During the recent Climate Week in New York City, the Oil and Gas Climate Initiative (OGCI), a collection of global energy companies, made several announcements. First, OGCI added three new US-based members -- Exxon, Chevron, and Occidental Petroleum -- bringing the total number of companies in the group to 13. Second, OGCI announced its first collective methane reduction target for member companies, a 0.25 percent leakage rate.
To discuss these issues and more, host Jason Bordoff sat down with Dr. Pratima Rangarajan, CEO of OGCI Climate Investments, on the latest episode of the Columbia Energy Exchange. OGCI Climate Investments is the arm of the organization that is investing more than $1 billion in what they describe as innovative startups to lower the carbon footprints of the energy and industrial sectors. Pratima has previously held various senior positions in the renewable energy field, including roles at GE and Vestas Wind Systems.
During their conversation Pratima and Jason discussed the history of OGCI and the goals of the Climate Investments portfolio. Pratima shared her view on what is needed to achieve deep decarbonization, the role for renewable energy and energy efficiency in that process, and the role of policy in driving down greenhouse gas emissions.
Other topics discussed include what improvements are necessary to scale carbon capture, utilization, and storage technologies, the use of satellites to continuously measure methane emissions, and what the future global energy system will look like if we successfully get on track to meet the necessary emissions reductions targets.
view the transcript
Jason Bordoff: Hello and welcome to the Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Jason Bordoff. During Climate Week in New York City recently the Oil and Gas Climate Initiative, the collection of global energy companies made several announcements including adding three new U.S. based members Exxon, Chevron and Occidental Petroleum bringing the total number of companies in the group to 13 and also announcing the first collective methane reduction target for number of companies to appoint 25% leakage rate.
To discuss these issues in more, I have the chance to sit down with Dr. Pratima Rangarajan, CEO, of OGCI Climate Investments. The arm of the organization that is investing more than a billion dollars in what they describe as innovative startups to lower the carbon footprints of the energy in industrial sectors. Pratima was recently appointed the first head of OGCI Climate Investments about a year ago, prior to this she held numerous senior positions within the renewable energy space including a GE and at Vestas Wind Systems.
During our conversations we touched on what the future holds for OGCI, how the climate investment fund is supporting new technologies and we’re putting those resources and addressing issues like methane leakage, carbon capture and utilization, other forms of reducing carbon dioxide emissions in the sector as well as the role of policy in achieving a low carbon future. It’s a fascinating conversation with Pratima, I hope you’ll enjoy it, here it is.
Pratima Rangarajan, thanks for joining us on Columbia Energy Exchange.
Pratima Rangarajan: Thank you Jason. It is a pleasure to be here and it’s quite an honor actually.
Jason Bordoff: Well, it’s good to have all the -- have OGCI in New York this week during the UN General Assembly week when we’re having this conversation. And when I ask you, about that, so, but for listeners who may not be aware, uh, just first explain briefly what OGCI is and what its purpose and mission is?
Pratima Rangarajan: Super yeah. The OGCI stands for the Oil and Gas Climate Initiative. And it is a consortium of 13 Oil and Gas major that have come together to take practical action on climate change. Their sincere belief is that they can do much greater good faster as a collective rather than as individual companies.
Jason Bordoff: And you said 13, that’s a bigger number than last week. We had three new members Exxon, Chevron, Occidental, I think there’s a perception outside that not all the oil companies are owes in the same place on these issues, sometimes there may be a difference between the European and the U.S. companies, do you think that it’s accurate? Do you think that it’s accurate? Do you think those companies – how will those companies joining OGCI change OGCI and what is a mean for its mission and activities moving forward?
Pratima Rangarajan: So, the first I think all the certain companies have the same and outcome in mind. We make sure that we were all aligned before we got together, because that alignment is critical to actually getting anything done. So, I don’t think there are in different place at all. What I do think they’re applying is a different mindset, a different approach, different geographic expertise that’s only going to add value to the conversation and to the execution.
