In the midst of the oil and gas industry’s transition to a low-carbon future, concerns about climate risk have added to the already complex landscape facing business leaders.
With the growing importance of ESG to stakeholders, it’s critical for energy companies to comprehend ESG concepts and incorporate improvement of ESG performance into long-term strategies.
Allyson Anderson Book, vice president of energy transition with Baker Hughes, is passionate about sustainable energy solutions and a 25 Influential Women in Energy honoree. Prior to her role at Baker Hughes, Book served as the associate director for the Bureau of Safety and Environmental Enforcement and for U.S. Senator Jeff Bingaman.
Book strongly believes that there is a “real opportunity” in the oil and gas sector to reduce emissions and positively impact the global community and maintain company growth at the same time.
She also talked about the need for innovative solutions to reduce emissions across different types of energy—whether it’s oil, gas, hydrogen or geothermal.
Hart Energy: ESG is becoming a megatrend. How can this turn into real and lasting practices for oil and gas companies?
Book: The pace of change and adoption of ESG frameworks by many companies in and outside of the energy sector has been exciting to say the least. The excitement and energy focused on the topic of sustainability is turning into real practices due to heightened oversight placed on companies, though I think we are in the early days of that transformation.
As business operations for the E&P sector become increasingly more transparent, combined with clear regulatory signaling from governments, real changes are beginning to happen, particularly in the area of emissions reduction.
Hart Energy: What are some of the biggest challenges in working toward the ‘E’ in ESG for oil and gas?
Book: The big hurdles today are a little different than they were even just a year ago. Today’s solutions require global collaboration and partnership. As the IEA shared, 25% of CO2 emissions reduction will come from currently available technology, 35% of technology needed to tackle CO2 emissions in the future will come from technologies in the prototype or demonstration phase, and 40% will rely on technologies not yet commercially deployed. It will take energy producers, technology and service providers, energy buyers, policymakers, and the community at large working closely together to achieve our collective ambitions to reach net zero. Making a commitment is the easy part. Getting to net-zero carbon equivalent emissions as a sector (and society) is perhaps the single greatest challenge of our lifetime.
Markets will naturally bear out who the winners and losers are in terms of low- to no-carbon energy production. What we don’t want, or need, is to lock in any one of kind technology or energy source. Companies need to be able to advance innovative solutions for carbon abatement and sustainable energy production. Innovation can occur with the right kinds of financial, policy and regulatory incentives to support long-term investments in sustainable energy solutions. Too often people pick one energy type or solution at the exclusion of everything else. In that scenario, if one source of energy fails in some way, then there's no back-up and an entire community might be without power, water or other essential services.
One of the strengths Baker Hughes brings to the energy transition is that we have technologies that are applicable to different types of energy—whether it’s oil, gas, hydrogen or geothermal as well as other sectors.
Emissions are the issue, not any particular fuel type. And we have and are developing solutions for both energy and industrial sectors to address different emissions challenges in various ways. It’s exciting to think about taking on a massive challenge and solving it. And to do that right, the outcome cannot be predetermined. We know the challenge in front of us today, let us get there through innovation, partnership and collaboration.
Hart Energy: Can you discuss some key factors that are pushing companies toward sustainability?
Book: There has been an increasing call for focused investments to progress the energy transition toward net-zero goals in line with the Paris agreement. The public outcry for change, as well as supportive government policies to mitigate the risks of climate change, is helping to drive the energy transition.
So right now, we’re all seeing this acceleration—due to these forces much bigger than any one sector—to move energy forward to more sustainable outcomes.
In addition, there has been progress in terms of companies' commitments. You don't just see it in our sector, you see it across all sectors right now. Many companies are making net-zero pledges—some for 2050, and some for far sooner.
Another thing has happened. People are picking up the importance of sustainability and not just on the emissions side, I would say on the social and governance sides as well, because it all goes together. If a company operates in a sustainable way, then it will be viewed positively by investors, employees, customers, communities and various other stakeholders, as being a better return on investment, employer and partner than those companies that do not function in a sustainable way.
In early 2019, Baker Hughes was one of the first companies in its sector to commit to reducing its Scope 1 and 2 greenhouse gas emissions by 50% by 2030 and to achieving net-zero emissions by 2050. The say-do ratio is important. We transparently share our progress in accordance with the Greenhouse Gas Protocol, which is the global reporting standard for how companies should measure and report emissions. We also have expanded our reporting of Scope 3 emissions across our value chain and are committed to making progress there as well.
Hart Energy: How is Baker Hughes addressing the challenges of climate change?
Book: Apart from our commitment to reduce our own emissions, Baker Hughes views the energy transition as an opportunity to make an impact on the global community and maintain company growth at the same time. It's an opportunity not just for us, but also for our customers and the communities we all serve. This includes potential new customers that we starting to engage with from different sectors, such as in industries like steel and cement, where emissions are particularly hard to abate.
There is real opportunity for us to apply existing technology to solve for the largest sources of Scope 1 and 2 emissions in energy production today, while investing in sustainable energy technologies for tomorrow, such as in hydrogen, geothermal, and carbon capture and storage areas where we have decades of experience as well.
Hart Energy: Workforce plays a very critical role in the shift toward energy transition. How do you plan to attract new talent and ensure the training, upskilling of the current workforce as your company transitions to an energy technology company?
Book: I think the energy transition to a low-carbon future resonates with young people and seasoned professionals alike. Baker Hughes’s very purpose statement is to ‘take energy forward—making it safer, cleaner and more efficient for people and the planet.’
It represents how and why we show up every day, and we believe it’s a powerful value proposition for others to join us. From my experience, any role my team posts related to ‘energy transition’ or ‘sustainability’ has had a high hit rate, and we have seen amazing and dynamic applicant pools.
For instance, we had an opening for a corporate sustainability manager, where within about a week and a half, we received 500 applicants. Candidates who applied ranged from those just out of school to very seasoned 20-year veterans who were looking to engage with us. So, there is a very strong motivational piece. People want to have and make an impact.
Continuous training is something we focus on at Baker Hughes. We have an active workforce, hungry to understand pockets of the energy transition better and better. And we have designed our own energy transition training opportunities internally to further develop our teams. As people come on board, there is an intrinsic commitment beyond Baker Hughes to the broader societal shifts taking place—on both the people and the planet side. All companies need to bring this broader perspective into the frame as ‘transition’ happens.
In fact, I would say, the term ‘energy transition’ doesn’t cover the profound societal shifts underway. To be a fair or ‘just’ transition, we must work collectively to ensure the costs are not carried disproportionally by any member of society. This work requires ongoing public dialogue and engagement, in addition to technology solutions and policy incentives, to make sustainable progress by increasing access to energy while decreasing emissions from energy.
2022-06-09 - Canadian crude is being washed out by a surplus of American sour crude due to the U.S. opening its Strategic Petroleum Reserve to combat high fuel prices.