Ten oil and gas companies plan to establish a $1bn fund next year to invest in research and startups focused on low carbon emissions technologies, through their Oil and Gas Climate Initiative (OGCI).
The OGCI Climate Investments fund will use new technologies owned by member companies and identify ways to cut the energy intensity of both transport and industry.
The 10 OGCI member companies – BP, China National Petroleum Corporation (CNPC), Eni, Pemex, Reliance Industries, Repsol, Royal Dutch Shell, Saudi Aramco, Statoil and Total – together represent one fifth of the world’s oil and gas production.
CNPC replaced BG Group as one of the 10 OGCI members after Shell acquired the UK-based gas supplier in February this year.
Each of the 10 companies will invest $100m in the fund, which is expected to last for 10 years and complement other investments made in reducing emissions.
Seven OGCI companies reporting data have invested almost $15bn in renewables over the past four years, plus almost $3bn in research and development on low greenhouse gas technologies.
OGCI said in a statement: “We expect our investments to have a considerable multiplier effect. This will come from partners investing alongside OGCI Climate Investments, as well as our own and other companies’ investments in deploying commercialised technologies.
“The overall impact on reducing emissions will be on the scale of a gigatonne [a unit of explosive power equivalent to one (109) billion tons of TNT] or more over the decade.”
Amin Nasser, CEO of Saudi Aramco, added: “The launch of OGCI Climate Investments clearly demonstrates our industry’s climate and environmental stewardship and our resolve to deliver secure, affordable and sustainable energy to the world while significantly reducing greenhouse gas emissions.”
The new fund could invest in startup companies and also fund research and development (R&D) programs at universities, Patrick Pouyanne, CEO of Total, said at its London press conference this month.
Bruce Niven, chief investment officer at Aramco’s corporate venturing unit, said by email he had “been heavily involved in set up and strategy development.
“It is a flexible financing vehicle that will do a mix of venture, JV [joint ventures], project/demonstration and R&D funding. Venture will likely be the major part.”
The fund will target four areas: accelerating the deployment of carbon capture, use and storage, reducing methane emissions from the global oil and gas industry, industrial energy efficiency and transportation efficiency.
A CEO and management team for OGCI Climate Investments has yet to be announced.
OGCI was launched at the UN Secretary General’s Climate Summit in New York in September 2014 and the idea for its collaborative investment vehicle was sparked during a meeting at Davos in January.
The oil and gas sector is the primary source of over half of the energy used by global economies and its operations emit around 5% of manmade greenhouse gases, while the use of oil and gas – in power generation, transportation, buildings and industrial operations – contributes about 32% more, OGCI said.