Jason Bordoff: And you led up OGCI, part of OGCI, OGCI Climate Investments and so explain what that is, what the scope of the work is, well how much is being invested and where it’s going?
Pratima Rangarajan: Super, it’s my favorite topic. So the climate investments is a billion dollar fund that the billion plus now, that the companies put together in order to actually execute to the practical action. We invest in technologies and solutions that will lower the carbon footprint of the energy and the industrial sector it serves. And one of the reasons we pick those sectors is really that those two sectors produce most of the goods and services that make the world go around today. But in doing so they’re responsible for 75% of the Greenhouse Gas Emissions. So, it’s the place we have to start in order to start this climate journey.
Jason Bordoff: And talk about your – how you came to this, your background as a scientist, you worked from one of the premier technology and innovation companies, GE before coming to OGCI, but first just tell a little bit about your background as a scientist?
Pratima Rangarajan: It’s been a while, but I started, I have degrees in chemical engineering and I started as a scientist, been scientist, I worked on the plastics in the chemical side for many years, before I moved over to the power sector. And I think for the last ten years as you mentioned I have been working on renewable, actually on wind and energy storage, both in the United States for GE as well as in Europe I use to work for Vestas, one of the world’s largest wind energy companies. And when I worked at renewable that was part of my climate journey. I really believed over the last ten years that I have been working on-on climate, but it occurred to me about a couple years ago that just the penetration of renewable, even though it’s going very well, it isn’t enough to solve the climate challenge that we have today. And that’s why –
Jason Bordoff: And say more about why you believe that to be true, there are obviously many others who, some others who talk about 100% renewable and try to say 100% renewable goes to the debate about how much renewable can do and how much we can scale it. So your view about what it takes to achieve deep decarbonization, mid century goals of carbon neutrality, consistent method of long term, two degree pathway, what’s the role, renewable play and what else do we need in the mix and then how does that inform OGCI Investments?
Pratima Rangarajan: Excellent questions. And I think there’s been a lot of debate, but it’s really about the time scale and we don’t have a lot of time. And yes, fundamentally when we keep saying mid century, mid century is coming faster than we think. So, the real questions is can renewable scale to not only… it’s only a 20% today between renewable and nuclear in terms of the overall energy mix and keep in mind that there’s going to be a substantive increase in demands because the population is growing, so we’re saying about 30% increase in demand by say 2040 or so.
And so the question is well, the renewable can catch up to the other 80%, then look after that increase in demand and-and look after all the needs we have from a materials perspective, all of these today are sourced from fossil fuels. So, it really seems a very, very large challenge and improbable that we will change the entire infrastructure in a matter of a few decades. So, I would say that oil and gas is probably here to stay for the next few decades. And but we really need to decarbonize that sector so that we can manage not just the new demand for energy, but also the climate needs for the planet.
Jason Bordoff: So, what does that mean for where you prioritize as you think about and how did it apply more than a billion dollars now? What are the technologies that excite you that you see coming around the corner or tell us about some of the investments OGCI has made, OGCI CI has made?
Pratima Rangarajan: Absolutely. Again one of my favorite topics. So, we have three areas of focus and the first is to reduce the methane emissions. And this is really across the oil and gas value change, not just from production but also from the distribution and use. And we just announce three, three investments in that area –
Jason Bordoff: And we should note OGCI more broadly announced methane –
Pratima Rangarajan: Commitment.
Jason Bordoff: Target of 25% --
Pratima Rangarajan: Very ambitious target compared to the averages across-across the globe, so these are extremely ambitious targets and it’s important to note that they’re not easy to meet, the sector doesn’t have all the tools for measurements, for detection measurement, mitigation that it needs to really go, boom, I can meet those targets. And that’s what our investment fund does, is we will, we are trying to find all the right tools for both the OGCI companies as well as the rest of the sector and downstream to be able to use to reduce methane emissions.
As you know methane is a much more potent greenhouse gas than CO2, but it has a shorter life span, so it’s actually a good one to get started on quickly, because we can see the effect within a few decades.
Jason Bordoff: So, talk about some of the technologies, I mean, what do we need to get to the very, very low carbon methane emissions if not prevent them entirely?
