A powerful oil and gasoline presence is predicted on the COP28 local weather summit this month, after host United Arab Emirates mentioned everybody must be on the desk to seek out higher options to cease world warming.
However many stay sceptical of whether or not the trade may be earnest contributors to the local weather agenda.
Fossil fuels are the first trigger of world warming, and among the greatest vitality majors have lately walked again their sustainability ambitions.
Blockbuster Massive Oil earnings final yr amid excessive gas costs have led to profiteering accusations, whereas environmentalists suspect that fossil gas lobbyists blocked extra formidable targets ultimately yr’s COP27 in Egypt.
Becoming a member of the Eco-Enterprise podcast to debate the position that fossil gas corporations will play at COP28 is Charlotte Wolff-Bye, the chief sustainability officer of Petronas.
Petronas is Malaysia’s state-owned vitality firm, and one of many nation’s greatest monetary contributors. It has operations round the world, and its day by day manufacturing averaged 2.4 million barrels of oil equal final yr.
The corporate has additionally been current at previous COP summits, the place it has pledged motion in areas corresponding to higher managing methane emissions.
Charlotte Wolff-Bye is the Chief Sustainability Officer at Petronas. Picture: Petronas.
Tune in as we focus on:
- What Petronas will convey to COP28
- Can there be larger motion on the fossil gas sector’s sizeable Scope 3 emissions?
- How Petronas goals to construct belief with sceptics
- What a “accountable phase-down” of fossil fuels – as floated by COP28 management – entails
- The perfect outcomes from the local weather summit
Edited transcript
What is going to Petronas be bringing to COP28 when it comes to actions and messaging? Who shall be attending?
Petronas have a proper position within the COP course of. We are going to simply be a part of the 1000’s of different observers representing companies, cities and non-governmental organisations. It is a crucial discussion board for accelerating local weather motion, the place like-minded individuals get collectively, type new insights and broaden our community.
We are going to interact particularly on subjects corresponding to vitality transition, transition finance, simply transition, carbon pricing, voluntary carbon markets, nature-based options and biodiversity.
It’s about tips on how to scale up our efforts on local weather motion and to assist Malaysia and different host nations which have pledged targets in direction of the Paris ambitions.
We’ve a small delegation of leaders who shall be becoming a member of and a few of my staff members who’re specialists in particular areas of sustainability corresponding to biodiversity and carbon markets. They are going to comply with particular negotiation strands and programmes on the numerous pavilions.
I plan to go as properly, and sadly we will’t keep for very lengthy resulting from different enterprise duties to take care of in Malaysia. However we’re actually wanting ahead to COP28 as a result of it’s promoted as being very inclusive. Dubai can actually host large occasions, so the standard points round lack of lodging received’t be there so COP28 can actually be inclusive.
How do you interpret COP28’s message of getting oil and gasoline firms work collectively to attain local weather targets? What particular motion does this entail for Petronas?
I perceive that there’s concern and a kind of mistrust within the system in direction of many entities in society as a result of now we have a local weather disaster on our fingers. Nonetheless, inclusivity is necessary as a result of we should now transfer from discuss to motion, and which means bringing the true financial system to the desk.
About three quarters of artificial carbon emissions come from the worldwide vitality system, so it’s important to have the vitality system represented at a COP. The scenario has type of modified through the years. Up to now an ideal focus of the COPs was the negotiated outcomes – we wanted sturdy coverage alerts and for governments to come back collectively. However I’d say now, since COP 21 in 2015, now we have a really clear sign of the place the world desires local weather motion to go. So now it’s extra about the way you do it, who do you companion with, and how will you speed up local weather motion. So COPs have turn into a little bit of a local weather commerce honest, perhaps the world’s greatest local weather commerce honest.
Many teams need the oil and gasoline trade to sort out Scope 3 emissions, since as much as 95 per cent of emissions from the sector comes from fuels offered to and utilized by prospects. Is there a chance for any breakthrough settlement right here at COP28, and what would that appear like?
For us to attain with our local weather ambitions globally a complete programs transformation that’s required. We should change each how we produce vitality and devour vitality.
Scope 3 is a crucial subject. It’s such as you driving a automobile with my petrol in it – you produce my Scope 3 and your personal Scope 1 emissions. I don’t actually have management or whether or not you’re driving your automobile or not, and whether or not you’re dashing, and so forth. So Scope 3 is sophisticated since you don’t have direct management of it.
