Providing Leadership on Climate Reporting

Mark Green
Posted April 14, 2021

Timely, accurate reporting of greenhouse gas (GHG) emissions – by our industry and all emitting sectors of the economy – is critically important for our country’s efforts to address the risks of climate change. That’s why enhancing the consistency and comparability of our industry’s GHG reporting is one of the main elements of the Climate Action Framework API unveiled last month.

As the U.S. Securities and Exchange Commission (SEC) increases its focus on climate and ESG (environmental, social, governance) reporting, let’s just say that the natural gas and oil industry is on it. Not only do we see the value of reporting to stakeholders and the importance of accurate, transparent GHG reporting in developing sound, we want to drive it.

Indeed, industry is well-positioned to be a reporting leader; we’re not newcomers to it. API President and CEO Mike Sommers:

“Natural gas and oil companies were among the first industries to develop sustainability measures and report progress. That continues to the present day. Last year, API issued our 4th edition of Sustainability Guidelines with international partners, which provide a template for oil and natural gas companies to report their sustainability progress.”

The Climate Action Framework’s reporting section details three initiatives around increased sustainability/climate reporting.

Expand Industry’s Use of ESG Reporting Guidance

The natural gas and oil industry has been a pioneer in industry-wide sustainability reporting and for decades has provided detailed performance information for stakeholders – including regulators, investors and the public.

Together with two international natural gas and oil associations – IPIECA and IOGP – API developed and has updated since 2005 a common framework for companies to assess ESG issues, the “Sustainability Reporting Guidance for the Oil and Gas Industry” (see posts here and here.)

API will work to expand industry use of this guidance for reporting on climate change, the environment, safety, health and security, social impacts and in governance and business ethics. Dr. Aaron Padilla, API manager of Climate and ESG Policy, wrote:

The natural gas and oil industry is an essential partner in a sustainable energy future, and business transparency supports broader efforts toward emissions reductions and environmental progress. With updated guidelines and ongoing collaboration, reporting initiatives will continue to reflect the safety and reliability of industrywide performance for consumers, policymakers and stakeholders around the globe.

Build on API’s Compendium of GHG Emissions-Reduction Methodologies

API is updating its “Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry,” which draws on work by our industry, academia and government to provide consistent methods for calculating GHG emissions.

The first such update since 2009 is timely and will help ensure that the natural gas and oil industry is using the most current data, emissions factors and procedures for calculating emissions from operations. It will include content for the liquefied natural gas sector and carbon capture, utilization and storage initiatives, which were not prominent in the previous edition.

Develop Template of Core GHG Indicators

The goal is to put together a concise template of GHG indicators that will help individual natural gas and oil companies in their reporting. API will work with its members on a template that will enhance the consistency and comparability in reporting through standardized indicators.

This is a critically important effort in the reporting field, where there has been expansion of various different reporting frameworks with hundreds of GHG indicators that has made it difficult to compare results. Developing this template will standardize reporting across our industry.

Again, the natural gas and oil industry has been and will continue to be a leader in sustainability reporting. We see it as essential for good policy and valuable in the development of potential market-based mechanisms.

Reporting is one part of API’s robust climate action plan that signals our industry’s commitment to join with government, a broad range of economic sectors and others to meet the climate challenge while also supplying the energy our modern society uses every day. Sommers:

“It takes more than one solution to support communities, meet energy demand and tackle climate change. But if we all work together, we can meet the moment. To build a better world for all, it’s imperative to enable energy development and environmental progress.”