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Global Investors Urge Industry to Cut Fracking Emissions

Institutional investor groups representing trillions of dollars in assets have called on the oil and natural gas industry to use best practice control technologies to reduce global methane emissions from hydraulic fracturing (fracking) of unconventional wells.

The North American Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change and the Australia/New Zealand Investor Group on Climate Change jointly urged industry and governments to take "effective action" to minimize methane emissions from growing unconventional gas and oil output that's made possible because of fracking.

"As shareholders in oil and gas companies, investors are concerned with the regulatory and reputational risks associated with fugitive methane and the significant climate change concerns methane emissions raise," the groups said. "Over 20 times more potent than carbon dioxide, accounting for 14% of global greenhouse gas emissions, methane has the potential to accelerate climate change significantly, thus heightening the long-term economic risk to the financial performance of investor assets. From 2010 to 2020, oil and gas methane emissions are projected to increase by 35%."

The three investor groups represent more than 200 members with total assets of $20 trillion-plus. Representatives are working with industry and experts, in coordination with the Carbon Disclosure Project, to develop an investor framework to evaluate company progress on reducing methane emissions. Consultation with companies is set to be completed in October.

The investor groups said they wanted to issue their statement after the International Energy Agency published "Golden Rules for a Golden Age of Gas," which said a "golden age" was on the horizon for gas across the globe, but only if the world's unconventional resources, including shale, tight gas and coalbed methane, were developed profitably and in an environmentally acceptable manner (see Shale Daily, May 30).

"We cannot declare a 'golden age of gas' without taking serious action to curb fugitive methane emissions," said INCR Director Mindy Lubber. "Natural gas can play an important role in the transition to a low-carbon energy future, but it would be ill advised to ignore the real and growing emissions impacts of unconventional natural gas and oil development made possible by fracking.

"Industry leaders have proven that methane emissions can be managed with technologies and strategies available today. That is why investors will continue to work closely with the oil and gas industry and regulators to limit risks, increase efficiency and mitigate environmental impact by reducing emissions of this powerful greenhouse gas."

The groups' statement comes ahead of the start of Rio+20, the United Nations Conference on Sustainable Development, where fracking is among the climate change issues that world leaders, policymakers and other organizations are expected to discuss. The groups also support the fracking risk disclosure guidelines issued in May by the Investor Environmental Health Network calling for minimizing air emissions from fracking operations (see Shale Daily, May 21).

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