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Updated: 13th March 2019 13:05

Opinion

An electric Ford F-150 truck? It's a sign of the times

The head of Ford pitched an electric Ford F-150 pick-up truck to a crowd of oil executives in Houston yesterday. It's a sign of the times

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The Super Bowl of energy conferences has started to care about climate change in a big way

Bill Ford, the executive chairman of Ford, pitched the idea of an electric Ford F-150 to a global oil crowd in Houston. (Photo via Edmonton Police Service)

When the chief executive of Ford sits in front of a room packed with energy executives from around the world at the annual CERAWeek conference and says the company is looking at electrifying the Ford F-150 truck, there's no denying the energy world is in transition.

Layer on top of that a session on carbon pricing that was standing room only and the fact BP CEO Bob Dudley focused his keynote speech on Monday night talking about climate change and responsible energy development, and it leaves no doubt this is an issue no longer being swept under the carpet.

Energy companies are publicly talking about carbon pricing assumptions and how they incorporate those numbers into business plans. Perhaps most interesting is the fact that a transparent and predictable price on carbon is more strongly favoured over a prescriptive regulatory approach because it provides certainty to businesses, from both the planning and risk-management perspectives.

"Price matters if you really want to reduce emissions and incent different decisions to be made, because everyone responds to price," said Raymond Kopp, vice-president with Resources for the Future.

Having said that, it's not something that can be evenly applied across jurisdictions, because it is anything but black and white.

A Canadian rainbow of carbon pricing

As Katie Sullivan — managing director of the International Emissions Trading Association — pointed out, Canada has a rainbow of carbon pricing structures that are reflective of the different characteristics of each province, ranging from the carbon tax in B.C. and Alberta to the cap-and-trade system in Quebec.

The question in Canada, she said, is how this bottom-up, patchwork system will function alongside the federal government's carbon tax plan, which is top-down.

The other signal provided by a transparent carbon price is that it functions as an incentive to innovate — on everything from increasing energy efficiency to finding ways to both produce and use oil and natural gas with lower emissions or exploring offset options in the renewable space and elsewhere.

One might say efficiency and carbon management have converged since the oil price crashed in 2014.

And that's a good thing, because the industry isn't shy when it comes to consuming capital. In a low-pricing environment, it's the producer with the lowest cost and highest margin that thrives.

Bill Ford, executive chairman of Ford, speaks at CERAweek in Houston. (IHS Markit)

This has given rise to a new focus within the sector; being efficient is no longer about laying people off and doing more with a leaner workforce. It's about using technology across the spectrum — the Internet of Things (IoT), machine learning, artificial intelligence, predictive maintenance by analyzing data gathered by sensors, or using drones to inspect rigs and well sites, as well as to measure and track methane emissions.  

The added benefit of harnessing technology to improve processes and costs is that it has arguably mitigated the so-called "crew change," which saw a large exit of baby boomers from the industry.

But let's get beyond the jargon.

Tech and emissions targets

Data analytics might be part of almost every discussion today, but the notion of integrating data and technology as a way to accelerate innovation and improve cost efficiency was discussed at CERAWeek back in 2016.

So, what's different today?

It might lie in this definition offered by David Mabee, chief innovation manager at ConocoPhillips: "The data is in service of what you do with your assets, which is to create value."

Making things a bit more complex is that the data comes from many different aspects of a company's operations. This presents a real challenge of how to integrate, manage and analyze it, not to mention the need to modernize existing IT infrastructure that was likely put in place at a different phase of the company and the commodity cycle.  

This, arguably, is ushering in a new era of collaboration as the industry races to speed-up the integration of new technology and software to meet both financial and emissions targets.

After years of being more inwardly focused in order to solve its problems, the energy sector is reaching out, going beyond buying software and tech support, and creating partnerships with the likes of Microsoft, Google and Amazon Web Services.

"Open beats closed, doing it ourselves is beat by collaboration, partnerships are critical to the future; this is the accelerator to long-term value creation," Google Cloud vice-president of energy Darryl Willis said on Monday afternoon.

In other words, it's not business as usual. There is a marked urgency to the innovation agenda.  

It's about an energy sector that Dudley said "is progressive for society and nimble for shareholders" and "a conversation that is bigger than one amongst ourselves."

But what is most interesting is that, for the first time, there is broad consensus on the importance of deliberately addressing the twin issues of carbon emissions and climate change — with all options on the table: carbon pricing, technology and cooperation. 


This column is an opinion. For more information about our commentary section, please read this editor's blog and our FAQ.

Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at: calgarytheroadahead@cbc.ca


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About the Author

Deborah Yedlin

Columnist

Deborah Yedlin is a long time contributor to CBC Calgary. She has worked as a columnist for both the Calgary Herald and the Globe and Mail and is the Chancellor of the University of Calgary.

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