Jane: [00:00:08] Hello and welcome to the LSEG Sustainable Growth Podcast, where we talk to leading experts about sustainability and finance and pretty much everything in between. This week we have not one but two guests from an organisation called GHG Satt, which is a leading emissions monitoring company which uses high resolution remote sensing technology from space. So yes, we are talking satellites this week. Joining us is Dan Wicks, UK managing director, and Jess Callahan, who is the global director of financial services. But before we hear from Dan and Jess, a very quick reminder to follow us and rate us on Spotify, Apple Podcasts or any other platform you use. So let's hear from Dan and Jess. Enjoy the show. Well, hi Jessica and Dan, thank you so much for joining us on the show today. I can't wait to get into our conversation because today is a bit different. I certainly don't know a lot about your organisation in the sector, so I'm hoping to learn something new today. And Dan, we're going to come to you first if that's okay. Absolutely. Ghg SAT has been listed among the most innovative companies in the world for its work in space, technology and data. But before we get into the business side of things, let's start with the problem that your organisation is looking to solve. And that's really about methane emissions, principally. Now, we know that the concentration of methane in the atmosphere is greater than it has been pre-industrial levels and is still increasing. But so remind us, why should we be so concerned with methane when it comes to climate and climate change.
Dan: [00:01:47] Yeah. So when we think about climate and climate change, we often think about CO2. But methane is right up there as one of the biggest contributors to the global warming problem. So when you think about the key characteristics that determine how impactful a greenhouse gas is on climate. You have to think about the length that that gas stays in the atmosphere, and how much energy that gas is able to absorb. The more energy it's able to absorb, the more it's contributing to that warming effect. And if you think about methane, methane has a much shorter lifetime in the atmosphere compared to CO2. You're talking in the order of 12 years versus hundreds of years with CO2, and it's way more potent. The warming potential is much, much greater over a 20 year time frame, more than 80 times the warming potential of CO2, which is really significant. And if you think about the relative amount of methane in the atmosphere compared to CO2, to then say that methane emissions are responsible for more than 30% of global temperature rises since pre-industrial times. That's really, you know, really significant. The other key point with methane is most of it. Well, 60% of it comes from human activity. So it's coming from things like agriculture, fossil fuel production and the processing of waste, which gives us the opportunity to manage it. So methane emissions really represent a significant opportunity for slowing the current rate of warming. And that's why we're really focussed on methane and tackling it here at GHG.
Jane: [00:03:24] Okay. So that's really clear Dan, thanks. It really does set out why tackling methane emissions is so critical when it comes to climate change mitigation, and also effective if we get this right. And that's, of course, the goal of the Global Methane Pledge, which has 159 country participants. And together they aim to reduce methane emissions at least 30% from 2020 levels by 2030. So we've got we've got the kind of commitment there, it seems. But the question is, is you need to find these emissions, right? And you got to find them to be able to tackle them. And that's problematic because methane is colourless, it's odourless. And that's where your technology comes in. So tell us more about your satellite technology and how these satellites are working. What technology do we have at play here?
Dan: [00:04:16] Yeah, absolutely. So the old adage of if you can't measure it, you can't manage it, providing a clear baseline of how great these emissions are in terms of size and where they are, is really key to being able to respond. I've talked about the fact that a lot of these methane emissions are generated by human activity, by industrial processes, and a lot of those emissions are By-Products of those processes that are what we would describe as fugitive in the sense that they're unknown. We don't know when or where they're going to happen. And so satellite provides a really wonderful solution to this issue because it's a measurement tool that you can deploy globally to really track and map where these emissions are happening. And the really exciting thing is, in the last decade or so, there's been a big transformation in in the space industry in terms of access to and use of technologies like, like satellite, you know, large reductions in, in costs and miniaturisation of technology have made it really a viable solution for businesses today. At the heart of, you know, the heart of our solution is a satellite that is the size of a microwave oven, weighs about 15kg. So, you know, much smaller than you might imagine. And it houses a camera. And this is really the special sauce bit, a camera that's very sensitive to measuring the concentration of, of methane in, in the atmosphere.