Pratima Rangarajan: The first thing we have to do is to be able to measure them and at this, and we need 247global measurements, so that we always know when there’s a leak, when there’s a new leak what's going on, operational guys can't change something if they don’t know it’s happening. So, we have, we’ve made two investments on the measurement, one is the satellite company, GHGSat, when you think about 247 globally, you’re going to need satellite data and that’s what they do, they capture data on both CO2 and methane.
Our second investment is in an aerospace company, Kairos Aerospace, once you know you have a problem in a region you need to get in that, it’s not really taking larger area scans and that’s what Kairos does and our third investment that we announced is actually, it’s not in the measurement arena, but in stopping the leaks and that is a company called Clarke Valve, and they have a unique valve that’s very low cost actually and virtually eliminates all fugitive emissions. So what we love about these companies is they’re very practical and they can be scaled and implemented globally, pretty quickly, so we can see the actual impact.
Jason Bordoff: At the energy center here, we’ve, one of the areas we’ve prioritized as carbon management, carbon capture utilization, air capture CO2, there’s a lot of professors working on that Columbia, we’ve just created a research program here with Dr. Julio Friedmann to lead that in part because of what we heard in the public stake holder session at OGCI earlier this week which is despite the sort of commitments you're talking about, we’re not on track today for the kind of something consistent with two degrees, I think but there’s a consense or something, everyone in that room that we have a lot more work to do, and that carbon capture should and can play a role there and eventually negative emissions may well be needed. So can you talk about your view of carbon management and how OGCI Climate Investments is approaching it?
Pratima Rangarajan: I think a very important question and I agree with you, we are absolutely not on track or have to get on track. And there are two parts to it, one is we have to reduce the CO2 we emit. Today we emit 37 gigatons of CO2. So there is a huge part on the energy efficiency and transport efficiency that Climate Investments will focus on. But the part about CCUS is really because we still emit 37 gigatons.
Jason Bordoff: And that number is going up, not down, I mean –
Pratima Rangarajan: Exactly.
Jason Bordoff: It quite toed for a couple years, but it went up last year and I think it’s likely to go up this year?
Pratima Rangarajan: Yeah, yeah. And so we have to do something about it. So, we like to just call it, you know, I like to call it CO2 recycling. I think carbon capture utilization and storage is a bit of a mouthful, but it’s similar to home waste recycling, collect the CO2, clean it up, concentrate it and then we try to use it, a new product and what you can't use you put in storage, not that different from what you do with plastic bottles in your home. But we need to do something, because as this, if-if we don’t do it, the CO2 accumulates in the atmosphere like a blanket, it’s like adding blankets to our atmosphere every year and we get warmer. So we believe that it’s a very, very important part of our mandate to get CCUS working.
So, in CCUS, we have a three prong approach, the first is to reduce the cost of capture at present, the present technologies are too expensive we think. So we have an investment there in a company called Inventys, which has a novel solicit capture that we think will scale very well. But our second area is that is encouraging utilization companies. So, really how can we use the CO2 molecule to make new products, we have two investment in that area, Econic, which uses CO2 to make raw materials for polyurethanes, polyurethanes you use in everyday materials like mattresses and pillows. And our second is interesting, it’s Solidia, which is uses the CO2 to cure cement and concrete into water.
So, it does double job of lowering the CO2 footprints as well as the water footprint of cement and concrete and as you know cement is a, is responsible for almost 6% of global CO2. So, it’s a big hitter. So, I think all of those are very, very important for us, and but we’re also will invest in projects that look at the whole CCUS chain and in fact we have a project in the UK, we’re working with the UK government on, because in CCUS it’s not just about technology. It really is the business model hasn’t been shown to work. And we really need to get more projects in the ground, so we can lower the cost of the full cycle.
Jason Bordoff: Yeah, and presumably kind of making that business model work is partly about managing the whole, the cost of the whole system the way you just talked about and it’s probably about policy, whether you put a price on carbon or in some other way great incentives to do things we wouldn’t otherwise do, like try to remove the CO2 associated with using hydrocarbon, so how do you think about the role of policy, this OGCI play a role in advocating for a policy like that and what do you think needs to be done?
