Updates from COP27
Posted: November 17th, 2022
Authors: James G.
The 2022 United Nations Framework Convention on Climate Change (UNFCC), also known as the Conference of the Parties or COP27, is being held from November 6th to 18th in Sharm El Sheikh, Egypt. This annual conference is celebrating its 27th anniversary and includes the original 194 countries that signed the conference’s Paris Agreement in 1992 pledging to “pursue efforts” to limit global temperature rise to 1.5 degrees Celsius.1 The goal of the conference is to build on the outcomes of COP26 and deliver action on an array of issues critical to tackling the climate emergency, from reducing greenhouse gas (GHG) emissions, building resilience, and adapting to the inevitable impacts of climate change, to delivering on the commitments to finance climate action in developing countries.2
Major Updates from the Conference
There have been several significant updates from this year’s COP27 conference that make positive strides towards curbing GHG emissions globally. The following paragraphs outline the major updates from the conference:
- The International Sustainability Standards Board (ISSB) confirmed that the CDP, an international nonprofit that helps companies and cities disclose their environmental impact, will be officially incorporated into the ISSB’s IFRS S2 Climate-related Disclosures Standard (IFRS S2).3 The IFRS S2 disclosure will provide investors and consumers with quicker access to more consistent and accurate climate-related information. The integration of the CDP with the ISSB climate standards will assist with normalizing Environmental, Social, and Governance (ESG) data definitions for various industries, allowing for increased transparency, better industry benchmarking, improved gap analysis, reduced reporting burdens, and overall better collaboration. According to CDP’s chief impact officer Nicolette Bartlett, the integrated frameworks will “not only further support companies and financial institutions to build resilience and adapt, as climate risk disclosure was found to do by the Intergovernmental Panel on Climate Change, but to further increase ambition and action…what we don’t measure we can’t manage. We live in a global world and need a global understanding of the risks we face, the solutions available, the progress made and the laggards holding us back. CDP is pleased to put our weight behind driving the implementation of this long-awaited global standard.”4 Paul Dickinson, CDP’s founder chair also stated, “this will be critical in boosting corporate action and accountability, providing financial markets, governments and regulators with clear, comparable data to inform their decision making.”5
- The White House Council on Environmental Quality proposed the Federal Supplier Climate Risks and Resilience Rule which would require major U.S. Federal contractors to publicly disclose their GHG emissions and climate-related financial risks and set science-based emissions reduction targets.6 The rule would cover approximately 85 percent of the GHG emissions related to the U.S. Federal supply chain “which are estimated to be more than twice as large as the emissions from operating the Federal Government’s 300,000 buildings and 600,000 vehicles combined”.7 This measure is a huge mark for the U.S. because it sets the standard for other countries to follow to regulate GHG emissions and work towards the goals set forth by the Paris Agreement. The proposed rule states that “…the largest suppliers including Federal contractors receiving more than $50 million in annual contracts would be required to publicly disclose Scope 1, Scope 2, and relevant categories of Scope 3 emissions, disclose climate-related financial risks, and set science-based emissions reduction targets. Federal contractors with more than $7.5 million but less than $50 million in annual contracts would be required to report Scope 1 and Scope 2 emissions. All Federal contractors with less than $7.5 million in annual contracts would be exempt from the rule. Small businesses with over $7.5 million in annual contracts would only be required to report Scope 1 and Scope 2 emissions under the proposed rule…”8
Furthermore, the proposed rule would provide a targeted, risk-based approach due to its focus on major U.S. Federal suppliers. It would also promote industry-focused collaboration and innovation by requiring major U.S. Federal contractors to publicly disclose their GHG and climate-related risks. The rule would put serious pressure on industries to find ways to decarbonize their activities internally through management techniques and externally through supply chain engagement, industry collaboration, best-practice learning, the utilization of technology, and innovation.
- A focus on methane emissions reductions has been a major topic at the COP27 conference. The focus on methane comes on the heels of the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report that states countries must reduce methane emissions by at least 30 percent by 2030 to keep the 1.5°C temperature limit within reach.9 During the COP27 conference, the U.S. Environmental Protection Agency (U.S. EPA) announced that it will be strengthening its proposed standards to reduce emissions of methane and other air pollutants and combat climate change.10 The U.S. EPA’s proposed methane reduction standards supplement the U.S. EPA’s November 2021 “Emissions Guidelines to Reduce Methane and Other Harmful Pollution from the Oil and Natural Gas Industry” proposal and incorporate a broad range of stakeholder input and feedback, including nearly half a million public comments.
To help with the identification of areas with large methane emissions, the United Nations also announced at COP27 that they will launch a public database of global methane leaks detected by space satellites.11 The database system is called MARS or Methane Alert and Response System and will encourage companies and government to cut methane emissions where detected.12 The MARS system will use existing satellite technologies to provide governments and businesses with data to determine areas of high concentrations and the right measures to mitigate GHG emissions. “MARS will be the first publicly available global system capable of transparently connecting methane detection to notification processes and will use state-of-the-art satellite data to identify major emissions events, notify relevant stakeholders, and support and track mitigation progress.”13
U.S. President Joe Biden stated at COP27 that the updated EPA methane proposal and the implementation of the MARS program would lead to an 87 percent reduction in U.S. methane emissions from covered sources by 2030 from baseline 2005 levels.14 Biden went on to say that “the planned rules affect hundreds of thousands of U.S. wells, storage tanks and natural-gas processing plants, and require companies to replace leaky, older equipment and buy new monitoring tools.”15 The EPA’s updated methane standards will provide a more complete set of regulations for companies to follow and comply with, leading to significant GHG emission reductions.
