Advisor Spotlight: In honor of Earth Month, Project Canary Advisor Patricia Vega, founder and CEO of Quantum New Energy (QNE) and EnerWisely, talks sustainable leadership, driving the energy transition and why she’s excited about Project Canary’s mission.
“The best way to predict your future is to create it.” ― Abraham Lincoln
Individually and collectively, we all have a part to play in protecting our shared planet’s health and long-term sustainability while creating thriving economies and communities.
With split views on climate change, sustainability is seen by some as the opposite of profitability. However, recognizing the outward ripple effect of business actions on people, the planet, and prosperity, sustainable business practices can be both a source of enterprise value and the pathway for a better world.
Using the energy transition to create a more equitable and sustainable world requires leaders to shape the change with the right mindset, vision, and drive. Embracing best practices will drive future business success, so many organizations are embracing environmental, social, and governance principles while working towards net zero.
Managing the transition: an energy trilemma and beyond.
As a fundamental pillar of modern society, energy is crucial for addressing global challenges such as climate change, poverty, and inequality and building a better future for all. The importance of energy cannot be overstated.
Energy underpins human development and shapes the future of our planet. However, the convergence of crises, including post-pandemic shocks, Russia’s invasion of Ukraine, high inflation, and Europe’s energy crisis, reinforces the need for a managed energy transition.
In this context, we’re balancing three competing priorities: energy security, affordability, and sustainability (known as the energy trilemma). Solving the energy trilemma requires a multifaceted approach that simultaneously addresses each of these priorities.
Consequently, all energy transition scenarios establish that fossil fuels will remain in use for at least 2-3 decades, so we must focus on reducing emissions. To remain viable and sustainable into the future, oil and gas companies must invest in projects and technologies that enable them to decarbonize their supply.
But since no one can reach net zero alone because the carbon footprints of suppliers and consumers are interrelated, consumers need to be empowered to unleash society’s collective power and realize the vision of a more inclusive and equitable transition.
IPCC Report: The window of opportunity is still there but rapidly closing.
The Intergovernmental Panel on Climate Change (IPCC) released its most recent report in March. The report concluded that the world needs to cut 60% of its greenhouse gas emissions by 2035, compared with 2019, to stay under the warming limit set in Paris. Avoiding the global temperature from increasing above 1.5°C compared to pre-industrial levels is necessary to make adaptation less difficult. Our world will suffer fewer negative impacts on the intensity and frequency of extreme events, on resources, ecosystems, biodiversity, food security, cities, tourism, and carbon removal.
Climate change threatens human well-being and planetary health. And, while average global temperatures have already increased by 1.1°C, there is still a window of opportunity to realize a sustainable future for all.
However, this window of opportunity is rapidly closing. Without additional abatement, projected CO2 emissions from existing fossil fuels will likely exceed the allowable carbon budget of 1.5°C. We need to act quickly to achieve deep decarbonization across all sectors of the global economy.
The situation is dire, but more than fear, we need a vision and action for a better future.
Climate change is an existential threat to humanity and the planet. But while fear can trigger immediate action, fear is not what will motivate the long-term, sustained change needed.
Instead, we need rational hope. For that, we need a vision of a better future with abundant energy, a stable economy, and resources available to all, where our lives are not worse but better than they are today.
While a growing portion of the global GDP agrees with sustainability principles, we need the solutions and mechanisms to make those principles a reality.
And we must be deliberate in ensuring practical, viable, attractive, and accessible solutions for all.
Solving the energy trilemma requires global collaboration and existing and future technologies. Technologies like hydrogen, carbon capture, and sequestration need to be accelerated. In the meantime, we need to maximize what is available today. And that is where the focus on energy efficiency and methane abatement is so critical.
Gas as a bridge fuel for the energy trilemma.
Oil and gas will continue to be part of the energy mix for years to come, so it is crucial for the industry to proactively limit its environmental impact by decarbonizing its supply.
For several reasons, natural gas is often considered a bridge fuel for the energy transition. Natural gas has a lower carbon content compared to coal for energy production. There is also an extensive existing extraction, distribution, and utilization infrastructure, including pipelines, storage facilities, and power plants.
Natural gas power plants can provide reliable and flexible power generation, complementing renewable energy sources and helping overcome intermittency issues. Natural gas is also cost-effective, as renewable energy technologies are developing and becoming more affordable.
However, despite natural gas benefits, we must remember that methane is its primary component.
Methane emissions are the second most significant culprit for global warming after carbon dioxide (CO2). And while methane dissipates faster than (CO2), it is a harmful Green House Gas (GHG) 30 times more potent than CO2.