Pratima Rangarajan: Well, I think we’ve seen in the renewable sector the role of policy has worked, policy has worked tremendous, we’ve got tremendous benefits from it. I just, I'll use the UK as an example less than 15 years ago offshore wind was three times a cost of it today. We had a policy in place, so we could put in the first wind forms and 15 years later we’re a third of the cost. So, if we want speed and scale policy is one of the best levers that we have to at least get new technologies started on their path to lower cost and profitability.
So, we think it’s critical. OGCI we have a policy arm, in OGCI that works on policy, I think that’s great from an investment perspective, we don’t work on general policy, but we work with the governments on individual projects so that we want to get over the goal line. In the U.S. I think 45Q is a great first step for CCUS.
Jason Bordoff: This is the tax credit in the budget that provides the tax – rising tax credit up to $50 a ton for carbon capture and utilization.
Pratima Rangarajan: That’s correct. And it’s a great first step and we’re looking at projects all over the United States right now to see where we could help catalyze, catalyze the development of CCUS market place.
Jason Bordoff: And do you, what's the plan for OGCI Climate Investments moving forward, I mean, one thing you, I'm sure you’ve heard many times is people who say well, yes, a billion dollars is a lot, but in the scale of the capital budgets that all these companies have, we need to do a lot more. So, what's your reaction to that and what's the plan moving forward?
Pratima Rangarajan: Well, I think they will do a lot more, I am merely the billion dollars plus that we have now is merely a catalyst. So, for example I say, I've got an investment in these methane measurements, the next step is once I've done the investment, we piloted with these companies with our member companies or 13 companies and they will invest in piloting, they’ll invest in deploying in the late vast and taking it forward. It’s the same as we look at CCUS and those are some big bugs, but they will have to put behind some projects, and I think we have a full support of these companies. In Achates, you heard from Amin yesterday that’s our company –
Jason Bordoff: The CEO of Saudi Aramco.
Pratima Rangarajan: The CEO of Saudi Aramco, thank you. Achates is another company we’ve invested in and that looks at increased efficiency engines so, if that becomes commercial, you can imagine 20 to 50% lower CO2 emissions, you know from, everything from heavy duty trucks on. And our CEO at Saudi Aramco is very excited about that and we spoke about that the other day. So, I think we have they’ll all participate in it at a much greater level than the billion, the billion is the tip of the iceberg.
Jason Bordoff: And many of these companies have their own venture investment arms, different companies have moved in different directions to invest in renewable or batteries or different forms of clean energy, so how does OGCI climate investments work with the individual companies for what they’re doing is it connected or not?
Pratima Rangarajan: It is connected, and yeah, it has some distinct flavors. The companies are looking at the energy transition and where they want to position their companies as they move forward. And that includes the supply chain as well. So, they really think about this very holistically and does include carbon management for them. What OGCI, the climate investments piece is purely focused on climate. And our mandate is actually much broader than the oil and gas industry. We work on the entire energy infrastructure and its value chain and we also work on the industrial infrastructure and its value chain.
So I think but we have a very, very good relationship with the individual company venture funds, they act as a fund for us, they’re there for us when we need the resources, but we have to also keep in mind that we have to comply with ant competition rules, intellectual property and confidentiality. So, it’s a good, I think it’s a good combination, but we don’t do the same things at the same time.
Jason Bordoff: How does OGCI think about focusing on deployment of these new technologies?
Pratima Rangarajan: It’s critical. It really is, you know, that’s where we are very different from a typical investment fund. We are measured on impact and you don’t get impact unless you're deployed and you’re deployed at scale. So, a huge part of our efforts is in taking every technology that we invest in and sometimes technologies we don’t invest in, but we think are ready for deployment through the cycle. And we will support and that’s where we’re very lucky to have the team of OGCI companies, because we can leverage their expertise, their resources, their global footprint to support our companies into deployment.
