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Climate Assets monthly update: Waste not, want not

Date: 16 February 2022

My children ordering food and not eating it makes me hot under the collar.  You see, waste makes me angry.
 
So when I read in the FT about the methane leakages in the Permian Basin (McCormick & Benard, 28 January 2022), my blood pressure elevated.  This is waste on a gargantuan scale.  The aerial observations using Nasa’s Airbourne Imaging Spectometer show us the shocking extent of the issue.
 
The Permian Basin accounts for more than 30% of total US oil production.  Methane leakage in this region is c.60% higher than the US national average leakage rate.  Around 2.7m tonnes is released into the atmosphere each year from leaks in pipes, wells and processing stations across the Basin, as well as from the intentional flaring of excess natural gas. 

The red mist descends - our planet’s finite carbon budget is being needlessly wasted.

At COP26, recognising that methane is a powerful but short-lived climate pollutant, 109 countries signed up to the Global Methane Pledge to slash emissions by at least 30% by 2030 – these countries represent about 50% of global anthropogenic methane emissions.  35% of this methane comes from the fossil fuel sector.

 Smoking chimneys and a wind turbine
Calming myself down I try to understand why back in the Permian Basin so much methane is escaping.  I learn that the greater profitability of oil production in this region has resulted in a lack of investment in the infrastructure for natural gas gathering, processing and transportation. 
 
I recall I am also guilty.  Ordering the right quantity of groceries each week is also surprisingly vexing and try as I do, invariably something gets wasted, chucked uneaten into the abyss, producing methane as it rots.  That’s shocking too, harming the planet and happening in my kitchen and yours.  I’m engaged, but like the oil & gas operators, I’m too accepting of the inefficiencies and waste around me. 
 
I dare say putting in infrastructure in the Permian region takes effort and resources.  The good news is that operators are under increasing pressure from shareholders over their environmental credentials.  The satellite data now informs the key stakeholders who the main offenders are.  Regulators are also now on the case.  Biden’s administration has reinstated rules on plugging leaks in new facilities and new regulations put forward by the Environmental Protection Agency would also clamp down on leaks by existing facilities.
 
The scale of the problem is also an opportunity to meaningfully reduce methane emissions through better design, efficient management, regulation and infrastructure development.
 
Like at home there are opportunities to be more efficient in buying precisely what I need.  Better analysis of our family habits would help.  I dare say the infrastructure of the future will assist me too.
 
Perfect isn’t possible but we should all strive to make our version of good a bit better and reserve some anger for ourselves and the waste we are responsible for, as well as directing it at the Permian Basin operators and in my case my dear children picking at their dinner. 

Author

Caroline Langley

Investment Director

I have over 16 years of experience in the private client industry and 14 of those are with Quilter Cheviot where I have worked since 2006.  I manage private client portfolios (taxable accounts, ISAs and JISAs, trusts, SIPPs, small charities and offshore bonds) working with clients directly or alongside advisers.  I am also Deputy Fund Manager for the award-winning Climate Assets Fund.

Climate Assets Fund

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