This is the third in a series of Q & As with the Ceres experts who are engaging with companies to decarbonize six of the highest-emitting sectors of the economy. Click here to read the previous Q & A.
Q: Why is the decarbonization of the oil and gas sector so important? How can it be achieved?
The oil and gas sector is key to unlocking a clean future for the global economy for two basic reasons. It's a major contributor to the planet’s overheating, with oil and gas production representing almost 15% of global emissions. And the industry invests hundreds of billions of dollars every year in maintaining and growing the supply of energy.
Where this capital goes--whether into low-carbon technologies like clean energy or hydrogen, higher carbon fossil fuels, or is simply returned to shareholders--will have a major impact on the world’s ability to meet the goals of the Paris Agreement.
Q: Where do you see the biggest challenges?
The oil and gas industry faces fundamental challenges in both its efforts to eliminate carbon pollution from its operations, and in its work to adapt its business strategy to prosper in a cleaner energy world.
It’s no secret that the oil and gas industry is lagging behind. It is responsible for the largest source of methane emissions in the U.S., and yet field research suggests that current industry reporting misses half or more of methane emissions. While much work is underway to better understand sources of emissions and how they can be mitigated, there is still much to be done to reach near-zero methane emissions by 2030.
While operational emissions are important, the emissions embedded in the industry’s products (oil and natural gas) are orders of magnitude larger. There is no single path for companies that want to climate-proof their business strategies, and Ceres has worked with investors, banks and industry to define what good practice in this respect looks like.
Q: What are the biggest successes you have seen in recent months to move the sector closer to addressing climate risks and opportunities?
The past few months have seen substantial progress in decarbonizing the oil and gas industry.
In late 2023, with support from leading companies in the sector, the EPA moved to finalize its groundbreaking methane rule, which would reduce oil industry methane emissions by 80% over the coming decade. And more key companies including ExxonMobil and other national oil companies joined the Oil & Gas Methane Partnership 2.0, the UN’s flagship reporting and mitigation program.
A critical mass of large and small oil companies are also moving to set net zero ambitions for their operational emissions, including Exxon. At COP28, 50 companies representing more than 40% of global oil production committed to net zero operations by 2050 at the latest, ending routine flaring by 2030, and near-zero upstream methane emissions by 2030.
Q: Are there any upcoming projects and technology that you are most excited to see that will aid in further cleaning up the energy market?
We are starting to see the world’s national oil companies, which represent most global production, start to seriously address emissions. This is seen most notably in the launch of the Oil and Gas Decarbonization Charter at COP28.
This work by NOCs and others will be advanced by the launch of MethaneSAT, a satellite that tracks methane emissions, and advances in other remote detection techniques that mean that global emissions will be accessible to anyone with a desktop or a phone.
Q: What drew you to your work in the oil and gas sector?
The oil and gas sector is interesting because it is so critical to our ability to decarbonize and manages to combine cutting-edge technology, geopolitics, finance, and barbecue in a single, globe-spanning industry. It’s also full of some of the most interesting people you will ever meet.
Highlights
COP 28 Oil Industry Commitments
At COP28, representatives of the oil industry announced their joint intention to decarbonize their oil and gas operations by 2030, including an agreement to end routine venting and flaring of methane, which was a “necessary and important step, but more climate action from the sector is needed.”
In the lead up to COP28, Andrew Logan penned an opinion piece on the pivotal role that the oil industry plays in driving climate action, emphasizing the sector's imperative not only to acknowledge the necessity of transitioning to cleaner energy sources but to actively embrace sustainable methods and technologies. Calls from both investors and companies alike are demanding a departure from the status quo—and urging the industry to redirect investments away from oil and gas production.
As reports have shown, the world is not on track to achieve substantial reductions in global greenhouse gas emissions and companies need to move beyond pledges. Andrew spelled out exactly what the industry, especially national oil companies, need to do to align with a net-zero future. This includes the elimination of methane emissions and increased investments in renewable energy infrastructure.
Methane Benchmarking Report
Last summer, Ceres, in partnership with the Clean Air Task Force and ERM, released the third annual Benchmarking Methane and other GHG Emissions of Oil and Natural Gas Production in the United States, which analyzes the production-based emissions of the largest oil and gas producers in the United States and highlights dramatic variation among producers and basins.
The analysis found that reported methane and greenhouse gas intensity in the oil and gas sector have declined 28% and 30%, respectively, between 2019 and 2021, despite an increase in natural gas and total hydrocarbon production. While overall emissions trended down, the report found that the gap between leaders and laggards continues to grow. The report also found that natural gas producers in the highest quarter of methane emissions intensity have an average emissions intensity that is nearly 26 times higher than natural gas producers in the lowest quarter of methane emissions intensity.