Jason Bordoff: And I want to – the some people I think, I hear often, you’ve probably heard too, some people who see a conflict between the idea that the largest oil and gas companies in the world area going to help lead on the development of new technologies that fundamentally even with aggressive ambitious outlooks for carbon capture eat away at that core business, what's your response to that and then we talked about the credibility of kind of OGCI in this space, you know, earlier this week.
Pratima Rangarajan: You know these are companies with such incredible depth and breadth of capabilities. When they go deep into the ocean they can meet two small tubes together right. Once they decide that this is what they want to do, they’re going to be amazing engines for development. And I think that’s what we forget sometimes, we think of them as sectors, but their actual bunch of people. They’re – the CEO’s own hundreds and thousands – actually between our CEOs about two million people are employed. And these two million people care about global climate.
And once we can harness their capabilities and resources, then I think we have a much better chance of succeeding. The climate challenge is you know, Jason, it’s not only huge, but it’s coming on really, really fast. This is really a time that is about collaboration and going beyond your own comfort zones and beyond your own fences, I think well, I would really appreciate about our CEOs is that when they sit down to talk about OGCI and CI it is really beyond each of their companies, they are thinking widely and I have a lot of faith.
Jason Bordoff: And what are the challenges we have with achieving deep decarbonization goals as that even if you see very rapid growth rates in clean energy technologies, the denominators getting bigger, world’s using more energy in lots of parts of the world, merging markets, developing countries that are growing, their economies are growing, they’re using more energy, we don’t, talk a little bit about to what extent you see new technological opportunities they are to slow the pays of demand growth in the first place and what that might look like for where OGCI climate investments would think about deploying capital.
Pratima Rangarajan: I think it’s a demand, so in demand growth is critical, just as an engineer and a scientist, I just, this continuous increase in demand just doesn’t seems sustainable for the earth, because it’s not just about energy right, we have to produce food for the growing population, goods, energy, services and I think what’s interesting is that a third to two thirds or the molecules we use or any raw materials we use are actually wasted across the world. This is true for food. It is true for in the automotive sector, in almost every sector, efficiencies aren’t very good, in terms of actually taking the raw material and using them.
So I think all of us in the world whether it is in the developing countries or developed countries have to be a better look at efficiency and utilization and it’s a win-win, the lesser you use, the less money you spend and you get a return on investment twice, because you also get the climate impact. So I think that’s a critical piece. It doesn’t take away from the fact that’s the supply side, the energy in industrial sectors need to continuously and relentlessly drive to lower carbon footprint, but I think all of us as individual citizens countries can help with the demand side as well.
Jason Bordoff: And what, you’ve mentioned some areas where there are a lot of other people working in the space, you have the break through energy coalition, many high network individuals that had put billions of dollars into a fund for clean energy, you mentioned satellites, the Environmental Defense Fund in the NGO that’s where to launch satellite to measure methane and this played a very active role in giving us better understanding of the actual leakage rates in the U.S. collaborating with industry and with academics and I think we’ll see that globally moving forward. How do you work with other investment funds, other NGOs, how do you do that?
Pratima Rangarajan: Yeah, absolutely, as what I said earlier this has to be about collaboration right. So, we have no enemies, anyone who wants to work with us are fabulous, so, EDF, environmental defense fund, great example, not only are we doing some studies with them on methane measurements, they’re helping us with our standards, they were involved with our, you know, target setting, but in addition on the investment side, they will, they supported us through, you know, we were in a competition on methane to find new technologies.
And EDF was right in there with us, supporting us, trying to get us more technologies funneled to us, they came to our Competition Day, we work with them quite intensely, it’s been a fantastic collaboration actually. A breakthrough energy, a coalition and breakthrough energy ventures similar, they work in a slightly different set of streams, so we collaborate with them when we can, but in addition to them we have a range of other investment firms that we work with. And it’s been actually very, very promising, very optimistic, everyone is aligned on what we need to get done and it’s a good community as we find new options for investment.
