Report • September 2023

Voluntary Emissions Reduction Initiatives in 2023

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Authors and Acknowledgements

Authors

Picture of Heather Isidoro, P.Eng, MBA

Heather Isidoro, P.Eng, MBA

Senior Consultant, Voluntary Emissions
Highwood Emissions Management

Picture of Antonio Monisit

Antonio Monisit

Differentiated Gas Technologist
Highwood Emissions Management

Picture of Katherine Elona

Katherine Elona

Emissions Engineer-In-Training
Highwood Emissions Management

Picture of Jessica Shumlich

Jessica Shumlich

Chief Executive Officer
Highwood Emissions Management

Picture of Paul Ashford, P.Eng.

Paul Ashford, P.Eng.

Vice President Consulting
Highwood Emissions Management

Picture of Dr. Thomas Fox

Dr. Thomas Fox

President & Chief Innovation Officer
Highwood Emissions Management

Picture of Dr. Jeff Rutherford

Dr. Jeff Rutherford

Director, Research & Development
Highwood Emissions Management

Sponsors and Acknowledgements​

As we launch the third edition of our annual Voluntary Initiatives report, I am filled at once with wonder and gratitude. Wonder at how far our industry has come in only three years, in terms of our collective emissions knowledge, competencies, and sustained commitment to progress. Gratitude for those who have done the work to get us here – including industry, regulators, academics, non-profits, service providers, innovators, and educators. Many of the visionaries pushing our industry forward are the same individuals and organizations who have made this report possible. We extend our sincere thanks to our sponsors for funding this report, to the administering organizations for their cooperation and contributions, to our colleagues and mentors for their guidance, and to the Highwood team – especially those who have worked tirelessly for months to produce this report. We look forward to another year of hard work – alongside all of you – in our mission to deliver cleaner and more affordable energy.

Picture of Dr. Thomas Fox

Dr. Thomas Fox

President & Chief Innovation Officer
Highwood Emissions Management

Executive Summary

Global demand for energy continues to increase, alongside energy transition pressure. With a rising global demand for sustainable and affordable energy, operators in the oil and gas industry are looking for strategies to balance or reduce the greenhouse gas (GHG) emissions footprint from their operations. As a large global emitter, the oil and gas industry is expected to contribute to GHG emission reductions to meet the goals set by the 2015 Paris Agreement.

Energy transition is often misunderstood. Throughout history, transitions have occurred due to technological developments, or scarcity of existing resources. Today’s energy transition factors in environmental concerns and the need to mitigate climate change. However, transition is not about a hard-stop on existing energy sources, but rather a collaborative approach to lowering the carbon footprint of existing supply in conjunction with the development of new low-carbon solutions.

The energy industry will be part of the solution. Minimizing and managing emissions from oil and gas production is not only becoming a regulatory requirement, but also a benchmark for stakeholders to evaluate and grant social license. By taking a proactive approach to emissions management and going beyond the minimum regulatory requirements, energy companies can differentiate themselves to Environmental, Social, and Governance (ESG) conscious stakeholders, profit from reduced leakage, as well as benefit from premiums for certified low-carbon products.

Voluntary Initiatives are an essential part of the solution. Early in 2021, our team at Highwood Emissions Management (Highwood) observed a rapidly growing ecosystem of voluntary initiatives available to the energy industry. Our clients expressed increasing confusion as they attempted to navigate a new and expanding network of programs, asking questions like “Which one is best?” and “What is the benefit to my organization?”.

Our first report in 2021 broke new ground. It brought structure and guidance to the rapidly emerging voluntary initiatives landscape. We identified 20 distinct voluntary initiatives and categorized them as certifications, guidelines, commitments, or ESG ratings. We also introduced disclosure levels and offered recommendations for how organizations could approach and adopt voluntary initiatives. These definitions and classifications are rapidly becoming standardized terms in the emissions management space.

We followed with our 2022 report, expanding our coverage to 24 voluntary initiatives available to the  energy industry, including 8 new initiatives. The second edition leveraged questionnaires to collect detailed information from administering organizations. Using this data, we expanded the scope to include the entire supply chain, allowing participation for gathering, boosting, processing, transmission, and LNG operations. We also introduced a series of feature articles to help operators evaluate their voluntary options, with topics such as The Role of Measurement, Selecting the Right Initiative for You, Leaders in Differentiated Gas, and more.

This 2023 third edition updates existing and new programs, totalling 24 voluntary initiatives now available to the energy industry across the supply chain. New developments are highlighted as well as trends towards the use of shared methodologies and protocols among initiatives and regulatory bodies.

