As the carbon and climate conversation comes front and center in political and investor arenas, you’re hearing a lot about company commitments on carbon. If the terminology is making you sweat, there’s no need: This primer is for you.
And if you are tempted to skip this issue because You don’t need to know about climate and carbon, think again. As we discuss in our Colorado Series, oil and gas employees must be able to hold up their end of a climate conversation at a bar or in a backyard. Companies need to be fluent in climate speak to meet the rising expectations of their stakeholders and shareholders.
Both of these things are true:
- It’s tempting to say that the jargon around climate and decarbonization is “all over the place” – it is.
- That’s not an excuse – you still need to be fluent in climate and carbon.
This is a good place to start.
These terms will come up over drinks, in the grocery line, or at a hockey game – you will be glad you know them.
- Net-carbon neutral, net-zero, and zero carbon. Companies articulating a net-carbon neutral goal are saying that they will remove as much carbon from the atmosphere as they put into it. Net-zero is the same thing. Check out Canadian oil sands producer Cenovus’ 2020 net-zero commitment here. Xcel energy made a zero-carbon commitment (which I covered in an earlier installment), but I think we can safely assume it is really a net-zero goal. Net-zero is the same thing: carbon emissions – carbon captured or offset = zero.
- Carbon negative. Oxy CEO Vicki Hollub has talked about the future of carbon-neutral oil and others have invoked the prospect of carbon-negative oil. As an aspiration, what does this means? Example: in enhanced oil recovery (EOR), a field would permanently store more carbon than is produced in the oil. In cement, carbon-negative would indicate a product that is made with and stores more CO2 than is emitted during its creation.
- What carbon? From where? Savvy commentators on the decarbonization conversation want to know which company emissions are being discussed – whether you are talking about methane emissions reductions or future decarbonization commitments. This is talked about in scope.
- Scope one emissions are direct emissions from company owned or controlled sources – for example, those onsite and emitted from company equipment.
- Scope two emissions come from purchased energy, such as fuel for compressors or electricity imported onsite.
- Scope three emissions represent all the rest of those indirect emissions along the company’s value chain – including those emitted from a company’s products.
- Historic emissions. This is a new one I mention only because, earlier this year, Microsoft committed to offsetting all of their historic emissions by 2050.
It matters because:
All energy development is happening in this new climate-dominated conversation. Your regulators, stakeholders, customers, communities, and shareholders are participating – and whether you’re in or out communicates a great deal to them. If you don’t understand the conversation and engage proactively, you’ll be reactionary and late.
The critical mistakes companies are making:
Diverting away from the climate and decarbonization conversation by saying, “This language is confusing.” or “The goal post keeps moving.” or “Why bother?”
Seize the day. Successful companies will:
- Become climate literate to reduce social risk. Industry leaders are skating to where the puck is going, in their private conversations, public relations and their planning. Understanding the terminology is just the beginning.
- Address your emissions. As I’ve been saying throughout the Both True series, reducing your methane and carbon emissions is the price of admission – you don’t get a gold star. Get on it, get serious about it, and create transparency about what you’re doing and your results.
- Hey C Suite! Air emissions and the climate conversation are part of your job now. Historically the EHS and Regulatory departments took on air emissions – but now everyone needs to be able to talk about your commitments and your progress. Maybe you’re leaving climate and decarbonization to the good folks in investor relations (IR) or whoever is handling environmental social governance (ESG) submissions. But this isn’t any single department’s issue anymore. Leadership needs to be fluent in methane, other GHG emissions, and climate – what you have, what you’re doing about them, and how you’re going to get even better.
- Talk climate and carbon. I hope if this series can accomplish one thing, it is to get every oil and gas company in North America talking about climate and decarbonization all the time. The public is, so we need to too.
Becoming fluent and comfortable in macro and everyday climate conversations are key to mitigating your social risk. Understanding the terminology is just the beginning. I’d like to hear about the way your company talks about climate internally and externally. If this post was forwarded to you, you can subscribe here.