SOURCE: PFC Energy

November 07, 2007 11:55 ET

PFC Energy Benchmarks Oil Company Climate Change Performance: Competitors Catching Up With BP

WASHINGTON, DC--(Marketwire - November 7, 2007) - With International Oil Companies (IOCs) continuing to step up communications regarding their positions on global warming, PFC Energy has undertaken a series of studies to assess these companies' carbon strategies and benchmark their climate change performance.

--  The importance of carbon strategy
    

Developing a coherent carbon strategy is an increasingly important priority for IOCs, and there are several reasons why. First, these companies are under increasing pressure from shareholders to demonstrate and report environmental performance, including transparent greenhouse gas emissions reporting and moves to access low-carbon energy sectors (gas, biofuels, renewables). This investor pressure is not driven by altruism, but by a need to gain assurances over exposure to future portfolio and regulatory risk, which is the second reason. Third, the ability to lower CO2 emissions is an indicator of operational efficiency, as higher emission levels often come with less efficient energy use within industrial operations. Finally, consumer perception appears to be increasingly sensitive to the actions taken by major oil and gas companies on this front.

IOCs are thus increasingly recognizing the value of being perceived as strong performers on carbon strategy. But how well are these companies performing on this parameter, and how does this align with their external communications?

--  Benchmarking beyond the climate change rhetoric
    

To answer these questions, PFC Energy has relied on its extensive database and portfolio modeling capabilities to allow assessment of IOCs on a like-for-like basis, enabling the development of a series of consistent and quantifiable indices to support informed benchmarking. The findings are somewhat surprising, with ratings for the IOCs' approach to strategy, operations, and external reporting being quite different than widespread perception among industry observers may suggest.

What will not come as a surprise is that BP leads the supermajor rankings in terms of the quality of greenhouse gas emissions disclosure, but its rating is not as high as some might expect. The group scores 3.7 on PFC Energy's Quality of Climate Change Disclosure Index (QCCDI), which rates disclosure on a scale of zero to five based on more than 70 criteria. ConocoPhillips is next, with a score of 3.5, followed by ExxonMobil, Total and Chevron, while Shell brings up the rear among the supermajors.

While BP does significantly outperform the industry average in terms of limiting the carbon intensity of its operations, it is not the leading IOC on this parameter. Based on a study released by PFC Energy's newly launched Carbon Strategy Service (CSS), Total has a narrow lead on second-ranking BP in terms of upstream emissions intensity, despite BP's greater exposure to carbon regulation in this segment. In downstream, ConocoPhillips leads the IOC rankings on refining emissions intensity, ahead of BP and ExxonMobil, based on a comparison of actual operating emissions of CO2 against modelized base-case emissions intensity, which takes into account the structure and complexity level of each operator's specific refining asset portfolio.

--  BP's performance in line with climate change positioning
    

Built on the experience and successes of PFC Energy's other competition-based service, the CSS provides in-depth analysis and insight into how IOCs are addressing the challenges of climate change. It evaluates individual operators' stated climate- and carbon-related strategy against their actual performance, and critically assesses the carbon intensity of their portfolios, presenting the findings through extensive company profiles. This analysis, which also includes a detailed examination of IOCs' positions in renewables and lower-carbon fossil fuels, is supplemented by a series of regular Memoranda on significant developments and emerging issues surrounding climate change, whether geopolitical, legislative or technological.

PFC Energy's CSS focuses its initial report on BP, the first IOC to acknowledge the reality of global warming and accept its corporate responsibility on this matter. While BP has intensively communicated its stance on climate change and the actions it is taking to reduce its greenhouse gas emissions, observers may wonder whether the company's performance backs up its claims. Overall, PFC Energy finds that BP has indeed been more proactive than other IOCs in this domain. Not only does the company rank better than most in the quality of its greenhouse gas reporting, but its focus on reducing operating emissions of greenhouse gases has shown impressive results, giving BP one of the lowest emissions intensity rates overall among the leading IOCs. The group has arguably also invested more extensively than many of its competitors in exploring and deploying new technologies, and in developing business opportunities in renewables, lower-carbon fossil fuels, and carbon capture and storage initiatives. Finally, in terms of future positioning, BP has an appreciably less carbon-intensive portfolio than the other supermajors.

Notes to the Editor

PFC Energy, headquartered in Washington, DC, is a leading strategic advisory firm in global energy with main offices in Houston, Kuala Lumpur, Paris, Bahrain, Lausanne, and Buenos Aires. PFC Energy's clients include all major international oil and gas companies, many national oil companies, oilfield service companies, financial institutions and government agencies and ministries involved in energy policy and energy-driven economic development. PFC Energy's coverage includes competitor analysis, energy sector strategies, commercial opportunities, and geopolitical forces affecting energy policy and energy economics.

Contact Information

  • Further information

    On PFC Energy:
    Erika Smakula
    Email Contact
    (1 202) 721 0325

    On the Carbon Strategy Service:
    Souna Kang
    Email Contact
    (33 1) 4770 7849