ConocoPhillips

Climate Change Strategy

Environmental team at work

​Carbon Pricing in Our Decision-making

For all of our project decisions we either build a carbon price into the base case economic evaluation or we run a sensitivity to test our projects against possible future carbon pricing. This is in addition to scenario planning which tests our projects against a range of commodity prices which simulate differing future supply and demand balances.

For operations in countries with existing or imminent GHG regulation, the cost of regulatory compliance is evaluated based on specific regulation and local GHG 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 $150 million or greater, or which result in a change to annual emissions in excess of 25,000 metric tons of CO2 equivalent, are required to perform a sensitivity analysis that includes carbon cost as part of the project’s economic analysis.

The company currently uses an estimated market cost of greenhouse gas emissions in the range of $6 to $31 (in 2016 U.S. dollars) per tonne, depending on the timing and country or region, to evaluate future project opportunities.