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Stepping Into Sustainability: 3 Ways the Oil, Gas and Chemical Industries are Preparing to Hit Net-Zero

Climate change and environmental services

Stepping Into Sustainability: 3 Ways the Oil, Gas and Chemical Industry are Preparing to Hit Net-Zero

Addressing Sustainability Roadblocks

As the pressure to adapt grows globally, a significant roadblock remains: Implementing a sustainability program is extremely difficult. It requires novel operational management strategies that will affect the industry to its core, down to the element level of carbon extraction and subsequent emission into the atmosphere.

Top organizations in the oil, gas and chemical space are implementing specific measures to remain on target as pending regulations and net-zero targets approach. Discover three (3) crucial ways your company can prepare to step into sustainability.

1 - Invest in Carbon Capture Projects

Carbon Capture, Utilization and Storage (CCUS) is an alternative way of capturing the CO2 waste from energy production and either storing it or utilizing it to reduce the level of emissions entering the atmosphere. Large energy firms in Houston, Texas are currently collaborating on a global scale to develop carbon capture projects that have the potential to reduce atmospheric carbon significantly.

ExxonMobil is leading the charge with a substantial focus on the U.S. government. The objective is to increase carbon’s value through the current tax credit systems in place. The current 45Q tax credit is less than $50/ton CO2, but most research has shown that an $85 to $100/ton CO2 tax credit would make many of these carbon capture projects economically feasible. Research has shown that CCUS must be included in all global decarbonization efforts on a massive scale to meet the 2050 United Nations net-zero targets.

2 - Accurately Report Sustainability Metrics

It is crucial that your organization invest time and resources into operationalizing Environmental, Social and Governance (ESG) and sustainability reporting metrics. This necessity emerges from the White House’s recent Congressional Review Act revoking the Methane Rule that previously prevented Methane from being a regulated greenhouse gas.

In addition, the CLEAN Future Act is also in effect. This bill includes provisions for reducing 2012 methane emissions by 65% before 2025 and 90% by 2030. To do this, the bill directs the EPA to finalize regulations by the end of 2022 to meet the 2025 goal. These 2022 regulations cover both new and existing sources “from every segment of oil and natural gas systems, including oil and natural gas production, processing, transmission, distribution, and storage.”

As you can see, metrics are key to successful sustainability. If you’re just beginning this process, take the necessary time to understand not only pending regulations but your stakeholders’ demands as well.  ESG and sustainability reporting metrics should be holistic. Aggregating permitted emissions data with unstructured operational emissions data often requires assurance, similar to U.S. Securities and Exchange Commission (SEC) disclosures.

3 - Avoid ESG Misconduct

In March of 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement. Their purpose is to develop initiatives to proactively identify ESG-related misconduct and identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force has an array of experience and expertise, and they are currently policing the market and reviewing whistleblower complaints to protect investors and the public.

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