In the United States, methane emissions accounted for 10% of total GHG emissions in 2019, with methane emissions from oil and gas systems representing 32% of the total U.S. methane emissions in EPA’s inventory.
Globally, methane is responsible for around 30% of the temperature rise since the Industrial Revolution.
Incentives for realizing the methane emissions reduction and decarbonization opportunity.
Due to methane’s shorter-term climate impacts, cutting methane emissions is one of the most effective ways to limit global warming and improve air quality in the near term.
The United States is catalyzing actions to reduce methane emissions at home and worldwide, working with the European Union to lead a Global Methane Pledge to reduce overall methane emissions by 30% below 2020 levels by 2030.
The Global Methane Alliance estimates that Methane emissions are a wasted resource, responsible for about $30 billion in lost production annually.
The International Energy Agency IEA estimates zero net cost in eliminating 10% of leaks in 2020, as the value of the captured methane would be sufficient to cover the cost of the abatement measures.
With a balanced approach between incentives and fees, the USA is leading by example and establishing itself as the gold standard for methane emissions reduction. The inflation reduction act (IRA) provides funding and grants for technological improvements that reduce methane in industrial equipment, processes, and conventional marginal wells.
As part of the incentives for decarbonization, the IRA increases the value of the Carbon Capture and Sequestration (CCS) Tax Credit 45Q to $85 (up from the current $50) per metric ton for CO2 stored in secure geologic formations, $60 per ton for the beneficial utilization of captured carbon emissions and $60 per ton for CO2 stored in oil and gas fields.
Credit values for direct air capture technologies also increased to $180 per metric ton for those projects seeking to securely store captured CO2 in secure geologic formations, $130 per ton for carbon utilization, and $130 per metric ton for CO2 stored in oil and gas fields.
The IRA also introduces a charge on methane emissions from petroleum and natural gas systems for facilities that emit 25,000 mtCO2e or more per year. This emissions charge is the first time the federal government has directly imposed a charge, fee, or tax on GHG emissions, incentivizing facilities to enhance their equipment and operations to avoid paying them. The charge starts at $900 per metric ton of methane, increasing to $1,500 after two years.
What gets measured, gets managed, and can create value.
Incomplete information about actual emissions levels and a lack of awareness of the cost-effectiveness of reduction are crucial barriers to reducing methane emissions.
Tackling the challenge of methane emissions starts with understanding the magnitude of the issue and pinpointing the sources of these emissions.
Accurately gauging methane emissions is complex but begins with identifying emissions sources. Once leak sources are identified, oil and gas equipment emissions can be mitigated and prevented.
Decarbonization is not just a reputational or environmental issue for the oil and gas industry. Producers demonstrating that they are taking decisive action to reduce methane emissions can credibly argue preference and premiums for their resources over higher-emission options.
While there are many complementary technologies, and the use of satellites is helping estimate the global footprint, the world needs improvements to the transparency, accuracy, completeness, comparability, and consistency of methane emissions data.
Accurate site-level continuous measurement versus estimates will promote more ambitious and credible action and trust.
A measurement-based energy economy can promote the three Ts: Trust, Transparency, and Transactability. By avoiding claims of greenwashing, oil and gas operations with lower carbon intensities are increasingly likely to enjoy a commercial advantage over higher-emitting sources.
Let’s be the change we want to see; the time to act is now.
Regardless of political views, we all share this planet as our home. The IPCC report is crystal clear: we are not doing nearly enough to avoid dangerous global warming impacts, our choices matter, and the faster we act, the better off we will all be.
In the end, achieving the full potential of the transition is about leadership. With inspired and inspiring leaders, realizing the potential of the energy transition is possible. Climate action at every level matters and has an impact. We are champions of energy’s essential role in enabling a better, more sustainable future for all.
At a macro level, the U.S. international leadership is promoting action to address carbon emissions and solve the energy trilemma on a global scale. This leadership is re-establishing the American promise of equal opportunity access for all.
In honor of Earth Month, let’s help drive sustainable change that benefits all.
At an individual level, we can work to reduce our carbon emissions. In the USA, annual emissions are 14.6 tons of CO2e per person, more than twice the global average of 6.3 tons and six times India’s 2.4 tons per person. To fight climate change, the average annual emissions per person must drop to around 2.5 tons of CO2e by 2030.
Daily life options are available; from how we travel to the type of electricity we use, our food, and the things we buy, we all can make a difference.
Let’s be game changers; the moment to act is now!
Written by: Patricia Vega