While operational emissions reductions will drive our progress toward our net-zero emissions ambition, ultimately offsets are likely to be required to mitigate residual, hard-to-abate emissions. Leveraging know-how from our experience in the compliance offset market, we have designed a flexible strategy to develop and purchase voluntary offsets, beginning in 2022. This strategy includes developing a diversified portfolio of offsets from third-party projects and funds, as well as considering our own offset projects. Our preference will be projects in countries and regions in which we operate or have land holdings. While we do not anticipate the need to utilize offsets to achieve our medium-term targets and did not retire any voluntary offsets in 2022, we are investing now to build a bank of offsets for potential use and retirement in the future.  

In early 2022, ConocoPhillips sent invitations to prospective offset developers to propose investment opportunities for ConocoPhillips participation. The invitations sought a variety of project types that could start issuing offsets by 2025, including those that are: 

• Nature-based: relating to forestry and land use, wetlands, agricultural improvements and grasslands or soil enrichment. 
• Technology-based: relating to energy efficiency, fuel switching, abandoned well management, waste disposal and fugitive emissions reductions. 

The evaluation criteria for these projects emphasize the need for durability of the reductions or removals and leakage minimization, as well as community, conservation and biodiversity co-benefits to create and increase commercial value for the projects beyond our net-zero operational emissions ambition. 

We have initiated investments which will bank credits for future use in our offsets registry accounts, such as Verra's Verified Carbon Standard and the American Carbon Registry. These include carbon credit funds such as Climate Asset Management’s Nature Based Carbon Fund (NBCF). Taking a landscape approach, the NBCF looks to invest in nature-based solutions projects that restore and conserve nature in developing economies. This provides long-lasting and verified positive impacts for biodiversity and communities and offers investors the carbon credits it procures.  

The NBCF’s initial project investment is in the Global EverGreening Alliance’s Restore Africa Programme, which aims to restore 1.9 million hectares of land, directly supporting 1.5 million smallholder farming families in six African countries — Kenya, Ethiopia, Malawi, Tanzania, Uganda and Zambia. As of December 2022, implementation had already begun in three of the six countries.  

In addition to our investment in NBCF, we are separately supporting offset projects in Mexico aimed at improved forest management for future offset issuance.