Who is best equipped to transition the global economy to a low-carbon future? Perhaps it is those most familiar with the needs, challenges, and opportunities posed by rising human demand for energy.
The global oil and gas industry is positioned to lead the development of a cleaner, more sustainable energy mix, Christiana Figueres, the United Nations' climate chief said in a speech Thursday. Indeed, it may have little choice, according to Ms. Figueres, as dwindling conventional energy resources threaten the industry's business model and greenhouse gas emissions destabilize climates across the globe.
Oil and gas companies are quick to say they already contribute a great deal to lowering carbon emissions – by dramatically increasing the efficiency of resource extraction and power production, and in shifting the US away from coal and toward cleaner-burning natural gas. But Figueres urged an audience of industry leaders to do more Thursday – not only out of environmental concern, but also as an opportunity to invest in new technologies and growing markets.
"[T]he systemic risks of unabated climate change are potentially so unmanageable that the world has no other option but to address the challenge," Figueres said, according to prepared remarks before the IPIECA (International Petroleum Industry Environmental Conservation Association) in London. "We need, and are undoubtedly moving towards, a new, sustainable energy mix. What is exciting is that the oil and gas industry can actually be part of the solution. In fact I suggest the oil and gas industry become the leaders that take us to the new, sustainable energy mix."
Figueres called on energy producers to rein in potent methane emissions from natural gas and invest in renewable-energy technologies or ones that capture carbon emissions from existing power plants and store them underground.
First and foremost, they must be more transparent with investors about potential risks to their carbon assets, Figueres said. Those risks could come in the form of physical limits to resource extraction, the market impacts of new, emerging technologies, or taxes on carbon pollution. Three-fourths of the world's fossil fuel reserves must remain underground in order to limit global temperature rises to an agreed-upon safe level of 2 degrees C (3.6 degrees F.),Figueres said.
Activist investors have also put pressure on major energy firms to assess future threats that could leave their carbon assets "stranded" in the ground. While they have appeared increasingly receptive to shareholders' environmental concerns, most oil and gas companies continue to be skeptical of its impact on the bottom line.
ExxonMobil, the world's largest publicly traded international oil and gas company, released two reports this week that largely dismiss the risk of governments or other factors significantly curtailing its vast fossil fuel wealth.
"[W]e are confident that none of our hydrocarbon reserves are now or will become 'stranded,' " the company concluded in one of its two reports. "We believe producing these assets is essential to meeting growing energy demand worldwide, and in preventing consumers – especially those in the least developed and most vulnerable economies – from themselves becoming stranded in the global pursuit of higher living standards and greater economic opportunity."
ExxonMobil's reports came on the same day the UN's Intergovernmental Panel on Climate Change released its latest report in 25 years of documenting the threats posed by increased concentrations of heat-trapping gases in Earth's atmosphere. Figueres pointed to what she called the "physical boundary of the atmosphere" in making the case for game-changing support on renewables from traditional energy firms.
"Oil and gas can preserve their legacy as enablers of growth," Figueres said. "Legacy implies solutions that persist over time. We must look past the next quarter, past the end of the decade, into the second half of the century by which time the global economy must be carbon neutral."