Public Policy Engagement
We believe that over the months and years ahead, governments — federal, state/provincial and local — will continue to act on climate-related risks. To succeed in a low-carbon economy, we must play a constructive role in public policy dialogue to devise practical, equitable and cost-effective approaches to reduce greenhouse gas (GHG) emissions and address climate-related risks.
Our Climate Change Position outlines our principles of effective climate change policy. These principles continue to guide our engagement on climate change policy in the United States, Canada, Europe, Australia and other countries in which we operate. We work with trade associations, industry peers and other key stakeholders to develop and use best practices and in efforts to align the policymaking process with our positions and principles.
Carbon Pricing Policy
- The Paris Agreement and public opinion trends will yet lead governments around the world to regulate and price GHG emissions more stringently, and that our interests are best served by proactively engaging on climate-related policy.
- Climate-related policy action can support an orderly transition to a lower-carbon economy, facilitate the development of carbon capture, use and storage, and reduce the overall risks associated with climate change.
- A revenue-neutral carbon tax that is transparent, predictable and cost effective to administer would be an effective policy option.
- Any carbon pricing mechanism should result in some relief via the elimination of other laws and regulations aimed at reducing or controlling carbon and other GHG emissions.
- Any proposed tax should be revenue-neutral and used in such a way as to minimize economic impact.
We are a Founding Member of the Climate Leadership Council (CLC), an international policy institute founded in collaboration with business and environmental interests to develop a carbon dividend plan. Participation in the CLC provides another opportunity for ongoing dialogue about carbon pricing and framing the issues in alignment with our principles. We also belong to and fund Americans For Carbon Dividends (AFCD), the education and advocacy branch of the CLC.
Our decision to join CLC was based on the alignment of the Baker-Shultz Carbon Dividends Plan with our own carbon tax principles and the belief that an effective carbon pricing policy requires engagement from business and environmental stakeholders. The Baker-Shultz plan has four key pillars:
- A gradually increasing carbon fee (beginning at $40/ton and increasing steadily over time).
- Carbon dividends for all Americans.
- Border carbon adjustments.
- Regulatory simplification.
We have been actively engaged in climate-related discussions with policy makers and stakeholders since our first global climate change position was published in 2003. Since then, we have developed climate change action plans, set an emission intensity target, integrated carbon restricted scenarios into our strategic planning process and published carbon tax principles.
Global Principles for Country-Specific Carbon Tax Legislation
A well-designed carbon tax or other legislative proposal to fix and impose a price on carbon dioxide or other GHGs should meet the following principles:
- Economy-wide – Any carbon tax designed to fix and impose a price should apply as broadly across the economy as administratively practicable.
- Non-discriminatory – GHG emissions alone should form the basis of taxation. A carbon tax should not “pick winners and losers” among industries, emissions sources, or discriminate in providing subsidies to energy sources.
- Uniform – The carbon tax should apply to all GHG emissions at the same rate on a “units of carbon dioxide equivalent” basis using the IPCC standard 100-year global warming potential.
- Transparent – In order to most efficiently incentivize changes to consumer behavior, the carbon tax should be imposed at the point in the value chain which is as close as administratively practical to the point and timing of the emission. If a point is chosen further upstream, a system of credits or other mechanisms should be designed to eliminate (or prevent) taxation of emissions applicable to taxable products sequestered downstream of the point of taxation and to those used as feedstocks for the manufacture of products in which GHGs are stored.
- Avoid double taxation – Any federal carbon tax should preempt state, provincial and local carbon taxes and renewable production tax credits.
- Provide regulatory relief – The federal carbon tax should replace all environmental laws and regulations that are intended to reduce or control carbon and other GHG emissions.
- Predictable – The application of the tax and the tax rate may be adjustable when necessary, but such adjustments should be infrequent, and should be limited to those designed to achieve the broader environmental goal of the tax legislation.
- Cost-effective administration - Existing channels of tax collection and emissions reporting systems should be used if feasible. Where actual emissions cannot be measured, best efforts based upon sound science should be used as an estimate.
- Globally competitive – Any country-specific carbon tax rate should be set in accordance with existing taxation channels and emissions reporting systems and be adjusted to ensure global competitiveness. Depending on the point of taxation chosen, carbon tax legislation should include a border adjustment mechanism, or other attributes designed to mitigate competitive disadvantages to host country industry when competing in global markets.
- Revenue recycling - The tax should be revenue-neutral and used in such a way as to minimize economic impact.
- Compliance flexibility - Any federal carbon tax should include multiple options for compliance, including offset credits from a broad range of jurisdictions, cash payments, or flexible compliance frequency.
Our approach to public policy engagement on climate change has evolved. However, we remain consistent in our view that market-based solutions at national and global levels, rather than a patchwork of less effective regulatory approaches, are most likely to be effective in reducing GHG emissions.
Shortly after the merger of Conoco and Phillips Petroleum, in 2003, we published our first global climate change position. Since then, we have consistently used our Sustainability Report to detail our commitments, priorities and actions. We also first participated in the Carbon Disclosure Project (now CDP) questionnaire in 2003.
In 2004, we described actions that we would be taking to address climate change, including:
- Assessing data.
- Developing objectives to reduce GHG emissions.
- Improving operational efficiency.
- Developing climate change considerations for project planning and approval processes.
- Engaging in discussions on climate change through the International Petroleum Industry Environmental Conservation Association (now IPIECA).
- Joining the International Emissions Trading Association (IETA).
In 2005, we began trading in the European Union ETS.
Through our membership in the U.S. Climate Action Partnership (USCAP) beginning in 2007, we actively participated in efforts to design an effective legislative approach.
In 2008, we adopted and published our first Climate Change Action Plan to systematically address climate change risk.
