In the dynamic world of oil and liquefied natural gas (LNG) trading, one of the hottest new products is the carbon-neutral transaction. Designed to make oil and LNG more competitive environmentally with renewable energy in response to environmental, social and corporate governance (ESG) pressures, climate change and the decarbonization megatrend, carbon-neutral oil and carbon-neutral LNG provide for the offset of the greenhouse gas (GHG) emissions associated with a defined set of oil or LNG activities. A carbon-neutral oil or LNG transaction is effected through terms in the underlying transaction documents that govern the sourcing, purchase and retirement of carbon credits as offset units (COUs).1
In the case of LNG, carbon-neutral transactions first emerged in Asia in 2019 after Shell announced the execution of a carbon-neutral LNG transaction with Tokyo Gas, among others, for cargoes sourced from Shell’s Queensland LNG terminal in Gladstone, Australia.2 Since that time, there have been several publicly announced carbon-neutral LNG transactions and other unreported carbon-neutral LNG transactions, including a transaction in which the authors have been engaged. In the case of crude oil, Macquarie Group arranged the world’s first publicly announced carbon-neutral oil transaction—a transaction executed by an affiliate of Occidental for delivery of two million barrels of oil to Reliance Industries announced on January 29, 2021.3
The Biden administration in the United States, along with an increasing number of the world’s largest money managers, are accelerating decarbonization rapidly through executive orders and investment mandates. Moreover, with oil and LNG prices now trading at or near 12-month highs, the market for carbon-neutral oil and LNG appears poised for explosive growth. For participants seeking to enter into carbon-neutral oil or LNG transactions (or for that matter, pairing offsets with other energy products), we recommend consideration of the following factors.
1. Incremental Cost of COUs; Allocation and Documentation
Converting a traditional oil or LNG transaction into a carbon-neutral transaction involves incremental costs. The primary drivers of the incremental costs are the price of the applicable COUs, the applicable quantity of CO2 emissions (and other GHG emissions, if any) to be offset and the applicable quantity of oil or natural gas/regasified LNG in the underlying transaction. Other factors that will influence pricing include: the quality of the COUs that the parties choose; the source or origin of such COUs (e.g., from a party’s inventory, a registry or exchange); definition of the carbon footprint that is applicable to the transaction; and transaction costs (e.g., verification agent/carbon accountant costs, registry fees and other expenses). For example, in the case of COU quality, price varies widely, with recent quotes from under $1/metric ton of CO2 to, in other cases, more than $50/metric ton of CO2, with variables such as the type of project which generated the credit, the carbon standard under which the credit was generated, the location of the applicable project, the co-benefits associated with the project and the quantity of COUs bid by the buyer all impacting price.4
As an example of additional costs, it has been reported that a recent carbon-neutral LNG cargo shipped by Total from the Ichthys LNG plant in Darwin, Australia to the Dapeng LNG terminal in China cost about an additional $0.75/MMBtu of gas, or roughly an additional $2.4 million for the cargo (based on a cargo-equivalent of 3.5 billion cubic feet of gas).5 During much of 2020, when global LNG and gas prices and proxies (e.g., JKM, TTF, Henry Hub, etc.) generally hovered at or below $5/MMBtu, this was a substantial additional cost, generally increasing the cost of a carbon-neutral LNG cargo by 10-20% above the cost of a traditional LNG cargo of the same quantity without the carbon-neutral wrapper. However, with LNG prices increasing and greatly outpacing the recent price increase in exchange-traded CO2 emissions allowances,6 the cost of pairing an LNG transaction with COUs has, in proportion to recent LNG prices, generally never been less expensive.
After determining the incremental costs (or pricing formula) that would apply in pairing the specific commodity with COUs, the counterparties must decide (i) which party will bear the incremental carbon offset cost—seller, buyer or a third party via a pass-through mechanism (e.g., refinery, power generator, energy consumer); (ii) how to document the incremental cost and allocate it under the applicable master carbon neutral agreement, confirmation or annex to the underlying LNG or crude oil sale and purchase agreement; and (iii) how to document the quality and risks associated with the COUs. For example, in connection with documentation, the parties will need to work with their advisors to weigh the potential risks of incorporating the terms and conditions of the carbon-neutral transaction into the underlying purchase and sale transaction versus documenting the carbon-neutral portion of the transaction under separate and independent performance provisions. In terms of pricing, the parties will need to evaluate whether to include the carbon offset cost formula within the oil or LNG pricing formula applicable to the underlying transaction or whether to treat such costs as a separate line item in the cargo invoice or trade confirmation. Whether the carbon offset aspect of the transaction will be binding on the parties at signing or structured as an option (or perhaps subject to conditions precedent) will, among other things, influence these structuring considerations. Legal, tax, intercompany accounting issues and jurisdictional issues will also dictate the optimal approach.