Dan: [00:05:43] And so we launched these satellites into orbit around the Earth. They're orbiting around the Earth poles. So kind of perpendicular to the rotation of the earth. They sit about 500km above the surface of. Of the Earth, and they whizz around the earth in about 90 minutes, which gives you 15 orbits a day. And that allows us to see, you know, the whole Earth and collect these measurements. So we're using that camera on board to really see where there's elevated concentrations of, of methane and, and trying to understand what's causing that, ultimately attributing those emissions events to particular facilities on the ground and to give a sense of scale. We're now, you know, we're now have a constellation of 11 of these satellites whizzing round around the Earth. In fact, we've got two more planned for launch in the next couple of days. So we're really trying to grow that constellation in 2024. So last year we collected about 3 million measurements from sites all over the world. And that translated to more than 20,000 emission events that we're seeing. So, you know, a really effective tool for providing a global kind of transparent measurement means of understanding what's going on with methane.
Jane: [00:07:00] That sounds fascinating. And also really providing this real time data, which is so important to be able to tackle methane emissions exactly when they're happening, not some months after they've been discovered. So let's move to Jessica, because I'm curious about who your customer groups are. So you're creating this data. It could be really insightful. So who are the buyers of this data, Jess. Walk us through your main customer groups.
Jess: [00:07:29] Yeah, it's a really good question. So our main customer groups range actually from your oil and gas customers, as you would probably expect. Also governments, a landfill operators, coal producers, but also financials. So it's quite broad. But there's a lot of interest from all of those groups within our data because as you say, it's as close to real time as you can get. So we can observe and we can deliver that to our customers within six hours. And that's the best that you can get out there currently in relation to what we do. Not only that speed, it just makes it an actionable piece of insight. So if you're delivering that level of information to an operator, for example, they can act on it very, very quickly and resolve a situation, a leak that's happening. For example, so recently we've detected an emissions rate which was over 1000kg per hour from an operator, and we shared that information. We updated them about this, and they were able to immediately act on that. And in doing so, they were able to reduce any incurred costs, which actually, if you look at the equivalent levels of Henry, HubSpot prices about 1.3 million USD on a on an annualised basis. So this data is used by these customer groups really to help them be much more effective in terms of keeping their product in the pipe, for example, or being much more informed in terms of investment if you're financial or supporting policy if you're a government, for example. But also whilst getting those returns, which is key for everybody, but also being very much supportive of the planet and improving that, that climate and environment as well. So those are our customers typically.
Jane: [00:09:16] It's really interesting how you set that up, because it seems to me that depending on your different customer groups, they have a different motivation. So, you know, the producers are it's very, very kind of focussed on, you know, let's keep the product in the pipe because otherwise that's kind of a lost opportunity from a revenue perspective. Whereas the government might be thinking about this from a oversight and monitoring around their national targets, around climate, etc.. But there's another customer group that I'm keen to delve into. And this is of course your specialist area and that's around financial services. So tell me more about kind of how some of your financial sector customers are starting to engage with this data, what they're using it for, what sort of decision making or outcomes they are seeking by having this type of granular level of data.
Jess: [00:10:05] Yeah. So the ultimate decision in anything using data when you're a financial institution is you're wanting to make a return on your investment. That's the number one goal. If there are other factors that you can also gain from that, such as supporting the environment and the climate aspects. That's just a win. And that's actually what our data enables. So for them it's like a perfect combined effort. So we deal with global financials and that could be a bank advisory firm asset manager pension funds underwriter insurance companies. It's quite broad. But ultimately there are some key reasons as to why this data delivers value for them. First of all, is understanding their stewardship that they have with their clients. This is often, I think, one of those areas that is often not noticed or seen, but they have phenomenal stewardship with their clients, and they're really trying to help support them navigate through not only regulation, but mitigating any leaks and trying to resolve that very quickly and be kind to the environment, but whilst also making sure that you're keeping it in the pipes that you're developing, you know, getting returns at the back end. So their stewardship is, is really, really strong and they work very hard with their customers to, to enable all of that. The second part, of course, is where they're the asset level measurements, which Dan was talking to because it's so precise that data is also validated and verified by the likes of NASA and ESA.
