Efforts to limit climate change will have a significant impact on the energy mix over the next few decades and Woodside is adapting to these changes. This presents both risks and opportunities for Woodside's business.
Impacts of climate change
Woodside recognises the scientific consensus on climate change and the challenge of providing safe, clean, affordable and reliable energy whilst reducing emissions in line with the Paris agreement. Woodside is well positioned to assist in reducing climate change impacts while also providing a reliable and long-term energy supply.
Sustainable and reliable energy
Acknowledging the interconnected challenges and opportunities of sustainable development, Woodside understands that society is increasingly demanding cleaner air and an energy mix that reduces climate change. This is leading to changes in the global energy mix. Woodside can play an important role supplying sustainable and affordable energy supporting the growth of renewables, while reducing climate change and air quality impacts. To maximise these opportunities, we are developing new technologies, underpinned by our core business, to position Woodside as a supplier of sustainable and reliable energy.
Woodside's strategic response to climate change risk
In 2016, we elevated climate change in our risk register and evolved how we will manage this risk. We have refined our approach to Carbon and Climate Change and published a Climate Change Policy.
Our approach highlights our belief that the benefits of natural gas will see gas and LNG play an increasingly important role globally in reducing greenhouse gas emissions, supporting intermittency of renewable energy and improving local air quality. We will also continue to pursue energy efficiency, support global carbon pricing and evaluate the resilience of our portfolio against a range of scenario's, including a 2oC scenario, to understand the potenital impacts, risks and opportunities.
The Paris Agreement
In December of 2015, nearly every country in the world adopted the Paris Agreement, which provides an enduring framework for the world to address climate change.
Key elements of this agreement include the following:
- Limiting climate change to well below 2°C above pre-industrial levels, with aspirations of 1.5°C
- Achieve a balance between anthropogenic emissions by sources and removals by sinks
- Strengthening national adaptation efforts
- A five-yearly pledge-and-review process, to increase national ambition over time.
The Paris Agreement came into force in November 2016, just 11 months after the Paris Climate Conference (COP21). It has now been ratified by more than 100 countries, which are responsible for more than 80% of emissions.
- The relative low-emissions intensity of gas provides it with an advantage over coal in a decarbonising market.
- High value-adding oil and gas applications, which require high energy reliability, such as peaking power, long range transport and chemical plants and process.
- New technology allows existing and future oil and gas facilities to reduce their greenhouse gas emissions.
- Demand for oil and gas in markets may subside, resulting in stranding of higher cost assets.
- Divestment campaigns may target oil and gas operators and, if sufficient momentum is gained, could potentially impact shareholder value.
- Changes to climate policies and stakeholder expectations can impact project approvals, schedules and costs.
- Governments may introduce unilateral carbon prices in host countries, which would increase operating costs, relative to international competitors.
Our detailed response on climate change can be found in Woodside's Sustainable Development Report 2016.