May 26, 2022 – ESG (environmental, social and governance) investing has become mainstream and is now estimated to account for more than one third of the $51 trillion of U.S. assets under management.
The rise of ESG has being driven by a growing urgency for individuals and corporations alike to tackle one of the world’s most pressing problems, climate change. A growing number of Fortune 500 companies are committing to incorporating ESG and net zero targets into their operations as they face increasing investor and consumer pressure, mandatory government climate risk disclosure, and stricter environmental regulations.
What is driving the huge corporate and institutional push to reduce GHG emissions? The latest United Nations report from the Intergovernmental Panel on Climate Change showed that carbon emissions from 2010 to 2019 have never been higher in human history. The report stated that unless action is taken soon to limit global warming to 1.5 degrees Celsius set by the Paris Agreement, we could face a world with increased risks of extreme weather, with the kind of floods, storms and droughts we have seen in recent years multiplying.
As a venture capital investor at The Flying Object fund (TFO), we see the rise of climate change awareness and actions representing a massive new opportunity for the Space Tech industry. Space Tech plays a critical role in tackling climate change because better data on greenhouse gas emissions is essential to accelerating action on policy making, regulations, and corporate compliance. Among current and emerging Space Tech solutions, Satellite-based Earth Observation is recognized as one of the most powerful tools to monitor and track change on earth and GHG emissions over time.
A recent key area of focus has been methane, a greenhouse gas that is the second largest contributor to global warming after carbon dioxide. Methane is 25 times more potent than CO2 in terms of trapping heat in the atmosphere over the short term. To reduce methane emissions, we need to first accurately detect and measure methane leaks. As such, monitoring and tracking the emissions at scale at sites around the world and in near real-time will be a critical part of reducing methane emissions. Accurate, timely and frequent global measurement of emissions data would enable all stakeholders to better address methane reduction and the global energy transition.
Most of the focus on methane emissions reduction has been concentrated on the oil and gas industry since it accounts for one of the largest sources of methane emissions at around 20% to 25%, and also because the methane sources from oil and gas operations are generally more concentrated, and thus easier to detect and remediate. Other methane-emitting industries include agriculture, coal mining, solid waste, and waste-water management. Under the Biden Administration, the U.S. Environmental Protection Agency is in the process of strengthening regulations to limit methane emissions from new and existing oil & gas wells, processing plants and other facilities with active support from the industry. Methane regulations also exist in Canada and are being pursued in the European Union and some other countries as well.
As a result, we have seen a growing number of public and private satellite constellations emerge in recent years for methane detection to help address this urgent problem. GHGSat was the first commercial company to pioneer high resolution greenhouse gas emissions sensing from space; they developed a sensor for small satellites that can detect methane leaks and pinpoint leaks from individual sites. On the other hand, public satellites like Europe’s Sentinel/Tropomi satellites cover wide-area methane detection to identify patterns, hotspots, and regional variations. Therefore providing useful information to commercial high resolution players like GHGSat on where to target their monitoring, and allowing them precisely pinpoint the facilities responsible.
Several private and public-private entities are planning to launch their constellations in the coming years. These companies include Bluefield, ISIS Space, Scepter, Orbital Sidekick, MethaneSat, and Carbon Mapper. MethaneSat is backed by the Environmental Defense Fund. It will be able to detect and quantify methane almost anywhere on earth based on its high sensitivity. Kayrros is a data-agnostic analytics platform delivering global energy insights including methane detection and monitoring using multiple public and private data sources.
A good example of a recent Space Tech collaboration with the oil and gas industry is ExxonMobil’s collaboration with Scepter, announced in December 2021. The companies are working to jointly develop real-time methane detection on a global scale, and advanced data analytics, with the first phase focused on capturing methane emission observations from ExxonMobil’s operations in the Permian Basin, where the company has announced a net zero GHG emissions target by 2030.
By adding satellite monitoring to its layered approach, ExxonMobil has the potential to redefine methane detection and mitigation at scale across its global operation from upstream exploration, production to distribution and downstream refineries. It is Exxon’s goal to lead the industry in energy transition starting with GHG emissions reduction. We believe Exxon will become an anchor customer to Scepter and provide domain expertise to help the company develop high-value, end-to-end solutions, and accelerate commercial adoption.
As part of the project, Scepter is building a constellation of highly-sensitivity, multi-sensor satellites covering the gamut of air pollutants and greenhouse gases, and capable of supporting ExxonMobil’s operations by providing access to independent, real-time and comprehensive atmospheric data. The space data will be fused with other data from aerial and terrestrial sensors to further improve ExxonMobil’s methane mitigation programs.
In the coming years, we expect to a see a transformation of GHG emissions detection capabilities with multiple constellations in space. Together these new commercial and public players will bring better, more accurate and transparent measure of GHG emissions data to help companies, policy makers and regulators monitor, track change, and make better decisions. We are optimistic that space tech will play an important role to cutting methane emissions to slow global warming.
The Flying Object fund
Josephine Millward is a partner at The Flying Object fund. TFO is a sector-focused global venture and growth fund offering strategic capital to breakthrough solutions across the technology of flight and sustainability. Prior to TFO, Josephine was a strategic advisor and head of research at Seraphim Capital. She has more than a decade of experience as a top-ranked Wall Street research analyst covering defense technology stocks.
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