In conversation with Sarah Ladislaw, Senior Vice President and Director at the CSIS Energy and National Security Program, Pratima Rangarajan, CEO of OGCI Climate Investments, talked about her work within the context of the OGCI, why the fund was founded and how Climate Investments differentiates itself from other funds. We’ve summarised the highlights of the discussion here:
SL: Tell us about OGCI and Climate Investments. What does the group do?
PR: OGCI, led by the CEOs of 10 major oil and gas companies, was launched in 2014 to lead the industry’s action on climate change. The CEOs started this journey with a real clarity of mission – to take practical action: reducing methane emissions, reducing emissions by increasing industrial energy efficiency and transport efficiency and CCUS. Almost exactly a year ago Climate Investments began operating as an independent part of OGCI, to manage the investment fund that these 10 companies have committed to as OGCI.
SL: How does OGCI Climate Investments differ from other investment funds?
PR: OGCI has chosen to focus our work where we feel we can make the most impact on emissions reduction in the near future. Tackling methane leakage is a great example of this. Methane is a potent greenhouse gas and has a climate change impact 28 times greater than carbon dioxide over a 100-year period. Methane leaks are common across supply chains and we therefore identified this as an area where we can make a significant difference and quickly.
Earlier this week, here in Washington, we hosted our first Venture Day where we committed to investing $20 million in promising technologies able to detect, measure and mitigate methane at scale and commercially. Out of 56 applications we chose 10 shortlisted companies to come and present proposals. This is what differentiates OGCI Climate Investments from other investment funds. We are looking at investing in technologies which can be integrated into existing operational environments, which are commercially viable and have potential to scale. And our member companies are ready to take advantage of these solutions and technologies to enable fast deployment in their own supply chains: we have a market and can have an immediate impact.
SL: Tell us about the member companies and how OGCI sits alongside their own individual activities?
PR: Member company cooperation is a significant part of the success of OGCI, and the work that Climate Investments is involved in is spurring on the member companies to do even more. OGCI is an addition – not a replacement for individual member company activity around accelerating the energy transition. In 2017, the CEOs committed to progressing towards zero methane emissions and later this year, they will build on that with stronger targets. It’s amazing that our members are 10 competitive oil and gas majors and yet they work together in such a collaborative fashion because they truly believe that the climate issue is bigger than any one of them and that they cannot solve the problem by themselves.
SL: What about renewables? Is that something that OGCI is looking at or is this about other approaches?
PR: We are sometimes asked why OGCI isn’t focused on renewables and the main reason is that we believe that renewables cannot deliver the energy transition alone. 20 years ago, fossil fuels were responsible for 80% of energy generation – 20 years later, they are still responsible for 80%. Why? Because renewables cannot keep up with the pace at which the global population and demand for energy is growing – they can’t be scaled quickly enough. Our member companies are each involved in investing in renewables as part of the energy mix. But as OGCI we are focusing our efforts on developing technologies which can meet this increasing demand. And that means looking at improving energy efficiencies, reducing wastage throughout the supply chain and scaling up solutions like CCUS which can have a massive impact.
SL: What about policy mechanisms? Is OGCI advocating for public policy proposals?
PR: Many people think that industry hates regulations, that’s not true. Sometimes regulations can be very helpful in enabling companies to make fundamental changes whilst also meeting the needs of their shareholders. The willingness of governments to put public policy mechanisms in place to support initiatives and make them commercially viable is often integral to success and widespread deployment. This was the case with wind power - governments in the UK, US and Germany in particular enabled mechanisms to support the development of wind farms and the resulting marketplace has dramatically cut the costs of offshore wind. If a similar approach could be replicated for CCUS, this would greatly reduce the cost and allow CCUS to be deployed at scale, which would transform its potential to reduce carbon emissions.
But it’s not just about public policy, it’s also about creating a marketplace. A good example is recycling. Today most businesses and consumers wouldn’t question the importance of recycling. But 20 years ago, there just wasn’t the market for it and it was seen as expensive and optional. Changing behavior takes time, so public policy, industry, consumers - all are needed to work together.
SL: What about transportation? That seems to be a slight departure for a group like OGCI?
PR: Yes it’s true that transportation does take OGCI into an area away from the member companies core business - it’s not about production or supply. However, improving transport efficiency is going to be critical to reducing carbon emissions. Most vehicles still run on petrol and diesel and will continue to do so for the foreseeable future. Electric vehicles will continue to increase as passenger cars, but most of the growth in this sector is in heavy vehicles, and particularly in Asia. Therefore OGCI are also looking at transportation and in particular solutions that will help to reduce greenhouse gas emissions created in the transport sector.
SL: Are you ever accused of greenwashing?
PR: Well when asked if OGCI is just greenwashing, I say: “Let’s hear your better ideas on how to tackle climate change!” It is easy to criticize us but often without suggesting credible alternatives. If you can suggest an idea then we will look at it. There is plenty of innovation capital and innovative companies out there. We just hosted at least 10 of them at our Venture Day, and we will be meeting many more. At Climate Investments, we want to help create real solutions, commercially viable solutions that can be quickly scaled and deployed in operational environments so we can start to make a real impact on tackling climate change here and now.
You can access the full webcast click here.