As mentioned, the updated methane standards include a comprehensive list of cost-effective approaches that oil, and natural gas facilities can follow to comply with the regulation. The following list provides an overview of these approaches:
- Routinely monitor all well sites for leaks at less cost, and until they are closed properly.
- Flexibility to use innovative and cost-effective methane detection technologies, with a streamlined process for approving new detection methods as they become available.
- Quickly identify and fix large methane leaks by leveraging data from remote sensing technology.
- Properly operate flares to reduce emissions, comply with revised requirements for associated gas flaring.
- Comply with emission standards for dry seal compressors, which are currently unregulated.
- Comply with a zero-emissions standard for pneumatic controllers and pneumatic pumps at affected facilities in all segments of the industry.
- Increase recovery of natural gas that otherwise would go to waste – enough gas from 2023 to 2035 to heat an estimated 3.5 million homes for the winter.16
In addition, the new methane proposal includes a “Super-Emitter Response Program” that would require operators to respond to credible third-party reports of high methane leaks.17 The program would essentially require oil and gas companies to respond to large-emission events identified by EPA-approved third party entities leading to a wider circle of methane leak investigators and potentially a rise in communities partnering with nonprofits and others to investigate oil and gas infrastructure within their boundaries.18 Darin Schroeder, an attorney with the Clean Air Task Force states that “there are a lot of possibilities for this super-emitter program to kind of share the burden and really make sure that when we see a big leak, we can get it stopped as quickly as possible.” 19
Looking Forward
This year’s COP27 conference is proving to be an important one for the annual global meeting compared to prior years. The announcement from the ISSB that they will integrate their reporting protocols with those of the CDP shows that climate reporting is becoming more standardized and normalized, which will help companies benchmark against their competition and learn more efficient ways to reduce the GHG emissions associated with their operations. The announcement of the U.S. Government’s Federal Supplier Climate Risks and Resilience Rule is a big step towards pushing industries towards decarbonization through policy and regulation. Companies will now be forced to disclose their ESG data so investors and consumers can evaluate how that company is performing with respect to the goals set forth by the Paris Agreement. The newly updated methane standards set forth by the U.S. EPA are another important step to fight global climate change and assist companies with their reduction strategies. The updates out of COP27 are promising advancements in the global fight to reduce global GHG’s as set forth by the Paris Agreement. It is now up to participating countries and their governments to adopt effective policies and measures to promote decarbonization through collaboration.
If you are interested to learn more about the COP27 conference, or how ALL4 can help your organization with its ESG and climate-related needs, please reach out to James Giannantonio, our ESG Managing Consultant, at jgiannantonio@all4inc.com.
Sources of Information:
[1] https://www.bbc.com/news/science-environment-63316362
[2] https://www.un.org/en/climatechange/cop27
[3] https://www.edie.net/cdp-to-integrate-issb-standards-into-disclosure-platform/
[4] https://www.edie.net/cdp-to-integrate-issb-standards-into-disclosure-platform/
[5] https://www.theasset.com/article-esg/48056/cdp-platform-adds-ifrs-s2-climate-disclosures
[6] https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/10/fact-sheet-biden-harris-administration-proposes-plan-to-protect-federal-supply-chain-from-climate-related-risks/
[7] https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/10/fact-sheet-biden-harris-administration-proposes-plan-to-protect-federal-supply-chain-from-climate-related-risks/
[8] https://reason.com/volokh/2022/11/11/biden-administration-to-require-federal-contractors-to-report-and-reduce-greenhouse-gas-emissions/?comments=true
[9] https://abcnews.go.com/Technology/launching-satellite-based-system-detect-methane/story?id=93055245
[10] https://www.epa.gov/newsreleases/biden-harris-administration-strengthens-proposal-cut-methane-pollution-protect
[11] https://www.reuters.com/business/cop/cop27-un-hunt-sources-climate-warming-methane-space-2022-11-11/
[12] https://www.reuters.com/business/cop/cop27-un-hunt-sources-climate-warming-methane-space-2022-11-11/
[13] https://abcnews.go.com/Technology/launching-satellite-based-system-detect-methane/story?id=93055245
[14] https://www.wsj.com/articles/biden-to-announce-restrictions-on-methane-emissions-at-cop27-11668166064
[15] https://www.wsj.com/articles/biden-to-announce-restrictions-on-methane-emissions-at-cop27-11668166064
[16] https://www.epa.gov/newsreleases/biden-harris-administration-strengthens-proposal-cut-methane-pollution-protect
[17] https://www.epa.gov/newsreleases/biden-harris-administration-strengthens-proposal-cut-methane-pollution-protect
[18] https://www.eenews.net/articles/how-epas-draft-methane-rule-targets-super-emitters/
[19] https://www.eenews.net/articles/how-epas-draft-methane-rule-targets-super-emitters/