In any event, while there are incremental costs in transforming a traditional oil or LNG transaction into a carbon-neutral transaction, key players are betting that the downstream markets will develop such that premium pricing will be available for carbon-neutral oil and LNG cargoes and that such premium pricing ultimately will mitigate the incremental costs incurred by the parties to the original transaction, including incremental costs arising from any new regulatory compliance requirements.
2. Carbon Trading Regulations
Since the first voluntary carbon credits were traded in 1989, COUs acquired in the voluntary market7 have historically been sourced from registries established by nonprofit entities (e.g., Verra, a nonprofit established in 2005 to certify carbon emissions reductions) or acquired directly from third-party project developers or through a party’s sponsorship of projects which generate their own COUs. Starting in March 2021, the CME Group will launch its Global Emissions Offset (GEO) futures contract, targeted toward voluntary carbon market participants, which will provide parties to carbon-neutral transactions, among others, direct access to carbon offsets.8 The CME’s GEO futures contract will be based on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which includes carbon offset standards based on a set of criteria developed by the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations, and will allow for delivery of CORSIA-eligible voluntary offset credits from three ICAO approved registries during specified delivery periods.9 However, no matter how a COU might be sourced, traded or consumed, participants in a carbon-neutral oil or LNG transaction should be cognizant of trading regulations applicable to COUs.
From a trading regulations perspective, COUs, as well as existing emissions allowances products, are generally deemed to involve “environmental commodities” which are treated in a similar manner as other tangible commodities that can be consumed (e.g., corn, soybeans, coffee, etc.) and on which a futures contract can be traded (such as the CME’s forthcoming GEO contract). For transactions with a nexus to the United States, subject to the exclusions described below, this generally means that the Commodity Futures Trading Commission (CFTC), the primary governmental agency responsible for regulating the U.S. commodity derivative markets, would have jurisdiction over such transactions under the Commodity Exchange Act (CEA); accordingly, except as noted below, parties to carbon-neutral oil or LNG transactions would need to comply with the requirements of the CEA, including potentially satisfying commodity pool operator, swap dealer or other registration requirements, clearing the transaction through a central counterparty and/or posting initial and variation margin, reporting the transaction to a swap data repository and complying with other potentially burdensome and unexpected obligations (depending upon the structure of the carbon-neutral transaction). Indeed, the CFTC has indicated that if environmental commodity transactions are traded like stocks or bonds that are resold for their cash value, CFTC regulations would apply to such transactions just as they do to futures and swap transactions.10 For example, a transaction involving the acquisition of COUs from the CME’s new GEO futures contract (as well as the trading of the futures contract itself) would be a transaction subject to CEA regulation and CFTC jurisdiction.
However, depending upon structure, a carbon-neutral oil or LNG transaction may be excluded from regulations under the CEA. For example, “forward transactions” are generally not subject to regulation under the CEA and CFTC jurisdiction (other than the CFTC’s general enforcement authority over anti-manipulation and fraud and deceptive trading practices with respect to cash commodities). To qualify as a “forward transaction,” a contract generally must involve (i) an underlying nonfinancial commodity11, (ii) deferred shipment or delivery of the nonfinancial commodity and (iii) intent on the part of the counterparties to settle the contract by physically making or taking delivery of the nonfinancial commodity. In our experience, the first two factors are generally able to be satisfied in carbon-neutral oil and LNG transactions. However, if COUs are not physically settled in a carbon-neutral oil or LNG transaction (i.e., consumed or retired) but re-traded, the “forward exclusion” would likely not apply (absent other exemptions) and the contract would instead be characterized as either a futures or swap contract subject to the regulatory jurisdiction of the CFTC. Other instances where the “forward exclusion” may not apply to contracts involving environmental commodities include where the transaction:
- Includes the right to unilaterally terminate the agreement under a pre-arranged contractual provision permitting financial settlement.
- Is structured as either a commodity option (including a “trade option”) or is embedded with volumetric or price optionality.
- Is characterized as a “retail commodity transaction.”12
Accordingly, to minimize the risk of potentially onerous CFTC regulations applying to a carbon-neutral oil or LNG transaction that the parties otherwise expected would have been exempt, those persons structuring carbon-neutral transactions should consider these factors, including, among other things, striving to (i) establish boundaries (or resale restrictions) that apply to post-closing activities associated with the COUs to minimize the risk that any resale of the COUs utilized in the transaction vitiates the “forward exclusion” and consequently triggers direct CFTC regulation and (ii) avoid carbon-neutral transactions which permit the parties to financially settle the transaction in lieu of delivering or retiring the applicable COUs.