In 2022, there was a surge of adoption in most certification initiatives.

Most of these initiatives currently have a slow but steady rate of continued growth. OGMP 2.0 and MiQ are outliers, with 86% and 29% increase in number of listed participants, respectively. 

Contrary to our expectations, we have found that less rigorous initiatives did not correlate to a higher uptake. Based on the data gathered, initiatives that rated themselves as moderate in the effort scale had the highest increase in uptake in 2023. This indicates that companies are willing to concentrate their effort on initiatives that have established their interoperability and value add, be it in terms of financial, operational and/or reputational value.

We also observed that most initiatives require or award higher ratings to companies employing direct emissions measurements. An Eye on Methane: International Methane Emissions Observatory 2022 Report noted direct measurement numbers were on average, 60% higher than industry estimation for United States energy production.

Key findings:
What has changed since 2022?

01. Participation is growing and seen across the world, especially for OGMP 2.0.

02.  Most initiatives have acknowledged their complementary criteria with other programs, increasing interoperability and agility for participants.

03. Some regulatory bodies have started to structure their disclosure requirements around voluntary initiatives to streamline and maximize interoperability.

04. Measurement and reconciliation are now encouraged by multiple initiatives. ‘Measurement-informed inventories are gaining traction.’

05. Participating companies are facing heightened public scrutiny regarding their environmental claims, prompting administering organizations to improve on verifiability and transparency.

06. Newer initiatives are developing guidance for specific industries and segments.

While the cost of direct measurement is higher, measurement-informed inventories tend to better represent individual company inventories. Companies using direct measurement have more representative baselines giving higher credibility to their overall reduction results.

As many organizations still struggle to meet minimum regulatory requirements, there is hesitation to add voluntary initiatives when the cost and effort level is not well understood.

We identify six key knowledge gaps that may prevent broader industry uptake. Addressing these gaps and aligning protocols will improve transparency, credibility, and the value of voluntary initiatives.

In addition, we continue to address the knowledge gaps identified in the 2022 report. In particular, GTI Energy’s Veritas initiative has addressed the need for better data and more transparent reporting by creating methane measurement and reconciliation protocols. Amid continuous improvement, clarification, and recognition, we are optimistic that voluntary initiatives will become increasingly credible, trusted, and adopted within the oil and gas.

Key Knowledge Gaps

01.  Harmonization between regulations and voluntary initiatives – Will initiatives adopt regulatory disclosure requirements, or the other way around? The alignment in their requirements will decrease the barriers in adoption of voluntary initiatives.

02. Chicken and egg conundrum: A major barrier in the adoption of certification and commitment initiatives has been the uncertainty around the benefits versus costs. However, a wide adoption of the initiative must happen to decrease this uncertainty.

03. How can administering organizations encourage transparency and accountability without dissuading companies from engaging in the programs?

04. What is the level of effort required and best approach for a credible measurement-informed inventory?

05. Encouraging companies to delve deeper into understanding their complete emissions profile through direct measurement remains to be a significant challenge.

06. There is no centralized and publicly accessible database that collects, aggregates, and analyzes information from the different initiatives. Is there a meta-initiative that can collect, aggregate, and disseminate reported data?

We conclude with a set of recommendations from Highwood to guide stakeholders as we collaboratively move to address existing knowledge gaps, strengthen credibility, increase uptake, and realize clearer benefits to participation.

  1. Administering organizations must capitalize on successes by quantifying the benefits of participation, not only to encourage potential participants but also to identify opportunities for alignment with similar initiatives.
  2. All stakeholders should continue to collaborate, establish alignments, and work towards consolidation of complementary programs to provide companies the agility to participate in multiple initiatives using the same set of data.
  3. Administering organizations should continue promoting transparency and move towards requiring independent verification to increase the credibility of their programs, shield participants from possible allegations of greenwashing, and enhance stakeholder confidence.
  4. The energy industry should lead by example and promote better emissions quantification, reporting, and mitigation to provide a new benchmark for other industries.

Introduction

When we look at the big picture of climate change and GHG reduction targets, it is worth making a few distinctions about the overall GHG picture.

GHG’s are gases that trap heat in the atmosphere, and include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases. Carbon dioxide and methane account for approximately 80% and 12% of total GHG’s respectively.

CO2 is produced by the combustion of fossil fuels or, in other words, the use of fossil fuels to create energy. Methane is produced during fossil fuel extraction (coal, gas, and oil), agricultural practices, land use, and by the decay of organic landfill waste.

Energy producers (including coal) are responsible for 40% of emissions, second only to agriculture2.

Year over year