Voluntary Emissions Reduction Initiatives in 2023

Highwood Emissions Management

September 2023

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.

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.