Our objective is to manage climate-related risk, optimize opportunities and equip the company to respond to uncertainties, including government policies, evolving investor sentiment around the world, technologies for emissions reduction and alternative energy technologies.
As the energy transition continues to evolve, the strategy must be robust across a range of potential future outcomes. The strategy is comprised of four pillars:
Our framework consists of a hierarchy of targets - from a long-term ambition that sets the direction and aim of the strategy, to a medium-term performance target for GHG emissions intensity, to shorter-term targets for flaring and methane intensity reductions. These performance targets are supported by lower level internal business unit goals to enable the company to achieve the company-wide targets.
We continue to expand our Marginal Abatement Cost Curve process to provide a broader range of opportunities for emissions reduction technology. In 2020, we also established an internal low carbon technology group to evaluate opportunities and technologies that can closely integrate with our global operations, markets and competencies. The team is focused on a range of options from emissions reduction solutions for existing operations and developing an offset strategy, to assessing renewable and battery storage as well as considering emerging opportunities including carbon capture utilization and storage and the hydrogen economy. We will disclose additional information on this team’s efforts as it moves forward with its evaluations and related business investments. Read more about our energy transition and climate risk strategy.
We are integrating climate-related risk into our portfolio decision-making by incorporating carbon pricing into our economics for project approval and by addressing the risk of stranded assets by prioritizing major projects with a fully burdened cost of supply less than $40 WTI per barrel of oil equivalent (BOE).
Our external engagement is intended to understand the point of view of stakeholders and further the evolution of climate-related frameworks, metrics and public policy. In 2020, this included:
- Participating in climate-related initiatives like the World Bank Zero Routine Flaring by 2030, which we endorsed.
- Being a leading voice in the Climate Leadership Council to advocate for a price on carbon in the U.S.
- Working with our trade associations to ensure alignment with our climate change position.
- Discussing the Net-Zero Benchmark Assessment with the Climate Action 100+.
World Energy Outlook Scenarios.
Understanding a range of risks.
Short, Medium and Long-Term Risks
Time horizons for climate-related issues.
Climate Change Action Plan
Addressing priority risks.
Impact on Business and Strategy
Areas for potential impact.
Effect on financial planning.