What is the business case for action around strategies proposed, In other words, how could these strategies add value to the company? (3%)
https://www.mckinsey.com/industries/oil-and-gas/our-insights/the-future-of-liquefied-natural-gas-opportunities-for-growth
https://uk.practicallaw.thomsonreuters.com/w-011-0184?transitionType=Default&contextData=(sc.Default)&firstPage=true
REPORT BY DR MICHAEL H SMITH (ANU) 1 ASSESSING CLIMATE CHANGE RISKS AND OPPORTUNITIES FOR INVESTORS Oil and Gas Sector Introduction The oil and gas extraction and processing (oil and gas) sector is already financially vulnerable to extreme weather events such as cyclones. Climate change is forecast to increase the exposure of oil and gas companies to climate, energy and carbon price risks. Few oil and gas companies publically report having a comprehensive, corporate-wide climate change mitigation or adaptation strategy. As this guide will show, oil and gas companies have available to them many adaptation measures and opportunities to mitigate energy cost, carbon and carbon related regulatory risks. Purpose This guide provides information to help investors assess and integrate climate risk and opportunity in the oil and gas sector into investment analysis. How to use this guide Identify the risk factors: Recognise key climate change, energy and carbon risks faced now by investors in the oil and gas sector in Australia. (Table 1 and Table 2 provide a checklist of issues for investors) Indentify how risks will increase: Unmitigated climate change will increase risks related to extreme weather events, energy cost and carbon liability. Increasing risks and potential for negative impacts are explained. Identify the adaptation strategies and mitigation measures: The most cost effective measures companies can take to adapt to physical risks (to build resilience for climate changes which can no longer be avoided) and mitigate energy costs and carbon risks (reduce exposure) are then described based on observations of leading practices. These measures should not be considered in isolation but within the capital planning cycle of companies. Assess materiality: Not all climate change risks affect all sectors equally. Tables identifying risks, adaptation strategies and mitigation measures in this guide include the most significant issues for the oil and gas sector. Integrate the information into investment processes: The diagram below indicates how investors can integrate the information in the guide into investment practices. ASSESSING CLIMATE CHANGE RISKS AND OPPORTUNITIES FOR INVESTORS Oil and Gas Processing Sector IN THIS REPORT Integration into investment process IDENTIFY CURRENT RISKS • Climate risks • Energy cost and carbon risks Assess company exposures (current and future) Assess company response Adjust valuation assumptions Engage companies on outstanding exposures and response IDENTIFY RISK VARIANCE AND IMPACTS • Expected climate changes • Expected energy cost and carbon changes IDENTIFY ADAPTATION AND MITIGATION OPPORTUNITIES • Climate adaptation strategies and measures • Energy and carbon risk mitigation strategies with measures DELL Highlight 1 Summary of climate risk in the oil and gas sector ......................................................................2 Climate related risks ................................................................................................................2 Climate change risks, forecast change, potential impacts and adaptation strategies.....3 Energy costs, carbon risks and mitigation opportunities ....................................................4 Analysis of the climate change risks and impacts ...............................................................6 Analysis of climate change adaptation opportunities ................................................................8 Proactive management: beyond compliance .......................................................................8 Analysis of climate change mitigation opportunities to address energy cost and carbon risks ...................................................................................................... 10 Overview of main energy cost and carbon risks ............................................................... 10 Reducing energy intensity through energy efficiency ........................................................ 11 Reducing exposure to greenhouse gas emission related costs and regulatory shifts by reducing flaring, venting and fugitive methane emissions. ............ 12 Addressing additional carbon and energy risks - through diversifying into low carbon energy markets and investing in carbon capture and storage ............. 13 Conclusion..................................................................................................................................... 14 Key Resources .............................................................................................................................. 15 List of tables Table 1: Climate Change Risks, Forecast Change, Potential Impacts and Adaptation Strategies .............................................................................3 Table 2: Energy and Carbon Cost Risks, Forecast Change, Potential Impacts and Mitigation Strategies ...............................................................................5 Table 3: Costs from Cyclones to the Oil and Gas Industry of Australia ...................................6 Table 4: Climate Change Risks and Potential Impacts ...............................................................7 Table 5: Climate Change Adaptation Strategies to Manage Risks ...........................................9 List of figures Figure 1: Distribution of value through oil and gas industry value chain ...................