Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Deborah Gordon, director of the Energy and Climate Program at the Carnegie Endowment for International Peace. Deborah, thanks for coming back on the show. Nice to see you.
Deborah Gordon: Pleasure.
Monica Trauzzi: Deborah, Carnegie has just released an oil climate index. It's the first-of-its-kind tool that models the interaction of oil extraction and production and climate change. You dig into the changing dynamics of the oil industry. How varied are the climate impacts of different oils?
Deborah Gordon: Overall, we have 30 test oils in the first phase of the oil climate index and they're global. They're all over the place. Side note, interestingly we don't have any Frack 2S oils. There just wasn't enough data to model those, but of these global oils, the 30, there's an 80 percent difference between the lowest greenhouse gas-emitting oil and the highest greenhouse gas-emitting oil.
Monica Trauzzi: When we talk about oil, we tend to talk about it so generally. Are people aware, are policymakers aware of the variety of oils that exist?
Deborah Gordon: No, I think that that was one of the reasons why we thought to do this is that, instead of alternatives replacing oil when we saw the run-up in prices over the last five years, we saw oil replacing oil, and those oils were extremely heterogeneous, and so you have -- if you have heterogeneous substances, processes for moving them, different refining techniques, you're going to have different emissions, and that's what we're finding.
Monica Trauzzi: So which oils emerge as having the greatest impact on climate change?
Deborah Gordon: That's a great question. There are four -- of these 30 test oils, I do want to preface it 'cause we'll find new oils out there -- but of the 30 test oils, we have four categories of oil climate concern. The gassy oils that are flared in the Bakken, in Nigeria, those oils become high-emitting greenhouse gas oils. Extra-heavy oils, Canada, Venezuela, those just have a lot of carbon in them to begin with. Those become high-emitting oils. Depleted watery oils, especially in our test run of the California San Joaquin Valley oils, some of those oils are over 100 years operating, there's a lot of water associated with them, become greenhouse gas-intensive to get them out of the ground. And then the fourth category is just the catch-all of extreme oils. We only have one extreme oil in our 30 oils, which is a 30,000-foot-deep Russian chivo oil. It's that deep, but if you're going to go into extreme environments -- the Arctic, permafrost, ultra, ultra-deep, you're going to get different greenhouse gas emissions associated with those oils.
Monica Trauzzi: And you said that U.S. fracked oils are not included in the index because there's not enough data. Is that because industry has not provided enough data or just not enough time has passed?
Deborah Gordon: No, what -- this is actually one of the surprising findings in the oil climate index, besides measuring the greenhouse emissions, was the lack of transparency of data. That has become a huge issue. It's going to become a bigger issue. It's an issue for safety, we already know, but it's going to be an issue for greenhouse gas emissions. It's not a matter of time. It's inconsistency, spotty reporting, a lot of privatized data that either is so expensive or not for sale. It's just not collected uniformly by the government or by the -- by the federal government or by states. So data's a huge opportunity here. I'll put a positive spin on it. If we can get more data, we're moving to Model 50 oils now, but we need consistent data to model these oils.
Monica Trauzzi: There's so much uncertainty right now in the oil market. Does this index help provide any clarity to that effect?
Deborah Gordon: There's a lot of competition between oils, whether the prices are high and there's a lot of competition or the prices are down low now between OPEC and the U.S. or different shale oils, tremendous amount of competition in this market. It will probably always be the case, and where there's competition, you want information, you want market transparency, and we believe that the competition on economics geopolitics of oil, but you have to add this third rung of climate impacts.
Monica Trauzzi: Does the data underscore some of the challenges that address for policymakers in addressing climate change but also trying to grow the economy through energy development?
Deborah Gordon: Yeah, I think that it's a reimagining of how are we going to get alternatives into the marketplace. If it is going to be a market, open market, you know, competition, you're going to have a lot of new oils come to market before you're going to have alternatives, and then the question is are CAFE standards enough? You know, you need some kind of policies around oil supply.
Monica Trauzzi: So how would you like to see or how do you think policymakers should be using this index?
Deborah Gordon: Well, the very first thing I would do is start to create expectations and requirements for better information because I think that that's going to be important moving forward, both for the oil climate index, but for everything we're doing in managing these oils in the 21st century. The second idea would be to go back and think about environmental impact statements and going back to the National Environmental Pollution Act (NEPA) and, at the point in time when you actually are going in to request a drill and do your drilling for oils, that's when the information becomes most important for the whole market, not just for businesses and producers, but also for policymakers and the public. So bringing that information to bear right from the start will help create that type of illumination to make good decisions.
Monica Trauzzi: So bigger picture, then, is it possible for expanded oil production to coexist with emissions reduction?
Deborah Gordon: I don't think that it's going to stop, so we're going to have to think about how to make some of these dirtiest oils dirtier -- make these dirtiest oils cleaner, rather, and then have this race to the top, and this competition from oil should be from a greenhouse gas perspective as well as all these other perspectives.
Monica Trauzzi: All right, very interesting. Thank you for coming on the show. I appreciate it.
Deborah Gordon: Pleasure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.