there will finally be a worldwide declaration of a “climate emergency,” and public and private organizations will commit to climate action plans, incentives/regulations, and other substantive change. With the passing of some major scientific milestones (we say goodbye to 1.5*C and recognize that 2*C is a bullish goal), adaptation will become an equal focus with mitigation. What we expect in the 2020s:

• Resiliency: There will continue to be an increase in mega-disasters, creating climate refugees across the globe. The new conversation will focus on resilient and robust strategies against these weather extremes. We anticipate that the decentralization of energy will help to avoid another PG&E 2019. Renewables and storage-based microgrids with demand-side management will become prevalent around the country, particularly in areas that are vulnerable to extreme weather, and a standard in developing countries, bringing reliability and lower costs
• Asia: Developing countries will see the most growth in the next decade and face some of the most significant impacts of climate change. We expect that Asian countries will emerge as leaders in green technology, creating technological advancements and opportunities for implementation at scale.
• Sensing: Data went largely unchecked in the last decade, and we expect that in the next 10 years, consumers recover control of their data through sensors to track their usage, efficiency, and information in real-time. C&I customers also embrace this trend more widely to extract more useful insights from smart devices across operations and supply chains.
• Advanced chemistry: The waste crisis created an awareness of materials, their origin, and their lifecycle. In the 2020s, we expect that advanced materials will be critical with the growth of new technologies for the low-carbon economy. We anticipate an intersection with the carbon story to push CO2 utilization and overall carbon value creation to new levels.
• Accountability: Governments and individuals will continue to blame large corporations for the climate emergency. There will be an uptick in climate-related company bankruptcies and moves to become public benefit companies. The opportunity for proactive companies in the new energy economy is significant; action can help to avoid litigation and to create new business opportunities.

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