How did I go from climate change to a book on oil and gas industry?
A true open source story: I met Andrea Frosinini through Hyperledger. He then connected me with Dr. Soheil Saraji at the University of Wyoming. The three of us started talking about the applications for blockchain–from Vinci, Italy, Laramie, Wyoming, and Los Angeles, California. (This was 2021. We couldn’t have gone to Vinci, Italy even if we wanted to.)
Our original idea was a white paper on using blockchain for carbon accounting for carbon capture and storage, but given the amount of material, Soheil suggested that we expand into a full book. So Soheil and I spent the past year working with collaborators from all over the world and talking with people in the oil and gas industry. The result, “Sustainable Oil and Gas with Blockchain,” covers the many initiatves in the oil and gas industry, such as reducing methane leakage, carbon capture, sustainable aviation fuels and hydrogen, plus sustainable plastics and carbon credit markets. It also goes over how the blockchain could help support and scale these efforts, as well as legal and technical issues related to the blockchain. It will be published by Springer in June 2023. Click here for more about the book.
I learned a lot writing this book. I spent a lot of time on applications for blockchain technology, but I also dove deep into the business and financial side of the oil and gas industry. I hadn’t worked much on this industry from my days as a portfolio manager, because it was considered too risky for the blue chip pension fund and endowments, not to mention central banks, that we managed money for. While doing research for this book, it became obvious why they were so risky: Commodity businesses are brutal for all except the lowest cost producers, and oil is the world’s biggest commodity.
The conclusion of our book, though, is that environmental sustainability will change this. The value of energy, be it jet fuel, natural gas, or electricity, won’t just be the commodity itself, but its environmental attributes such as carbon emissions. Putting it all together, my theory is that environmental sustainability will make the oil and gas industry more financially sustainable, by differentiating its products and thus creating moats around their businesses.
And so I’ve come full circle. Climate change and open source have led me back to investing. One of the world’s biggest industries, oil and gas, will undergo fundamental changes in the next decade. This will open up many opportunities for investors. I believe the key to identifying these opportunities is to look at the oil and gas industry from a climate perspective and will be putting out more about it at SustainableOilGas.com— please sign up for the newsletter there for updates.