Methodology for calculating and reporting potential emissions from fossil reserves drafted by WRI

World Resources Institute follows up GHG Protocol with new draft methodology

A draft methodology for calculating and reporting the potential greenhouse gas emissions from fossil fuel reserves has been opened for public comment by the World Resources Institute.

The Washington-based think tank hopes it will prove useful for shareholders who propose, and vote on, fossil fuel-related resolutions at companies.

The draft will feed into a working paper to be published in July, the WRI says. The WRI, which developed the Greenhouse Gas (GHG) Protocol with the World Business Council on Sustainable Development, is headed by Andrew Steer, the former Special Envoy for Climate Change at the World Bank. Its board includes figures such as Deutsche Bank Vice Chairman Caio Koch-Weser, former Swedish PM Göran Persson and Daniel Doctoroff, the ex-CEO of Bloomberg.

The new methodology – put together by Stephen Russell, who leads the WRI’s corporate GHG accounting project – is available for comment through March 13 and comments can be submitted through an online survey.

Russell referred to oil majors Shell and BP’s confirmations recently that they would support the “Aiming for A” shareholder resolutions on long-range climate resilience, saying: “The shareholder activists who submitted the resolutions, including the Church of England, UK Environment Agency, and UK and US local authorities, celebrated a victory for climate action. What exactly will these companies disclose?”In a blog posting, he writes that the draft “will be of interest to the top management of the oil companies that have committed to disclose their climate risk, to the shareholder activists who put forward the resolutions, and to pension fund managers, mutual fund managers, and investors large and small who will be voting on the proposed resolutions”.

He argues fossil fuel companies’ potential emissions are “simply too large to ignore”, and points out that through the GHG Protocol, the WRI has helped establish globally recognized, industry standards for measuring and managing emissions at the corporate level. But the GHG Protocol focuses on historical emissions, and omits the forward-looking perspective needed to capture potential emissions. So the new methodology will instead “allow companies to make accurate and consistent estimates of potential emissions, and support the efforts of a wide range of stakeholders to spotlight and improve the emissions performance of the fossil fuel industry”. It is stressed that the methodology does not outline a way to assess risks related to regulations on GHG emissions (e.g., “stranded reserves”).
Meanwhile, the Stranded Assets Programme at Oxford University’s Smith School of Enterprise and the Environment has issued a new working paper on capital expenditure risks and the extractives industry. The 28-page “Evaluating Capex Risk: New Metrics to Assess Extractive Industry Project Portolios” is available here.