That’s the reason in Petronas we’re proper now specializing in Scope 1 and a pair of [operational emissions]. We’ve been engaged on this for properly over a decade, and our net-zero plan has been in place for about two years now – we’re actually doubling down on this, however that doesn’t imply we shouldn’t mature our approaches round Scope 3.
What can the [oil and gas] trade do? For Petronas, we’re, for example in Japan, taking a look at how can we decarbonise the worth chain by combining our gasoline supply with carbon seize and storage from the ability sector.
Many different oil and gasoline firms are additionally investing closely into different low carbon vitality options in addition to renewables. Whereas we try to decarbonise our current system, we additionally investing within the subsequent era of vitality.
I’d not be capable of ship on scope three targets with out all of society wanting to try this too. A carbon worth is sort of an efficient method of decarbonising economies as a complete. It incentivises producers, for example, to actually deal with vitality effectivity. Scope 3 is a crucial subject, however all of us have to work collectively to ship on it.
Do you see the momentum throughout the oil and gasoline trade to handle Scope 3, maybe in phrases setting a concrete goal or timeline?
As I discussed, it’s not inside my management essentially to scale back Scope 3 emissions. Nonetheless, you may actually work with prospects in serving to them decarbonise – that is one thing that Petronas may be very a lot specializing in, by offering renewable vitality options, or hydrogen, or maybe combining efforts with hydrogen and carbon seize and storage. We’ve a memorandum of understanding right here in Malaysia with Tenaga Nasional, for example.
I believe world industries most likely don’t have targets on something, however now we have to start out someplace. If the trade can begin with a typical method on Scope 1 and Scope 2, it is going to go a good distance. The problem is that as we speak, not each oil and gasoline firm is specializing in lowering emissions and constructing new low-carbon vitality options. We’d like the entire trade to embrace this agenda.
Advocacy teams corresponding to Rimbawatch have been calling for Petronas to halt upstream developments, and in COP28 there’ll probably be related calls by different teams. How do you propose to have interaction with them?
Engagement is totally important. We don’t all need to agree, however now we have to come back to the desk. I can see that individuals are very involved about local weather change and so is all people at Petronas.
Exploring for brand new oil and gasoline is totally important, as a result of yearly these fuels should be replenished. Current sources don’t present indefinitely.
Some observers would say that simply prolongs the lifetime of fossil fuels. Properly, that’s not fairly the case. To begin with, what’s necessary is to convey new gasoline finds to the market. That’s crucial as a result of the true challenge proper now’s that we have to transition – simply shifting from coal to gasoline would go an extended, good distance, so that’s completely important.
Petronas’ portfolio may be very gasoline heavy. Many different progressive oil and gasoline firms want to have an analogous portfolio to us, and they’re attempting to construct a gasoline portfolio, however Petronas is already in that scenario.
One other level is that, the extra mature an oil discipline is, the extra vitality it takes to get gas up from the Earth’s crust. Generally you discover lighter barrels, lower-carbon barrels. Not each barrel is equal. Everyone is on the lookout for the decrease carbon barrels all over the world.
And you’d see this the methods of all of the progressive oil and gasoline firms. For Petronas as a nationwide oil firm, we should be mindful affordability as properly. If there’s not sufficient to produce the market, the costs shall be very unaffordable as we’ve seen over the past yr and a half all over the world. That has actually compelled Bangladesh, for example, to devour extra coal than it was planning to.
Affordability is important, however we must always by no means lose the aim of sustainability, of lowering the emission depth of our barrels. The vitality system is complicated, there’s no silver bullet answer to resolve all of the challenges, however the engagement and the talk is necessary, so we do welcome that. I hope COP28 shall be a mutual floor to have these conversations in a respectful method.
Scientists and the Worldwide Power Company (IEA) say a pointy drop in fossil fuels is required to succeed in net-zero emissions by 2050. However some international locations and the oil and gasoline sector doesn’t wish to minimize provide and are banking on applied sciences corresponding to carbon seize to make up for extra emissions. What’s protecting Petronas from shifting its enterprise mannequin in direction of the IEA’s mannequin for net-zero?
