Lord Browne is Chairman of BeyondNetZero, a climate growth equity venture established in partnership with General Atlantic. He served as Group Chief Executive of international energy company BP from 1995 to 2007, having joined the company in 1966 as a university apprentice. He led BP through a period of significant growth and transformation, including a merger with Amoco in 1998. His landmark speech at Stanford University in 1997 established BP as a global leader in the way it thought about and sought to address climate change. In 2007, Lord Browne joined Riverstone, where he was co-head of the world’s largest renewable energy private equity fund until 2015.
Lord Browne is independent Co-Chairman of the Prime Minister’s Council on Science and Technology, Chairman of the Queen Elizabeth Prize for Engineering, Chairman of the Courtauld Institute of Art, and a past President of the Royal Academy of Engineering, and a member of the SparkCognition Board.
In this feature we bring you a conversation between Amir Husain, CEO at SparkCognition and Lord Browne.
Amir Husain: Lord Browne, thank you so very much for your time today and for agreeing to speak with Cognitive Times.
Back in 1997, you were the first CEO of a major oil and gas company to talk about the importance of climate change and the responsibility that energy companies have towards assuring sustainability. How hard was this to do in the environment at the time, and did you face opposition from your peers when you spoke about this issue?
Amir Husain: Well, I can imagine how much dedication and focus something like that takes, particularly in the face of opposition and, frankly, your commitment to sustainability continues even now. It’s been a thread through your career over the last several decades.
Earlier this year in partnership with General Atlantic, you announced the formation of BeyondNetZero, a new venture focused on climate change-related investments, where you were the founding Chairman. What are some of the key initiatives and core investment themes BeyondNetZero is focused on to drive maximum impact within the larger client theme? What are some of the specific areas that you are most excited about?
Lord Browne: BeyondNetZero is General Atlantic’s climate investing venture and is up and running. We work with entrepreneurs who are part of the net zero revolution and seek to help their companies to grow and to prosper. We select portfolio companies that fit our core purpose. We only invest if the company can set science-based targets that give us a pathway to our goal of reducing greenhouse gases to net zero by 2050. We also insist on measuring achievement and progress annually through our external partner organisation called Systemiq. They help us validate what the companies are doing. We are a horizontal activity, so we look across every sector, investing in companies that we believe make the decarbonisation processes more efficient and effective whilst contributing to net zero; it’s what SparkCognition does with so many different sectors. This includes decarbonsation and energy efficiency. It also includes nature-based solutions, such as being conscious of investing appropriately in forests and thinking about carbon credits, or getting involved with agriculture, finding ways of growing food which may reduce carbon dioxide emissions. Finally, we’re involved in the measurement and management of greenhouse gases. Our activities span across the spectrum. I should say, however, we’re not doing everything; it’s always unwise in business not to focus selectively. Where we have skills in specific areas, we aim to pursue activity which reduces greenhouse gases and creates profitable companies.
Lord Browne: I think it’s very important to remember that many of these schemes have been tried in the past and have failed, and so credibility is at stake here. Nowadays, of course, we are able to plant trees, taking care to pick the right ones to plant. We can grow them and replace those that die or are cleared with other trees so that we have a continuous stock of locked-in carbon. We can also monitor this through satellite imagery, and satellite detection, measure the density of the vegetation and detect whether anything has been happening to the soil underneath the trees. We can therefore certify that what people say is there, is actually there. I believe measurement and management require long-term commitment if trees are to be a permanent store of carbon. And that is why it is controversial at the moment, because people say, “well, of course, we can do that, but the moment our back is turned, it’ll be cut down for another reason”. We must make sure that doesn’t happen, otherwise our credibility will be undermined. We have to try to make it possible to sell credits for the reduction of carbon and to absorb the carbon on a long-term basis.
I think the other thing about forests is trees tend to be felled for the wood, but also for the clearing of land. We should be finding ways of avoiding both of these actions. We should also be incentivising people to avoid using land where other opportunities exist. An example would be to reduce the amount of soy which is grown on land that used to be forests. This soy is used to feed cattle, the beef from which is then consumed. We should challenge ourselves to secure alternative feed, or even substitute the beef in the food chain. These are very important considerations which have the potential to have a dramatic impact on the amount of greenhouse gases generated around the world.
Lord Browne: There is a whole range of technologies that we know work and have the capacity to bring about enormous change. Renewable energy is definitely growing and will continue to grow. But it still only represents around 5% of global energy supply. I’m also very excited about nuclear. I do think that the world’s electricity system needs a baseload power supply, and nuclear, and for the time being natural gas with some form of carbon abatement, are the two big contributors here. Fission is proven but the waste needs handling. We also now see private companies investing in fusion, Constellation Energy being the very latest, which very recently enjoyed a very significant funding round. So I think there is very exciting activity here.
