If an aircraft manufacturer declared that its most crash-prone aircraft was safe, would you take a flight in it?
Was the reliance on market discipline and self-regulatory mechanisms a factor in the financial crisis of 2008?
As these questions make clear, there will always be an ongoing tension as to whether companies or sectors should be allowed to police themselves, with no independent oversight, or whether things should be regulated.
The oil and gas sectors are no different.As consumers, we have become conditioned to expect the best, whenever we want it. On-demand food, shopping, taxis and TV is the norm. And when you can’t get something delivered tomorrow, you probably huff and roll your eyes. And whereas in the past choice was limited, now it is infinite. Consumer power has never been higher, and that extends to green credentials.
In the oil and gas sector, the societal shift towards green consumer choices has caused ripples, simultaneously accelerating the need for producers to do the right thing by certifying their natural gas, and in effect, demonstrating their environmental credentials.
There are several options available when producers look to certify their gas on methane emissions, which include profitable schemes where companies offer to ‘certify’ gas as low emission, in terms of methane. This certification can indicate that more sustainable practices are being followed. But if that certification is delivered as part of a commercial arrangement, can we be assured that it is actually doing what it says? Should we blindly assume it is beneficial to the planet?
While these means of certification may claim to give a business greater oversight, there is one problem: the financial incentive for these certification businesses to offer out more certification actually acts as a disincentive for the reduction of methane emissions in real terms. The more certification, the more profit: there is an insurmountable risk that commercial certification programmes actually reduce transparency.
Consumers, buyers and regulators need to be able to trust the benchmarks and standards that the industry is assessed against. This means that standard setters driven by profit will never be credible, as a result of the clear conflict of interest that underlines their business model.
In the certification of natural gas based on environmental credentials, three key characteristics are critical:
- It must be 3rd party audited from a choice of multiple auditors
- It must be technology neutral, with multiple vendor solutions allowed
- It must be open source, and not a black box or “AI engine”
These principles could be sacrificed for the sake of profit-making, but where does that leave us? With no true reduction in emissions, and a sector that is built on incredibly shaky foundations in terms of its so-called efforts to decarbonise.
In an era when across the world trust in institutions is dwindling, independent certification is the only way to build trust in the from the start. Legitimate standards must reject profit in the name of independence. Anything else leaves the sector open to accusations of opaqueness, deceitfulness, and even the risk of a reduction in true market wide competition.
The most successful examples of genuine, impactful market-led certification are thorough, robust and third party verified – independently audited by established and trusted auditors with in-depth expertise. In addition, they are deconflicted – delivered not for profit to avoid adverse outcomes. They are also designed for the future: to collaborate not compete with regulators to ensure maximum global effectiveness.
Finally, they are end to end. ‘Fairtrade’ coffee beans are not Fairtrade if they are only traceable as far back as the export dockyard. Certification systems must follow the product along the supply chain from the production asset to entry to the importing zone.
MiQ, unlike some other providers, does all of these things. Make sure that your choice of certification standard gives you the greatest possible chance to achieve the deep and rapid methane emissions reductions you, your customers – and the planet – needs.