Jess: [00:11:33] So we have the gold standard, and that's the only one out there now that has that gold standard, which makes it we'd call it bankable. And by bankable we mean it's trustworthy. You could place that through an investment process and trust that is actually going to be pretty spot on. If you're dealing with model data, which is a bit more like estimated or got a bias to it that can actually be out of whack by the order of two. And if you're investing something, you're expecting a return of ABC, it might actually be nearer PFG. So it kind of it can be quite important for that. So when they're using this data with that in mind trend analysis due diligence for financings really supportive benchmarking. So understanding where there are investment opportunities and also supporting risk elements. That's a big part of any financial institution. And that might be within regulation compliance and also just providing a good reputational risk aspect as well. So the idea of them using measured not model data is key because that is what is making it bankable. And that means that you can then start looking at best returns, but not just in terms of financial, also in terms of supporting the environment as well.
Jane: [00:12:49] And one of the things you mentioned there was around asset level data, and I think that's quite an interesting point, because when we think about ESG data very, very kind of holistically, it feels like we're going on this journey and have been going on this journey in terms of improving the quality of data that we're getting. But we still have a situation where a lot of the data that particularly say, for example, investors are using or banks, etc., it is backward looking, isn't it? And so it tells you the picture of the past. It doesn't necessarily tell you the picture of the present, which I think is something really interesting about your data sources, because it does go to that next dimension, which is asset level. So what's actually happening? Not at a whole corporate level, but at a specific operational site level and also real time. So I should imagine that for an example, if an investor is thinking about allocating Capital. It can use your data as a different source of verifying, say, what the corporate is saying in terms of their track record on methane management, etc. so they could correlate that view from the corporate with some of the data that you're providing. Because actually, your data is almost like an independent check on how those methane emissions are being managed. I'm curious to understand, I guess another part you mentioned that insurance is a use case. Tell me, can you tell me more about that? So how might the data that you're generating be used in an insurance context?
Jess: [00:14:20] Yeah, definitely. So insurance companies have a wealth of data already. It's just enormous amounts. And they have a huge amount of understanding and clarity of what's happening anyway. But our data sort of adds another element to that. And we've kind of touched on a little bit. But let me sort of step a tiny bit out here. They're trying to basically be the crystal ball, which we kind of all wish we had. If for many things. Right. But they are the crystal ball. In trying to understand where there may be risk that may happen for their clients and ultimately affect their bottom line and their book of business. And in order to be able to support their clients in the best way, they need to have the best data to support that clarity in quite an opaque world for them. You know, there's fires, there's floods, there's I mean, there's all kinds of situations happening around the world. And to understand when that's going to happen and say it's going to happen on this date is nigh on impossible. Having a historic level of data. And we have a database that goes back to 2016. And so we have got almost a decade's worth of information.
Jess: [00:15:21] So you can get an idea on trends that's very valuable. But then also this ongoing ability to monitor which the corporates use and of course, the insurers underwrite, they can work with them on, on their programs to how they're trying to improve their emissions. So they're using technology and they're seeing it's improving because they're improving their technology and investment and so on. So our data. You're right. Ads are almost a cross-check, but it's almost like this independent run through just to make sure that, you know, compared to estimated and model data. This is the absolute bankable truth that's running through it. So they can just cross-check and help their stewardship even more with their clients, but also make sure that when they're completing, for example, their risk transfer solutions, they're trying to enable their clients to really be ahead of the game. They can use this to great effect. So I think the really that's the data is, is added to the wealth of other data that they can use within their models. But like you say, it's an independent truth line.
Jane: [00:16:20] And so it's really about helping kind of those insurers and underwriters to quantify the risk really. And I think as we start maturing, our ability to think about transition and physical climate risk, actually this notion around kind of more mature ways to think about risk assessment is certainly developing. And I think our kind of collective ability to think more holistically around the risks that might present as a result of our changing climate situation. It needs to be fed by kind of really good data points, doesn't it? Otherwise, it's all a bit theoretical. Okay, interesting story here. So I want to come back to you, Dan, because I'm curious to understand kind of what might be next because you're tackling methane. But are there other applications for your technology. What kind of happens next I think. I think I might be right in thinking, Dan, that you have recently launched your first commercial CO2 satellite. Is that right?