There are a lot of eventualities on the market and and no situation is appropriate. You might be referring to the IEA’s 1.5oC up to date situation, which is a back-casted situation that begins with the end-goal after which seems at the place we’re as we speak, and what’s required to succeed in net-zero.
On the identical time, the IEA has additionally mentioned in its newest World Power Outlook which you could’t simply merely minimize spenidng on oil and gasoline, as a result of it received’t assist the world attain 1.5oC. The IEA points numerous analyses and it doesn’t at all times give the identical message. I believe that’s necessary to notice, and so to tug out only one situation in isolation just isn’t at all times conducive.
I used to be listening not too long ago to a webinar from the Japanese authorities’s analysis company, which had additionally issued new eventualities not too long ago. It advised that even the place there are sturdy coverage alerts in direction of local weather motion in developming international locations and particularly Southeast Asia, there’ll nonetheless be about 50 per cent oil and gasoline consumption come 2050. It additionally talks about not each geography being that conducive for renewables, so totally different areas will want totally different options.
That is all the things that you must take into account. From an organization perspective, we’re right here to serve the area and areas past Southeast Asia. This actually means driving down the emissions from the oil and gasoline we produce, and investing within the subsequent era of vitality options.
We’re additionally taking a look at biofuel, round financial system, specialty chemical substances, hydrogen and electrical automobile charging. We’re actually investing broadly into the brand new vitality house as properly.
Final yr, Petronas recorded a web revenue of about 100 billion ringgit (US$20 billion), which was double of 2021. Can Petronas say that it’s doing simply sufficient to maintain the world working with the upstream oil and gasoline actions whereas planning and financing for a low-carbon future?
Petronas as a nationwide oil firm shoulders a lot broader obligations than any market participant. First I’d say that we do stay in a commodity house and only some years in the past, we had no earnings in any respect. So earnings are good as a result of that retains the system working and we will make investments into new and higher options.
As I discussed, we shoulder broader obligations. We aren’t right here solely to provide vitality – that’s necessary – however we additionally right here to assist new worth chains and industrialisation of the nation. Simply as now we have carried out with the oil and gasoline companies and gear sector right here in Malaysia, going ahead, we have to do the identical round hydrogen, carbon seize and storage and so forth.
Income are additionally crucial to the shareholder, which is Malaysia and the individuals of Malaysia. They profit from the dividends that come from Petronas when now we have a worthwhile yr.
COP28 president-designate Dr Sultan Al Jaber has mentioned that we have to put together for a “accountable section down” of fossil fuels. How does Petronas see this message; do you might have a plan to responsibly section down oil and gasoline – what would such a enterprise mannequin appear like?
The problem is that the area we sit in might be one of many quickest rising areas on the planet. Once more, again to eventualities, certainly one of them exhibits vitality consumption within the area would possibly go up by 60 per cent within the subsequent few a long time.
I believe for Malaysia it’s about 3 per cent a yr due to inhabitants development and growth. Usually, which means you might have extra emissions. What’s necessary is to decouble financial development from emissions development.
For Petronas, we don’t have plans for phasing down or phasing out [supply], however like I discussed, now we have a gas-heavy portfolio, which can stand the check of time going ahead. The area continues to be very a lot depending on coal and gasoline may convey down the emissions down by by half.
Our worldwide operations are producing some very low-carbon gasoline; for oil manufacturing, we’re taking a look at decarbonising it as a lot as we will. It’s about responsibly producing oil and gasoline and abating emissions as a lot as we will, and we depart no stone unturned. in the event you go on our web site, you will notice dozens of memorandum of collaborations with companions throughout worth chains and governments.
We’re working very laborious on ensuring that vitality of the long run has a greater carbon depth than it has now, and I believe we’re making excellent progress.
How do you see the chance value of constant to spend money on gasoline and carbon seize in comparison with a sooner scale-up of renewables? May our use of gasoline for vitality safety forestall a transition in direction of renewables that will even be possible?
I hear this argument loads truly. Does carbon seize and storage simply lengthen oil and gasoline manufacturing and consumption indefinitely?
The truth is that the worldwide vitality system is extremely complicated. There’s no binary swap from yesterday to tomorrow, to one thing inexperienced. Creating renewables doesn’t imply simply placing some photo voltaic panels on roofs and windmills someplace. It actually requires a complete assist ecosystem.