In June 2009, the American Clean Energy and Security Act of 2009 (HR2454) (Waxman-Markey) bill passed the House of Representatives. Although the USCAP Blueprint for Legislative Action was considered influential in the design of the legislation, we had serious concerns about some of the detailed elements in the bill. Following passage of the House bill, our focus turned to addressing issues of concern in the Senate version of the legislation. In order to intensify our company’s focus and resources on addressing the key issues, including the important role that natural gas can play in reducing U.S. GHG emissions, we announced in February 2010 that the company would not be renewing our membership in USCAP.
Through this more direct engagement, we were successful in helping to develop draft legislation that incorporated a more equitable approach to energy sectors while maintaining environmental effectiveness. We issued a statement regarding the draft legislation introduced in the Senate in May 2010.
Since 2010, we’ve continued to work toward approaches that are practical and effective, including active participation in the dialogue with trade associations like the American Petroleum Institute (API), industry partners and the government to advocate smart policy solutions.
Recent regulatory engagement
Engaging with a broad range of stakeholders to collaborate on effective climate change policy and GHG emissions solutions is key to solving the climate change challenge.
In 2014, we publicly supported the Gas Capture Plan in North Dakota, now required, which took a pro-active approach to flare gas reduction. We entered into agreements with pipeline companies to ensure that required gathering infrastructure was available when needed in order to reduce emissions.
In 2016, we supported the U.S. Bureau of Land Management Onshore Order 1, electronic filings, as the proposed changes reduced work and errors and sped up response time for both industry and the Government.
In 2016, the U.S. Bureau of Land Management (BLM) proposed a series of Onshore Orders. After careful review, ConocoPhillips opposed Onshore Order 9, the proposed Venting and Flaring rule based on the conclusion that the BLM was overreaching their authority and the proposal created a duplication of federal authority with EPA. Our comments to the BLM included suggestions to remove many of the duplicative requirements. While we opposed many of the requirements in Onshore Order 9, we did suggest some changes to certain proposed requirements. For example, we agreed that the limits for royalty free flaring should be changed and gave recommendations for the limits.
In 2016, ConocoPhillips led an education seminar with the Colorado Oil & Gas Commission on corrosion, corrosion mitigation, and integrity management as part of our outreach to share good practices.
Recent legislative engagement
In 2014, both the oil industry and environmental leaders in Alberta, Canada, realized they were at an impasse. Over the last decade, public dialogue on the oil sands, pipelines and climate change had descended into a polarized debate.
The provincial government was giving strong signals that they wanted help to achieve their climate change policy commitments. Industry and environmental organizations both realized that it was time to try something different, get out of the unproductive status quo and get moving on a provincial climate policy that recognized the importance of industry competitiveness. Common ground included wanting Alberta and Canada to have a strong economy, agreeing that climate change issues should be addressed and that they had to work together to find workable solutions. This included defining what leadership in climate change looked like for an oil producing economy. The groups were able to work together and agree on recommendations that the Alberta government decided to include in its new Climate Leadership Plan.
In addition to achieving progressive policy, the conflict and rhetoric regarding oil sands development has de-escalated. The policy creates the conditions for improved environmental performance, carbon competitiveness and economic success. It also strengthens the competitive position of Alberta’s oil industry, and its capacity to create sustained wealth and jobs, by driving cleaner, lower cost performance. We hope through this policy and our actions, we can continue a constructive conversation about oil sands, industry and pipelines. The work in Canada illustrates that climate and energy policy can be coordinated to ensure a diverse and secure supply of affordable energy and promote government and private sector investment in energy research and development.
One element of the Climate Leadership Plan enacted by the government of Alberta is the Emissions Limit for oil sands. In 2016, through our progressive work with leading environmental groups in Canada, we secured a seat on the Oil Sands Advisory Group (OSAG), one of only seven industry seats. Designed to advise the government on the implementation of the limit and other oil sands environmental issues, the OSAG includes members from industry, environmental organizations, and indigenous and non-indigenous peoples. The primary focus of the group is to consider how to implement the 100 million tonnes of CO₂ equivalent per year GHG emissions limit for the oil sands industry.
By bringing our voice to the table, we are constructively influencing the implementation of the emissions limit and environmental requirements for the oil sands industry. Ultimately, the policy creates the conditions for improved environmental performance, carbon competitiveness and economic success. It also strengthens the competitive position of Alberta’s oil industry, and its capacity to create sustained economic development and jobs, by driving cleaner, lower cost performance.
Paris Agreement on Climate Change
At the COP-21 meeting in Paris in 2015 almost 200 countries agreed on a new global emission reduction framework starting in 2020. In 2017, President Trump announced that the U.S. would withdraw from the agreement. Prior to this announcement, we took actions to advocate for the U.S. to stay in the agreement. ConocoPhillips Chairman and CEO Ryan Lance publicly expressed his view that it was good for the U.S. to remain in the agreement. During meetings with White House energy advisors on the National Economic Council and National Security Council staff, ConocoPhillips Government Affairs and Executive Leadership Team members advocated that the U.S. should continue to participate in the agreement because:
- It gives the U.S. the opportunity to participate in future climate policy discussions to safeguard its economic and environmental best interests as the Paris Agreement is being implemented globally.
- It provides an opportunity for the U.S. to encourage other nations to incorporate technology development as a means of lowering emissions from fossil fuels into their commitments under the agreement.
- Switching to natural gas power is already occurring in the U.S., driving economic development and GHG reductions.
- Withdrawing from the agreement could energize political action by domestic opponents of U.S. energy development.
We will continue to work to address climate change concerns by supporting effective, fit-for-purpose solutions that link to binding international agreements. We will also work to reduce emissions associated with our operations while ensuring the continued supply of affordable, reliable energy necessary for economic growth.