This is the third in a series of five articles on the 2022 Voluntary Initiatives Report by Highwood Emissions Management. To start at the beginning, visit: Voluntary Initiatives 101: Going above and beyond emissions regulations.
Know your Motivation
Voluntary initiatives are broad in scope. They have various considerations, risks, opportunities and trade-offs that need to be navigated. Many of the requirements come down to the goals of the company itself. What emissions objectives does your company have? Are you wanting to know your methane intensity, informed by measurement? Do you either have measurements, or are looking to perform measurements? Initiatives such as Veritas require top-down and bottom-up reconciliation.
Furthermore, levels of disclosures and target setting must be considered. Are you looking for public disclosure? If so, what level of disclosure do you want? Initiatives range from not needing to publicly disclose that you participate in the initiative to all data, methodology and approach. CDP generally requires results disclosure. Do you want to set a target and work towards a target? Initiative such as SBTi require public disclosure.
What’s on the Table?
Voluntary initiatives have a variety of benefits, although undertaking all is not reasonable. Participants in the oil and gas supply chain benefit from voluntary initiatives, including the following aspects:
- Participants are provided with the opportunity to showcase their emissions management investments; and,
- Buyers are provided with the ability to differentiate gas streams from one another. This allows them to select the best sources for their needs.
Additionally, voluntary initiative participants need to understand long- and short-term goals, and how their specific company makeup might impact the initiative. Companies that are looking to go public or attract investment dollars might determine a different initiative is right for them than a company that is looking to support a broader ESG strategy, or long-term environmental commitment. Additional considerations for potential participants are complying with a required initiative from an upstream or downstream supply chain participant (e.g., oilfield services required to participate in CDP) or looking to ensure preparation for future regulatory requirements (e.g. SEC).
Cost and effort are also varied between initiatives both in the preparation phase and the initiative achievement phase. Some have audit requirements, or third-party verification, and others allow for internal confirmation that requirements have been met. Costs can be quite varied, too — participants must be aware of registration, audit, if applicable, transaction fee, registry fee, etc. The workload of your team to maintain, workload to update/ change policy/ revise emissions, must be considered.
Participant and Buyer Considerations
If you are a voluntary initiative participant, or you are making purchasing decisions based on initiative achievement, you must understand benefits and risks. There are many benefits of these initiatives including third party recognition of progress towards emissions reductions, potential monetary benefits, and tracking progress to reduction targets. The risks associated with voluntary initiatives could be that the initiative doesn’t result in emissions reduction and could be viewed as greenwashing. Additionally, a participant may spend money on the voluntary initiative with the goal to monetize it, when the market may or may not be fungible.
Tricks to avoid the risks and capture the benefits include educating oneself on the initiative, including how the participant has shown its compliance towards it. If you are going to participate in the initiative, know what you are getting into and prepare a gap assessment. Understand the pros, cons and drawbacks. Lastly, engage with an organization that understands and is well versed in voluntary initiatives.
How can I learn more?
The first article in this series introduced Voluntary Initiatives — but only scratched the surface. In the second article we discussed the main findings from our report. This third article presents a value proposition for engaging in these initiatives. Stay tuned for Article 4, which will discuss the role of technology, and Article 5, which will speculate on the future of differentiated gas.
In the meantime, you can download the free report to really dive into the details, and don’t forget to register for our free interactive mini-conference, to be held on Sept. 21, 2022, in collaboration with Petroleum Technology Alliance Canada.