Zephyr Energy PLC (LON:ZPHR) has pledged to achieve 100% carbon-neutral operations by the end of September this year.
The company described its promise to achieve carbon-neutrality across its operational footprint as ‘industry-leading’ and called it a major first step towards near-term delivery of hydrocarbons produced with an operational “net-zero” carbon impact.
To achieve the target the company has agreed to collaborate with the Prax Group which will work with Zephyr to measure, reduce and mitigate greenhouse gas emissions across Zephyr’s businesses.
“When we relaunched the company as Zephyr almost a year ago, the board unanimously agreed a policy to always operate with two core values in mind: to be responsible stewards of our investors’ capital and to be responsible stewards of the environment in which we work,” said Colin Harrington, Zephyr chief executive.
“These values are straightforward, fundamental, and at the forefront of every decision we make.
“Zephyr recently entered a new phase of growth – we are now a cash-generating oil producer with plans for near-term development on our flagship Paradox Basin appraisal project. This new phase comes with a corresponding new carbon impact, which is why the timing is right to launch what we believe is an industry-leading environmental commitment.”
The mitigation efforts will be primarily focused on the purchase of sustainability/decarbonisation offsets – known as ‘Verified Emission Reductions’ (VER) from reputable pre-vetted developers of sustainable projects.
The cost to purchase the appropriate number of VERs to offset Zephyr’s growing operational footprint is expected to average well under US$1 per barrel of oil equivalent produced. The company, however, noted that it may be considerably less as it may be able to sell oil volumes at a premium due to their anticipated “net-zero” operational carbon status.
It highlighted recent market-based evidence which suggests that purchasers and supply chain partners of “net-zero” operated volumes are willing to absorb costs associated with the purchase of VER offsets related to oil and gas production.
Zephyr highlighted that mitigating the company’s operational CO2 impact is only a first step and that the ultimate end-use of produced volumes have a significant CO2 impact as well. It plans to work with potential end-users of its products to explore routes to more fully offset its product to the greatest extent possible.
The company told investors that it anticipates that its new approach will yield economic benefits including expanded access to a wider group of potential institutional investors. It noted that the average cost of capital for companies with committed ESG and decarbonisation initiatives has been shown to be demonstrably less than that of traditional resource companies.
It also believes that incremental regulatory benefits may also materialise from Zephyr’s actions.