Dan: [00:17:20] Yes. That's right. So one of the things we're looking at, of course, is other greenhouse gases. Whilst we, you know, champion the significance of methane, CO2 continues to be, you know, to be a challenge. And so we're we are using our technology start to look at that greenhouse gases as well. Of course a lot of industrial processes generating CO2 and thinking about ways in which that can be better, you know, better tackled. I think that's an interesting segue, actually, to build on some of the points that Jess had made. So this criticality of having asset level data drives and accountability that hasn't existed before, but it's also important to be able to draw a line between that asset and the aggregation of assets within asset classes or within companies or within geographic domains as well. Suddenly you start to have a much wider picture about what's going on, and particularly where you have that, that that trend over time. It allows you, yes, to work in the present more effectively at tackling emissions, but also to have that ability to predict and to plan. And I think one of the interesting things when you look at policy, for example, if we take the UK, the climate Change Committee is quite strong in saying that we're not doing enough in the UK around methane emissions. And they signpost to the fact that we just don't have moving forwards the strategies and plans in place to account for the mitigation that's required to hit the targets that were signed, that were signed up to.
Dan: [00:19:07] And I think the key thing there is having this type of data really changes your ability to implement new ways of working, new ways to plan for what is going to happen. And that also opens a wider sort of question around how do we effectively use the interests of these different stakeholder groups that we've talked about today to drive a kind of common outcome around the emissions Missions challenge so operators you know will have their incentives. Jess has talked a little bit about the economic drivers around reducing methane, which is a really good way to build momentum with their action. We've talked about the role of finance. Of course. You know, there's a tension that exists between, say, the bank and where their investments sit in the operators themselves. And then you have the role of the regulating body. And I think it's interesting to explore the tension between those groups and how we can use it more effectively to incentivise, you know, the right sort of action. And there are increasingly, you know, interesting initiatives coming to bear. One of the best ones to highlight, really, is the EU methane regulation that was recently launched, focussed on the energy sector. And one of the most significant elements of that is the consideration of, you know, energy imported into the EU and what the emissions footprint attached to that is, you know, you start to bring an accountability to emissions that hasn't existed.
Dan: [00:20:40] For often when you think about emissions, you think about territorial emissions. When you think about the UK, you think, well, what's going on down the road? You don't think about the fact that more than 50% of our energy is imported and there are emissions associated with that import. So we're starting to see some interesting strategies play out. And, you know, satellite becomes a really key technology to underpinning the delivery of those initiatives. If you're really going to start looking at international markets and the emissions associated with those markets, you need to have a tool that can have that sort of global view. And I suppose that's a neat way of sort of answering your question and saying that what's happening next for us? Well, we're continuing to work to build out our constellation. I talked about the fact that we're launching two more satellites in the next couple of days. We've got several more plans, but ultimately what we're aiming for is the ability to measure every single industrial facility in the world that is emitting methane and CO2 every single day, so that we've got accountability everywhere, and we've got a timeliness of data that allows action today, but will drive some of that future strategy as well. So that's really keeping us focussed right now.
Jane: [00:22:03] And that would be so amazing, wouldn't it, to be able to have reliable, high quality, real time data around the emissions that are happening globally from all of those facilities? That would just be a total game changer, right? In terms of what we really understand about what's going on in terms of emissions. And Ls6 is a business very much kind of data, data led. So I think that it really resonates with me in terms of your business, but also I am also a bit fascinated about the whole satellites and this, this notion that they're all whizzing around in orbit, low orbit and going around the world so many times. So I think it's just fascinating and I've learnt a lot from you. And Jess, thank you so much for coming on the show. It's been really enlightening and I wish you all the very best in your next endeavours. I'm really interested to see what happens next. Thanks again.
Dan: [00:22:54] Thank you.
Jess: [00:22:55] Thank you Jane.
Jane: [00:22:56] Well, I hope you enjoyed that episode with Dan and Jess from SAP. Fascinating to see how satellite technology is playing an innovative role in climate change mitigation, investment and government policy. If you've got questions, comments, or someone you'd like us to talk to, then do get in touch by email at FMT. That's all from me. But watch out for the next episode very soon.
