Navigating the Low Carbon Economy
A comprehensive action plan
1.
UNDERSTAND
YOUR OBLIGATIONS
DEVELOP BUSINESS MODELS
FOR DECARBONISATION
REVIEW
YOUR ASSETS
ASSESS
YOUR OPTIONS
SECURE
FUNDING
UNDERSTAND YOUR OBLIGATIONS
1
The regulatory and legislative response to climate change has created a patchwork of standards and obligations for companies globally. Standards are still being developed, while some jurisdictions are tightening rules, requiring constant review to ensure compliance.
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3.
4.
5.
REVIEW YOUR ASSETS
2
ASSESS YOUR OPTIONS
Many solutions – including methane management, Carbon Capture, Utilisation and Storage (CCUS), integration of renewables, etc – can reduce carbon intensity by addressing GHG emissions. Each has a different level of performance and cost – usually expressed as a unit. Many solutions are cost neutral, or pay back in short time periods.
3
DEVELOP BUSINESS MODELS FOR DECARBONISATION
After assessing assets and identifying an ideal technical decarbonisation solution, a business model is an essential tool for managing risk across the project value chain and attracting
internal or external funding.
4
SECURE FUNDING
The challenge of decarbonising the economy is huge. The OECD has estimated that the exercise of decarbonising the global economy in line with the Paris goals will require around EUR 6.3tn each year over the next 10 years alone. Securing funding is critical and the business model will drive what funding is accessible for your organization and projects
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2. REVIEW YOUR ASSETS
3. ASSESS YOUR OPTIONS
4. DEVELOP BUSINESS MODELS FOR DECARBONISATION
5. SECURE FUNDING
1. understand your obligations
There is a diverse range of environmental and climate change related laws (c.1,900 laws dealing with GHG alone).
Reporting & Disclosure have become key tools for abiding by the plethora of environmental and climate change related laws and avoiding climate change litigation, how is your organization addressing this?
Industry players need to be proactive and address decarbonisation and related climate change risks now to future-proof their businesses and avoid later claims of management complacency by shareholders.
Not all oil and gas is created, developed and operated equally. To understand what risks and opportunities lie within oil and gas portfolios, companies need to assess and forecast what their GHG emissions are on a field basis using credible, peer-reviewed tools. The benefits of performing such evaluations are clear - companies can take the right strategic decisions, and secure the value of their assets. Within the industry, GHG emissions data quality is troubled as the majority is derived from desktop calculations, not real-world measurements which is something we need to overcome jointly.
THINGS TO CONSIDER
THINGS TO CONSIDER
It is important to assess the wide variety of carbon solutions, before selecting an implementation plan. An accurate assessment of each option can require specialist technical and commercial insights
While many oil and gas companies have looked at many of these individual options – they tend not to be systematically deployed – and given the breadth of options - can be limited by experience.
Methane is an area of near term focus for the industry, and IEA analysis amongst others shows there is clear scope to reduce methane emissions cost-effectively. Methane has commercial value and can often be monetized directly making it more attractive
THINGS TO CONSIDER
The business model and structure is crucial to attract funding
All risks and liabilities need to be identified and allocated between counterparties.
Government support may be required, and insurance solutions may be needed
THINGS TO CONSIDER
THINGS TO CONSIDER
Decarbonisation projects that are not cash neutral require government policy support to create economically viable projects
Technologies in the early stages of development such as CCUS and blue hydrogen which still have high costs require investment to be developed will require government support and stimulus
Articulating your ESG credentials and achievements is becoming more and more relevant to investors
Align with green finance initiatives to attract funds
Carbon Intensity (CI) is a key metric to assess current and future performance or assets given it is more durable in today’s dynamic market place. However it is not used and applied equally across organizations which limits comparison or confidence in the integrity of the information.
The oil and gas industry has a GHG emissions data quality problem as the majority is derived from desktop calculations, not real-world measurements.
THINGS TO CONSIDER
Carbon Intensity (CI) is a key metric to assess current and future performance or assets given it is more durable in today’s dynamic market place. However it is not used and applied equally across organizations which limits comparison or confidence in the integrity of the information.
The global volume weighted average carbon intensity for crude oil production is 10.3 g CO2e/MJ. This is approximately 15% of the total well to wheel lifecycle emissions.
Some country based volume weighted averages can be half, and some can be twice the global average
However on a field basis, much larger variation exists with levels 15 times higher than the global volume weighted average. This would result in a much higher total well to wheel lifecycle emissions – some 3 times higher than the global average.