The focus of the following activities is measurement, analysis, planning, and integration, i.e. the basic “nuts and bolts” of effectively managing issues related to climate change.
Responsibility for managing climate change issues rests with a ConocoPhillips Management Committee member who reports directly to the CEO. In addition, the company has a Sustainable Development Group that provides regular reports to the ConocoPhillips Management Committee and the Public Policy Committee of the Board on climate change issues.
The Public Policy Committee oversees our positions on public policy issues, including climate change. The company’s Planning and Sustainable Development Groups are responsible for ensuring that the ConocoPhillips Management Committee and Board of Directors are aware of the risks and opportunities associated with climate change for our business, and for ensuring that these issues are integrated as appropriate into company strategic decisions.
Greenhouse Gas Measuring, Reporting and Forecasting
A detailed description of the ConocoPhillips process for measuring and reporting GHG emissions from our operations can be found on the Emissions and Impacts site.
Impact and Risk Assessment
Societal efforts to address GHG emissions and climate change create a variety of risks and opportunities for ConocoPhillips as an integrated multi-national energy company. We have a comprehensive approach for identifying material risks/opportunities and for quantifying how much these issues might affect our business. The intended participants in this risk identification and assessment include board members, executives, and managers and staff responsible for operations, planning and investment decisions.
A review of the implications of climate change for our business is included as an element of the company’s annual long-range planning process. In addition, each ConocoPhillips business unit is required to develop its own climate change plan tailored to the business environment, climate policy and climate impacts of its particular region or country.
Climate Change Risk Assessment for Projects
All projects and acquisitions, operated and non-operated, that are expected to result in a GHG emissions change of greater than 50,000 metric tons CO2 equivalent (net to ConocoPhillips) during any year of operation or that will cost more than $75 million are required to complete a climate change assessment. As part of this process, project teams are required to assess the potential risks and opportunities associated with GHG emission management, GHG regulation and a physically changing climate. This assessment is required for project and investment approval.
Integrating the Cost of Carbon into Project Economics
For operations in countries with existing or imminent GHG regulation, the cost of regulatory compliance is evaluated based on specific regulation and local carbon pricing information. This information is incorporated into the base-case economic analysis for ongoing and new capital expenditures. For operations in countries without existing or imminent GHG regulation, all capital projects with a cost of $75 million or greater or which result in a change to annual emissions in excess of 10,000 metric tons of CO2 equivalent are required to perform a sensitivity analysis that includes carbon cost as part of the project’s economic analysis. To understand more about carbon cost and the potential implications for our company, please visit Cost of Carbon.
Managing Renewable Fuel Obligations
Both the United States and the United Kingdom have renewable fuel mandates in place to address emissions from the transportation sector. As one of the largest refiners in the U.S. and the owner-operator of the Humber Refinery in the U.K., we have significant compliance obligations associated with these policies. For a detailed discussion of the benefits and challenges of renewable fuels, as well as ConocoPhillips’ efforts to comply with renewable fuel mandates, visit Renewable Fuels.
Business Unit Climate Change Planning
Each ConocoPhillips business unit is required to develop a climate change action plan. As part of that plan, business units have been directed to include specific goals related to climate change. These goals may include energy efficiency and/or GHG reduction targets but will also likely include other goals (e.g. improved accuracy of emissions data) aimed at preparing each business unit to effectively manage the issue within the context of the ConocoPhillips commitment to our shareholders and to sustainable development. For an example of a ConocoPhillips business unit’s approach to managing issues related to climate change, visit the ConocoPhillips Canada Sustainable Development portal.
ConocoPhillips has dedicated staff with specific responsibility for managing climate change issues within corporate headquarters, in key business units (e.g. ConocoPhillips Canada) and within staff groups (e.g. Health, Safety and Environment). These individuals tap into a wide range of organizational expertise from legal, communications, government affairs, engineering, geoscience, commercial and investment appraisal to develop recommendations for decision makers.