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 low-carbon economy, facilitate the development of carbon capture, use and storage, and reduce the overall risks associated with climate change.
- The most effective tool to reduce greenhouse gases across the economy is a well-designed price on carbon emissions.
- 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.
- The best way to regulate methane is through a price on carbon.
- In the absence of that carbon price in the U.S., the economy-wide direct regulation of methane would be effective. We support well-formulated federal regulation of methane emissions from oil and gas exploration and production if that regulation:
- Encourages early adopters and voluntary efforts.
- Incorporates cost-effective innovations in technology.
- Supports appropriate state-level regulations.
We are a Founding Member of the Climate Leadership Council (CLC), an international policy institute founded in collaboration with business and environmental interests to promote a carbon dividends framework as the most cost-effective, equitable and politically-viable climate solution in the U.S. 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. We support and are advocating for a carbon price contingent upon four pillars - a gradually increasing carbon price, carbon dividends for all Americans, border carbon adjustments and 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 or 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 dialogue with trade associations like the American Petroleum Institute (API), industry partners and the government to advocate smart policy solutions.
Recent regulatory engagement
Collaborating with a broad range of stakeholders 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.
Since 2018, we have been a member of the Energy Advance Center (EAC), a voluntary association of energy and energy-related organizations dedicated to advancing the development and deployment of carbon capture, utilization and storage to achieve a cleaner energy profile and improve U.S. economic security. In 2018, Congress passed the Furthering Carbon Capture, Utilization, Technology, Underground Storage, and Reduced Emissions Act to enhance the 45Q tax credit to further incentivize carbon capture and storage technology deployment in the United States. The primary issue with the 45Q tax credit is the interpretation of what constitutes secure geological storage (SGS). In particular, we support the adoption of a commercially reasonable ISO standard to demonstrate secure geological storage in the context of captured carbon dioxide that gets sequestered underground for enhanced oil recovery projects. The standard should establish criteria for transparency and assurance that carbon dioxide removal is achieved. We also support self-verification of compliance with the ISO standard given that our tax officer would attest to satisfying the requirements of 45Q under penalties of perjury.
Recent legislative engagement
In 2019, we worked within the broad coalition of Climate Leadership Council members to better define details of the overarching implementation plan. That included work on topics such as carbon price escalation rates, points of taxation, regulatory backstop provisions, high energy-cost region challenges and a border carbon adjustment. While the policy work continues with CLC members, the results of that engagement are reflected in the more detailed CLC plan released in early 2020. We also engaged with members of congress directly and through Americans For Carbon Dividends. This included reviewing several proposed climate bills and continuing to offer technical feedback on those bills to elected representatives and their staff. The company remains engaged with representatives from both sides of the political spectrum.
In 2014, both the oil industry and environmental leaders in Alberta, Canada, realized they were at an impasse as public dialogue on the oil sands, pipelines and climate change had descended into a polarized debate. The provincial government wanted help to achieve their climate change policy commitments, and industry and environmental organizations realized it was time to try something different: to participate in a provincial climate policy that would recognize the importance of industry competitiveness. The groups were able to work together and agree on recommendations that the Alberta government included in its Climate Leadership Plan.
One element of the Climate Leadership Plan 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.
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.