In the building sector as a whole, steel, cement and building materials all of which represent approximately 20% of the world’s greenhouse gases. Things are happening to reduce greenhouse gases. For example, there are different way of reducing iron ore to make steel, not using metallurgical coal and heat from hydrocarbons, but using hydrogen. Different forms of material can be used to create cement, including calcium or salts that are made with carbon dioxide. Carbon dioxide can also be used to cure cement, using building materials which contain recycled components from plastics, for example. These are all very important steps. So building is important, power is important, food is important. How do we reduce the huge amount of greenhouse gases which come out of agriculture, not least from beef and lamb? This needs to be thought through.
In each area there are different exciting technologies but as we know very well, the best way of reducing greenhouse gases is to use less of everything – for example, less energy. Optimisation of action by moving things around in an intelligent way, for example, can reduce emissions. This is all about AI and control systems. We all know about the travelling salesman problem, when you have got to travel to a number of places and the order in which you travel makes a difference. In the case of the old thinking, cost, and the new thinking, greenhouse gases and cost, you can do all sorts of things such as routing ships in different ways, moving vehicles around in different ways, looking at the whole supply chain. I think it is very exciting to see that at last this is being thought of; greenhouse gases are becoming an increasingly important consideration in supply chain management, not simply cost.
Amir Husain: Very well said, and of course at SparkCognition, we see AI as a broad capability that can impact all aspects of energy production. As we’ve worked with energy clients, we’ve found that optimisation is one element, prediction is another element, as is the prevention of failure and prevention of environmental catastrophes that might result as a consequence of those failures. Those are all very valid areas to which this technology can be applied.
In your conversations with energy companies and the advice that you’ve given to the leading CEOs in these sectors, what have you found to be other promising applications of artificial intelligence or sophisticated control technology in their areas of work?
Lord Browne: For a very long time anyone leading a hazardous business – and a lot of the energy business can be hazardous to human beings – has said, “wouldn’t it be nice if we had a plant with nobody in it”. Many attempts have been made to create autonomous systems and we are beginning to get to the point where real progress is being made. There are storehouses, ports, mines and factories involving few or no people and if people are still involved you can even predict when an accident is going to occur because you can observe patterns of behaviour and predict outcomes.
It’s very important to the oil and gas industry that they work to eliminate all forms of methane emission as well as those from carbon dioxide. We still need hydrocarbons but nobody wants them with uncontrolled emissions. So we have this conundrum of making hydrocarbons without carbon dioxide emissions. I believe this is one of the biggest challenges. Inevitably the use of hydrocarbons will eventually diminish since there will be other things which will take their place, both in mobility and in power generation and in heat and light, but it will take a long time. And of course, it’s not the thing that everybody in the world wants to see happen. There are nations that live on royalties and taxes which flow from hydrocarbon production. I don’t believe they will easily turn off the tap on their future.
Lord Browne: I think the important thing is never to lose the plot. Why are we doing this? While it’s an easy thing to say we’re doing it to save the planet, I don’t believe that’s correct. We’re actually doing it to save humanity. We’re trying to make it possible for humans to continue to exist and prosper, made possible by the use of our brains, technology and our behaviour.
In order to get there, I believe we are going to have to go through another big change in capital allocation, the largest since the industrial revolution. At that time it moved from the land to factories, it was powered by coal, which delivered an output per kilo 70 times greater than a human could have achieved. We are going through another industrial revolution, because the objective function has changed. In the past it was purely about growth. It was about growth in profits and it didn’t matter about the externalities. It didn’t matter about the damage that was done to the natural environment.
Since then, we have progressively thought about one factor after another, trying to make things better. We don’t have factories that kill people when they go to work. We don’t have smog in London. We don’t have lakes filled with toxins which would kill you if you jumped in, and actually we now try and proactively clean them up. We are doing more about equality and more about human rights and freedom of expression. We have now reached the point where we are acknowledging we have to do more together about the consequences of greenhouse gases. Consumers are demanding more information about the goods and services they consume, so that they can make informed, low-carbon choices. Corporate leaders are putting their shoulder behind laws and regulations that apply to everyone, in order to create a level playing field. Shareholders are often avoiding things like divestment, which might not make any difference to the climate, and are instead wielding their influence over corporate strategy and executive compensation. And voters are lobbying for governments to take the direct, comprehensive and sometimes blunt actions that only governments can take – such as the implementation of a transparent and universal penalty for emitting greenhouse gases and making sure that the revenue derived is redistributed equitably across society.