Taking Action on Climate Change
As we work to safely find and deliver energy to the world, addressing climate change-related issues is a high priority.
Our climate change strategy is designed to prepare the company to succeed in a world challenged to reduce greenhouse gas (GHG) emissions.
We implemented a corporate climate change action planning process to put our strategy into action and manage GHG emissions. The planning process encompasses adaptation to physical changes in climate.
We consider a range of external insights as we evaluate and plan actions to address climate-related issues in our businesses and functions. Examples include:
- Government actions on reporting and regulating greenhouse gas emissions. Globally, governments are taking action on reporting and regulating greenhouse gas emissions, such as in the European Union, the U. S. through the Clean Air Act and state laws, and in Canada at the federal and provincial level. Many countries made commitments as part of the Paris Agreement. However, there is uncertainty given the timing, type and range of actions available to countries, coupled with the conditionality placed on many of the commitments.
- Research centers, universities and other stakeholders continue to provide information about climate-related risks and opportunities.
- Many investors have questions about the impact of increasing regulation and legislation on the company’s returns, valuation and business outlook. Investors also seek to understand how we are managing these issues to reduce risk and create opportunity.
Our plan is constructed of five focus areas:
Understanding Footprint — Improving the accuracy and consistency of recording and reporting.
Managing Operations and Projects — Assessing and implementing emissions reductions where it makes sense to do so, focusing our efforts on priority areas.
Managing Risk and Opportunity Exposure — Scanning for emerging issues and preparing the company to address climate-related risks and opportunities.
Engaging Externally — Learning from stakeholders and communicating how we are addressing climate-related risks in our business.
Building Capacity — Building and sharing knowledge, developing skills, and resourcing is foundational to the work of our action plans.
Our Climate Change Action Plan is comprised of 73 specific, detailed actions within the 14 major groupings shown above. Our annual Sustainability Report includes specific examples of our progress on these actions. The comprehensive plan is refreshed annually as part of our long-range planning process.
In the 2016 World Energy Outlook, the International Energy Agency (IEA) illustrated a range of different energy mix scenarios in 2040. Fossil fuels make up around 80 percent of the energy mix today. Through 2040, total energy demand is predicted to grow in all scenarios and global population is anticipated to grow by about 3 billion people. Even in the IEA’s 2-degree (450 PPM) scenario, oil and gas demand would remain similar to current levels, with a growth in gas demand largely offsetting a decline in oil demand.
Changes in the energy system take time as energy infrastructure components have long asset lives. Changes go beyond changing the power generation and distribution systems, to include changing automobile, truck, ship and aircraft specifications.
Achieving the IEA’s 2-degree scenario requires significant progress on several fronts: improving energy efficiency of power generation, transportation and industrial processes; reducing emissions from fossil fuels or capturing and storing or converting those emissions; and increasing the amount of non-carbon energy, such as renewables and nuclear power.
Increasing the amount of renewable power also requires significant improvement in the amount of time that wind and solar produce electricity to reduce the amount of back-up fossil fuel generation needed or a significant improvement in energy storage.
These widely varying factors are the reasons that scenario planning is so important. There is not just one pathway to a 2-degree future. There are numerous ways in which government action and technology development could interact with consumer behavior to bring about a lower carbon future. Additional information on this subject and the role that our industry can play can be found in IPIECA’s “Exploring Low Emissions Pathways” paper.