You additionally require regulation and worth chains round it. We see now, for example, the offshore wind trade is struggling in different components of the world. However due to provide chain points and the excessive rate of interest atmosphere, it has turn into troublesome to drive the event ahead. So worth chains will take time to type and they’re going to want adjustment over time.
However there may be numerous effort and intent. We have to study from numerous components of the world about what has labored, what hasn’t labored. After all, the Malaysia authorities may be very proactive on this discipline and we’re very supportive of that.
However there isn’t any single in a single day shift from the present system to a very renewable system. A whole lot of funding goes into this, and investments into low-carbon options is already surpassing investments into fossil fuels, and that is unprecedented. We’ve by no means been within the house earlier than.
It is going to be troublesome as a result of worth chains don’t simply land on you and everybody earnings and it really works. The entire ecosystem must be duilt, and who pays for what? Do now we have the appropriate laws, regulation, tax incentives in place? All that can evolve over time.
Do you’re feeling if the world is prepared now, on the eve of COP28, to work collectively?
I’m not a part of the method, I’m an observer and we hope to have interaction and construct our community at COP28.
Will the world come collectively? It appears fairly fractious proper now, however we do want the world to come back collectively. It’s pressing, we should tackle tackle local weather change and scale up our actions immediately, and for that you simply want cooperation. It’s the solely method.
What actually introduced the Paris Settlement over the road was that sturdy collaboration between China and the USA, so let’s hope we’ll see some related strikes earlier than COP28, and I imagine there was numerous effort to get to that time.
Proper now, geopolitically, we’re in fairly a troublesome scenario all over the world. However the good factor with COPs is there may be numerous noise and robust winds earlier than COP begins, however it truly will get going, the momentum tends to take over, different issues fall away and folks are inclined to deal with what they’re there for.
So I’m hopeful. And the truth that all people is welcome can solely be a very good factor. As COP28 president-designate Dr Sultan Al Jaber is saying, the 27 COPs till now haven’t achieved what we have to do, so if the oil and gasoline trade and different industrial sectors can actually again the momentum that’s being introduced by the presidency this yr, that would actually transfer the needle sooner than earlier than.
What could be a perfect consequence from COP28 for you?
We hope that international locations may ratchet up their commitments and different issues would fall into place. I believe for us, the article six negotiations are fairly necessary. We actually wish to see a powerful motion in direction of voluntary carbon markets that might profit Malaysia vastly. This could be about buying and selling carbon credit from nature-based options, which might be necessary as a result of it might convey a market mechanism to facilitate transfers of proceeds from developed international locations into creating international locations.
On the oil and gasoline sector particularly, the COP 28 presidency has been very busy all year long corralling the trade internationally to decide to a method ahead and to scale back emissions. And I believe that is fairly momentous as a result of there are numerous progressive oil and gasoline firms, however they don’t represent the entire trade.
We have to get the remainder of the trade into the tent and thru a bit of little bit of peer strain and encouragement, we must always as an trade actually stay as much as the problem and double down on efforts.
And at last, what’s your message to those that are nonetheless sceptical of the advantages of getting the oil and gasoline sector at COP28?
To begin with, it’s, it’s okay to scrutinise us and maintain us accountable, but in addition, take a look at what we’re doing.
Up to now two years, we had arrange the Asean vitality sector methane roundtable, and as a part of this, we launched the Methane Management Programme. We’re quickly going to run a second workshop involving 100 technical specialists from nationwide oil firms throughout Asean, on tips on how to cut back methane emissions, which is such a potent greenhouse gasoline.
So there may be actual motion within the making. This area is taking nice strides, a lot that I’ve heard requests for the Methane Management Programme to be replicated in Latin America. Maybe that’s a chance to share our insights at COP28.
I believe we should be open and respectful in direction of individuals’s totally different views and opinions. COP is a chance to come back collectively. Why are we there? We’re there as a result of all of us care in regards to the local weather.
Generally you hear about oil and gasoline lobbyists wrecking the negotiations. There aren’t any oil and gasoline lobbyists there. We’re nowhere close to the negotiations. We’re there similar to different observers, to look at what’s occurring and have interaction within the very wealthy programme of a whole lot, if not 1000’s, of classes run on the numerous nation, trade and non-governmental organisation pavilions.
I’d say, let’s come collectively and listen to these totally different views as a result of we do want them. One perspective is not going to convey us over the road. We have to work collectively.