Jason Bordoff: And when you look on the horizon for new investments you’ve talked about some of the areas that you're focused on with methane carbon capture, carbon utilization, what are the other kind of, what, well two questions, what technologies are coming around the corner that we’re not talking enough about yet and then what do you say for how the investment portfolio is going to broaden if it is for OGCI Climate Investments what are the other areas you're looking to find investment opportunities in?
Pratima Rangarajan: I think we do need energy efficiency is my, we haven’t done enough on it, we’ve only been alive for 15 months as you noted earlier, so we’re still on the journey to cover all our basis, but the first one to me energy efficiency is a no-brainer, more in transport efficiency you heard that during the couple days for annual symposium, so I think those are the two immediate focus areas for 2019 we will be doing a lot more in that, we will be doing a lot more in carbon capture utilization and storage as well in 2019.
Further on as we look, we are looking at some new business models around methane, we’re interested in exploring things that are outside the scope of our OGCI companies, you heard a good question, I think from during our symposium about what about the countries that haven’t joined and that are not making a pledge towards better methane. Is there a way to come up with business models that makes those economic? So, we’re open to anyone with good ideas around business models absolutely. And then we will be looking at with our policy and strategy group is there a way to approach natural sinks for CO2 in carbon management and how can we leverage those and is there an economic business model for an investor.
Jason Bordoff: You know, you mentioned earlier how, well, a minute or two left, but I'm curious, it’s been a lot of, we talked earlier about what role do the world’s largest oil and gas companies had and how did you meet the climate challenge and then lot of different views on that and but it is interesting to look at where some of the companies have deployed capital and where they’ve made investments in offshore wind and the acquisition of companies in the electricity sector, recently on this podcast we had Maarten Wetselaar from Shell, the Head of Gas and New Energies, Eldar Sætre, [phonetic] [00:27:31] CEO of Equinor one of the things we talked about is what do oil and gas companies know about being power utilities and the challenges they face in trying to enter these new businesses, so I'm wondering what do these companies look like in 20 years in your view if we’re successful in getting on track and being what we need to be.
Pratima Rangarajan: I think you know, maybe we should talk a little bit about what the world looks like in 20 years, before we can answer the question, after all whether they’re an oil and gas company or an energy company they’re merely a supplier to what we want. And I think we have to look there at the fact that we’re going to have three billion more people or so. We’re going to have to supply them with food, materials, energy and yet, the climate issues are only getting worse and we need to lower our carbon footprint by a minimum of 50%.
So if you put all those together I think the energy, there these, the oil and gas companies will be energy companies, because the supply side, they have to supply the energy for the rest of the world for this increasing, but they do need to it with a relentless drive to a lower carbon footprint and therefore they cannot pick and choose technologies, they have to be technology agnostic. I'd say that’s the first piece. The second piece is for investments and investors and this is for them, for the energy companies as well as global investors and share holders. In order to get to a low carbon world, we need to all be agnostic to technology.
It cannot be just renewable, in order to feed the world with enough energy we’re going to need everything we have, but we have to drive our investment funds to the low carbon sector regardless of the technology. The third of course, we talked about demand. We need to and this is for everyone of us, we need to work on lowering the demand because there’s nowhere we can continue this exponential increase in demand. And finally I think the fourth piece of our future equation has to be in policy in order to get speed and scale we need policies from different governments that support the first three points, otherwise it just stays with the early adopters and you know, early adopters don actually result in full scale and we need that.
Jason Bordoff: Well, you’ve spent a lot of your career focused on renewable energy, at wind power at GE and Vestas and thanks for the work you’ve been doing to accelerate and help with these technologies and the work you're doing now deploying capital to new emerging low carbon technologies and thanks for joining us now on Columbia Energy Exchange to talk about it. Pratima Rangarajan, thanks for being with us. Thanks to all of you for listening, until next time I'm Jason Bordoff. For more information about the Columbia Energy Exchange and the center on global energy policy please visit us online at energypolicy.columbia.edu or follow us on social media at columbiauenergy. Thank you all for joining us, we’ll see you next week.