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– Fixing the climate change is the industry’s license to operate

Professor David Victor is keynote speaker at Energy:Connected May 19th and the academic who wrote the white paper describing the intentions for the hedge fund Engine No. 1 instigating campaign to turn ExxonMobil away from fossil fuels.

– The white paper is part of an effort to demonstrate to the oil and gas industry and the industry overall, the need for the industry to take climate seriously.  When you look at the global industry, you see a lot of state-owned companies that don´t take it seriously at all. You see Western companies that talk a lot, but don’t really do very much, and then you have many companies who view climate change as an existential threat to their industry. These companies understand that if they don’t fix the problem they will disappear or lose the license to operate with access to capital.

Sustainability in the boardroom

David Victor is a professor of innovation and public policy at the University of San Diego. At this year’s Energy:Connected May 19th at Scandic Fornebu, he will take part in a conversation with Nina Jensen, on the topic “Sustainability in the boardroom”. 

Jensen is a board member of Aker Carbon Capture, Aker Offshore Wind, C4IR Ocean, Ocean Wise, and CEO of REV Ocean.

Shook big oil

The hedge fund Engine Number One has been called the “little hedge fund that shook big oil”. The activist shareholder won three seats on the Exxon Mobil Corp board earlier this year and wants to change the companies’ business models towards low emissions and renewables. This kind of boardroom activism is rare and unknown to Norwegian and European companies.

David Victor attended COP26 as lead author for the Intergovernmental Panel on Climate Change (IPCC), a United Nations-sanctioned international body with 195 country members that won the Nobel Peace Prize in 2007.

Pressure

Victor believes industry leaders are seeing a tremendous amount of pressure to take climate seriously:

– The pressure is coming from the public and coming from their workers, their shareholders, bankers, insurers, and so on. That pressure is leading them to invest in new kinds of technologies and businesses. And it’s those investments that are demonstrating how you cut emissions while continuing to thrive.

– That’s the theory of change at work, and that theory of change will be on display in Glasgow.

The problem is speed

– Even if you assume there was going to be a big effort to control emissions, stopping warming to two degrees was not possible. I believe that to this day. And what’s happened is we’ve gone from 2°C to 1.5°C, as a goal. It´s just evidence that it´s easy to make bold pledges so long as you don´t lay out in detail what everybody individually must do to meet that pledge.

Even though the goal has changed the way towards it, it seems difficult.

– The problem is the speed of change. Governments have made very bold promises to stop warming at 1.5 degrees, and other things that are frankly impossible to do. They continue to pretend that it´s possible because it’s politically too difficult to say “Hey, we can’t do that”. You see a huge amount of progress on the ground in sectors and niches, he says and adds:

The race to net zero

– When you add it all up, it hasn’t added up to stopping warming at 1.5. You can’t move the industrial system and the climate system as quickly as you need to meet those kinds of ambitious goals.

The theme for Energy:Connected is “The race to net zero”.

David Victor sees a risk with the world focus on this narrative:

– We must be careful that we don’t become so obsessed with Net Zero pledges that we start playing accounting tricks. I think one of the big challenges is going to be to make sure that Net Zero is a way to focus attention on bold but unknowable things.

Pledges

Instead, David focuses on the Paris Agreement itself, where the net zero goal was launched:

– The most important thing about the Paris negotiations is that it’s based on countries making pledges. Unlike the earlier efforts like the Kyoto Protocol, where you would set a binding centralized target and timetable – this just turns it upside down and the countries themselves make choices about what to do.

Victor believes this will give countries flexibility. In principle, it makes it possible for a new kind of cooperation to be developed where countries make pledges around what they’re willing and able to do.

The theory of change

– And then over time, cooperation emerges as they learn how to make new efforts to control emissions. The theory of change in the Paris Agreement is that global diplomacy is the result of experimentation and changing facts on the ground as opposed to the leader of that process, he says and adds:

– Whenever you have a pledge-based system of diplomacy, in addition to the pledges, you need to check up periodically on the pledges to make sure that countries that don’t have the capacity to do very much on their own have money and resources of various types. It’s all anchored around the central single central idea, which is a pledge-based system of diplomacy.

– Net Zero is a way to focus attention on bold but unknowable things

Last week the United States, the European Union, and partners formally launched the Global Methane Pledge, an initiative to reduce global methane emissions to keep the goal of limiting warming to 1.5 degrees Celsius.

Methane pledge

– The Methane Pledge is a good example of working with countries that have significant methane emissions to supply the best technologies and push them forward.

The U.S. announced new regulations that, if they hold, will cut U.S. methane emissions by 75 percent. Leading oil and gas companies have now developed a set of technologies and practices that allow them to cut methane emissions from their operations by essentially 100 percent.

– They’re moving the frontier. They’re showing what is possible. The rest will follow along with that main partnership, which is getting everybody to follow the law.

To experience David Victor on the stage, secure your Energy:Connected conference ticket here!

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