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OGCI Chairman Bob Dudley On What Post-Pandemic Recovery of Energy Demand Means for Reducing Global Emissions; Investing in New Technologies and Why a Value on Carbon is Needed

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In the first episode of the CERAWeek Conversations series for 2021, Bob Dudley, chairman of the Oil and Gas Climate Initiative (OGCI), discusses how the post-pandemic recovery of energy demand “shows the size, scale and complexity” of the challenge to reduce global emissions and why “no one company, no one real industry [can do it alone].”

In a conversation with Daniel Yergin, vice chairman, IHS Markit (NYSE: INFO), Dudley discusses the organization’s initiatives for reducing emissions—including a target to reduce members’ methane emissions by 1/3 by 2024 from 2017 levels—and the development of technologies for carbon capture, utilization and storage (CCUS); the focus of OGCI’s $1 billion climate investment fund; and his thoughts on the IEA’s May 2021 report on pathways to net-zero emissions by 2050—”As the IEA says itself, it is a scenario, it’s not the scenario. This scenario has got a lot of attention and a lot of debate and that’s a good thing because it focuses everyone.”

The complete video is available at: https://ondemand.ceraweek.com/cwc.

Podcast version available: CERAWeek Conversations is also available via audio podcast on Apple Podcasts, Google Podcasts, Soundcloud, Spotify and Stitcher.

Selected excerpts:

Interview Recorded Wednesday, June 16, 2021

(Edited slightly for brevity only)

  • On OGCI’s principal mission and agenda:

    “Today the focus is [on] reducing collectively our own emissions, both methane and driving down the energy intensity of what we do. It is focused on technologies around measuring, detecting and monitoring methane reductions through real investments. And it’s working on CCUS, not just desktop studies but actually investing in projects [such as] ‘kickstarter’ hubs around the world. It’s a combination of working together on concepts, but also real action.”

  • On the portfolio of companies in OGCI’s $1 billion climate investment fund:

    “It focuses on various things like methane reduction: Monitoring, detecting, measuring. We’ve invested in companies with satellites that can measure emissions now—they’re not just a concept, they’re up in the air that can measure methane and detect and notify not just the OGCI companies, but in some cases, countries. We use drone technology—one of them flies around and measures quarterly for one of the [OGCI] company’s emissions offshore.

    “About eight percent of the world’s greenhouse gas emissions actually comes from cement when it’s cured. So, we’ve invested in a company that actually cures the cement with CO2 and it brings the CO2 into the cement and then sequesters it. Technologies like that are the kind that are going to make a huge difference. They need to spread with scale.”

  • On initiatives and investments of OGCI companies to reduce methane emissions:

    “You almost can’t get to the aims of the Paris Accords without the use of methane to displace coal out of the power system. CCS is another big area as well. You can’t get to those goals without both of those. Methane is a potent greenhouse gas. It doesn’t last in the atmosphere nearly as long as CO2 and the technologies haven’t been there to be able to monitor it and mitigate it.

    “What OGCI has focused on a lot is measuring our own emissions as the 12 companies collectively. We set a baseline in 2017 and we’re now targeting by 2024 to get down to 1/3 less than we’ve emitted before, which is about the equivalent of 3.4 million passenger cars on the road.

    “Unlike in the past, you can’t see methane—natural gas—but there’s going to be nowhere to hide because the technologies are coming so fast that we’ll be able to spot them, mitigate any leaks and hopefully spread that technology not only in the oil and gas industry—our own companies—but the rest of the industry and other hard-to-abate sectors as well.”

  • On energy demand post-pandemic and the collective action needed across industry to meet global climate targets:

    “There’s a clue in how hard it is to reduce emissions. Because even with that great reduction in economic activity in 2020, emissions maybe didn’t fall as far as some people were thinking. It shows you the size and the scale and the complexity of the challenge. Demand is coming back. In order to solve these problems, no one company, no one real industry [can do it alone]. We’ve all got to work together. Collaboration is key.

    “That was hard to do in 2020. OGCI kept together through the virtual world and kept spending and investing money. All the CEOs remained committed to it. Emissions are coming back up. You can’t just do it on supply, we’ve got to reduce demand as well across all kinds of sectors to happen. It just means to me now more than any time, we’ve got to drive things collectively, collaborate together. And not just the OGCI companies, but with governments, NGOs, policymakers, [and] stakeholders. We’ve got to work together and not just talk.

    “The scars of the COVID years are going to be even harder on developing countries. Some of them are far from out of the COVID fog that we’ve been in for a long time. What the world has to do is develop the affordable energy that people will need. And we need to develop the lower [carbon] technologies and spread that technology out.

    “This is a large, big transition we are in. All transitions are difficult but this one is really going to be difficult. That’s why we’ve all got to work together. Inside the OGCI companies and even the oil industry itself there’s great brains, there’s great know-how, there’s great experience on large-scale cross-border projects around the world. And it brings with it financial help as well. There’s no question to me that oil and gas companies and energy companies themselves have to be part of this grand solution that we’re going to work on over the coming decades.”

  • On the IEA’s May 2021 report on pathways to net-zero emissions by 2050:

    “It’s making everyone question and think and it’s created a great dialogue around it. As the IEA says itself, it is a scenario, it’s not the scenario. This scenario has got a lot of attention and a lot of debate and that’s a good thing because it focuses everyone. But again, it’s not the scenarios that matter, it’s not the words—it’s [the fact that] we need to get into action, we need to do it now. Lots of people are questioning some of the assumptions on the drop in demand by 30%. Thirty million barrels per day of oil by 2030 seems kind of aggressive given how it’s going today coming out of COVID times—but that’s OK. It will get everyone thinking hard.”

  • On public policies that would support industry’s decarbonization efforts:

    “Collaboration and working together has got to happen with governments, with policymakers, NGOs, companies themselves and other industries. Hard-to-abate sectors like steel, aluminum, the transport sector and the shipping sector—OGCI companies are working across some of those sectors together.

    Government has got to set the right policies in place. Good, healthy regulation is always a good thing. We’ll see what happens coming out of COP, but I think that will be an accelerant to doing more of that. It would be in the areas of methane emissions regulation; it would be in CCUS. CCUS I would think is going to have to be a big public private partnership. Some of [the projects] are so large and the costs are so high, I think we’ll start to see joint investments in some places.

    “For 200 years of economic history, it’s hard to change peoples’ behavior without a cost or a price on it. There’s something about the value of carbon—policies that set some sort of value on it. It could be cost, it could be [a] tax, it could be carbon markets that need to accelerate a little bit more. The OGCI companies, collectively, believe that there needs to be a value on carbon going forward.”

Watch the complete video at: https://ondemand.ceraweek.com/cwc.

New CERAWeek Conversations segments also include:

  • Geothermal: A New Arrival? – Lees Rodionov, director, sustainability, Schlumberger; Timothy Latimer, CEO, Fervo Energy; Jamie Beard, executive director, The Geothermal Entrepreneurship Organization. Interviewed by Carolyn Seto, research and analysis director, cost and technology, IHS Markit

About CERAWeek Conversations:

CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities—and energy technology innovators.

The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.

The complete episode library is available at https://ondemand.ceraweek.com/cwc.

CERAWeek Conversations is also available via audio podcast on Apple Podcasts, Google Podcasts, Soundcloud, Spotify and Stitcher.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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