I recently attended the Responsible Business Summit West 2019 in San Diego. It was truly impressive to hear and see all of the things that corporations and organizations are doing to achieve greater levels of sustainability and Environmental Social Governance (ESG) performance.
Critical to the discussion was the effort by companies to commit to reducing greenhouse gas (GHG) emissions and undergoing other efforts to address climate change.
Microsoft, Hewlett Packard, Home Depot, IBM, Chobani, and Sempra Energy were among the companies that made presentations on ESG and sustainable development, along with my colleague, Alanna Fishman.
Many of these companies have made great strides to ensure performance not only in their own operations, but also among their supply chains. What struck me was that in all cases, the actions of these companies were not harmful to operations, but were actually beneficial in terms of reducing waste, increasing efficiency, winning new customers, enhancing reputation, improving relationships with vendors and suppliers, building employee pride, and growing shareholder value. In other words, it was a smart transition.
A big part of the reason these organizations were able to accomplish these goals with such success was that they achieved them internally, in some cases with the help of external stakeholders, and on their own terms. While their decisions and actions were at times guided by advisors and organizations from the outside, they were not forced to act by heavy-handed regulation. This enabled them to play to their core strengths, which is how organizations perform most effectively.
There was also a lot of talk and interest in the transition from our current energy system to one that is lower carbon, less fossil-focused, and eventually net-zero carbon. Many of the presenters and attendees told stories about ambitious internal programs that worked well. Again, these largely involved gradual measured transitions that played to the strengths of the organization. There was a common theme – the need for a “smart transition.”
Following a less pragmatic path, the political discourse in the early stages of the 2020 campaign season has featured candidates trying to outdo one another in their proposals to end fossil energy and embrace a 100 percent green energy future.
While the rhetoric can be amusing, the concerning part of the story is there are many people who believe that what is being proposed is implementable in the timeframes described – an almost immediate jump to a zero-fossil economy. Rather than focus on the Green New Deal, we need to target our attention and efforts on solutions that are achievable.
At a recent energy forum in New Orleans, former US Energy Secretary Ernest Moniz spoke about the need for an energy policy that uses nuclear and natural gas to achieve our carbon reduction goals. He specifically noted that “[i]n our view a critical element of that transition does remain natural gas. Natural gas in this country has caused a revolution that has led to a majority of our carbon reduction.”
The U.S. energy revolution the former Secretary referred to is transformational in that it resulted in the US becoming the world’s largest producer and exporter of natural gas and crude oil, to the benefit of our economy. It is also revolutionary in its ability to enable the U.S. to reduce its GHG emissions.
For example, between 2005 and 2017, U.S. net emissions declined 12 percent largely due to a shift from coal to natural gas in electricity generation and increased deployment of renewable energy sources. This progress exemplifies a smart transition that utilizes domestic resources to meet our energy needs while addressing our climate and environmental goals.
This revolution is not only impacting the U.S. It is increasingly having an impact globally as the US sends its natural gas abroad via LNG exports. Currently the third largest LNG exporter in the world, the US is expected to exceed Australia and Qatar by 2024, with exports increasing by over 3.5 percent or about 4 trillion cubic feet, according to the International Energy Agency.
The GHG emissions reductions will also be exported, as will reductions in other pollutants such as particulates and ground level ozone.
While this is great news for the US and the world, the trend will be reversed if anti-natural gas activists are successful in thwarting future use of natural gas and the expansion of natural gas infrastructure needed to transport natural gas and produce LNG.
These efforts, which imply that natural gas is the problem and not the solution, threaten our ability to expand the energy and environmental benefits of natural gas domestically and globally and risks derailing a smart transition.
The world will face dire consequences if we do not take a measured approach to meeting our energy and climate needs. Natural gas enables the efficient and successful rollout of renewables in the U.S. and abroad because it fills in the gaps of renewable energy’s intermittency, while still reducing GHG emissions and ensuring reliability. It addresses the issues of potential blackouts and price spikes that would exist from inadequate supply. It also provides long term economic growth and export income for the U.S. economy, while giving our allies the benefit of diversification of supply.
In recent years, U.S. natural gas has taken significant heat globally for issues like flaring, methane emissions, and water use and management.
While these are issues that need to be addressed, as the companies that told their story in San Diego have shown, aggressive pursuit of sustainability goals and ESG programs offers a solution through which industry can ensure we are on the right path for a smart transition.
Jack Belcher is senior vice president of Cornerstone Energy Solutions and advises energy, transportation and financial services clients on government relations, regulatory affairs, risk management, ESG management, coalition building and stakeholder relations. He is also managing director of the National Ocean Policy Coalition.
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