In the United States, the Federal Trade Commission (FTC) has been fairly aggressive in penalizing parties in the consumer goods industry that make broad, unqualified general environmental benefit claims such as “green” or “eco-friendly.” As the FTC can initiate enforcement action if a marketer makes an environmental claim inconsistent with FTC guidelines, “carbon-neutral,” “low carbon” and “green LNG” or “net-zero oil” are all terms that may be subject to FTC scrutiny. While none of the existing FTC marketing guidelines are explicitly related to carbon neutrality, the following FTC guidelines related to COUs may apply (since parties to a carbon-neutral oil or LNG transaction use COUs to attempt to achieve neutrality or reduced carbon aggregate output):
- Marketers should have competent and reliable scientific evidence to support carbon offset claims. They should use appropriate accounting methods to ensure they measure emission reductions properly and do not sell the same unit more than once.
- Marketers should disclose whether the offset purchase pays for emission reductions that will not occur for at least two years.
- Marketers should not advertise a carbon offset if the law already requires the activity that is the basis of the offset.13
In addition, if a party states that it is “certified carbon neutral” by an accredited organization, that party would also need to meet criteria for endorsements provided in the FTC’s Endorsement Guides, 16 C.F.R. Part 255, including Definitions (§ 255.0), General Considerations (§ 255.1), Expert Endorsements (§ 255.3), Endorsements by Organizations (§ 255.4) and Disclosure of Material Connections (§ 255.5).14 To be certified, marketers must meet standards that have been developed and maintained by a voluntary consensus standard body. An independent auditor applies these standards objectively.15
For carbon-neutral oil or LNG transactions that involve foreign jurisdictions, the parties must ensure compliance with carbon-neutral marketing regulations applicable to those foreign jurisdictions. Accordingly, when structuring a carbon-neutral oil or LNG transaction, best practices would suggest the parties agree upon the applicable export, transshipment/re-load and import countries to ensure appropriate compliance with the marketing regulations in the applicable jurisdictions or otherwise allocate potential liability for marketing claims occurring upstream or downstream of the core transaction to the counterparty best positioned to manage those risks. For example, carbon-neutral oil or LNG transactions with a nexus to Australia should be aware of Australia’s National Carbon Offset Standard Carbon Neutral Program (NCOS) and those transactions with a nexus to England should review the British Standard Publically Available Specification for the Demonstration of Carbon Neutrality (PAS2060). The NCOS program provides that:
- To achieve carbon neutrality certification, an entity must measure its carbon footprint, reduce emissions where possible and purchase NCOS eligible abatement to offset the remaining emissions.
- Parties must also develop a plan for management of emissions which includes the management framework, systems and processes in place to effectively manage the carbon neutral commitment from start to end, as well as prepare a summary of emissions and actions under the program for public disclosure, all of which must be independently verified.
Given these risks and, of course, the generally strong desire by the parties to publicly report the consummation of a carbon-neutral transaction to, among other things, reap the public relations benefits of such a transaction and attain other co-benefits (e.g., satisfy potential ESG standards), it is especially important for the parties to ensure appropriate parameters are in place which govern the content of press releases and to address public reporting and the sharing of information applicable to the carbon-neutral oil or LNG transaction so that, ultimately, any statements about carbon-neutrality are highly defensible. For example, in the case of the carbon-neutral oil transaction referenced earlier, in recognition of the importance of this consideration, the parties appropriately defined their carbon-neutral oil transaction to mean “a structured transaction that results in the offset of an amount of carbon dioxide equivalent to that associated with the production, delivery and refining of the crude oil and the use of the resulting product through the retirement of carbon offset credits” and net-zero oil to mean “oil produced by Occidental through the abatement of atmospheric carbon dioxide in an amount equivalent to the carbon dioxide associated with the production, delivery and refining of the crude oil and the use of the resulting product.”16
4. COU Sourcing/Quality Assurance
The parties to a carbon-neutral oil or LNG transaction generally will need to agree upon the source and quality of the COUs. As mentioned earlier, in some cases, the parties will elect to source COUs from third parties, such as a registry or exchange. There are a number of organizations which operate registries where parties can acquire, transfer and/or retire COUs. Registries operated by nonprofit entities such as Verra and the Gold Standard are some of the more popular and reputable standard setting organizations that operate registries. Choosing the appropriate registry that will apply to the transaction is critical. Carbon offset projects come in a wide range of project types and levels of environmental integrity. These projects originate across the globe, often in remote locations. Therefore, utilizing highly reputable standards setting organizations and registries is paramount to support carbon neutrality claims. Not every registry will offer projects that satisfy the specific attributes and co-benefits sought by the parties or contain appropriate standards for the transaction. Standards organizations such as Verra continuously review applications for new methodologies under the verified carbon standard to accommodate for innovation. Moreover, sourcing COUs with questionable or potentially flawed standards can potentially backfire and create negative publicity for the carbon-neutral oil or LNG participants, and potentially subject the parties to punitive measures.
For example, some voluntary carbon offset project developers in the 1990s used their own standards for measuring the amount of carbon emissions a project would counterbalance.17 In a few instances, these standards turned out to be unreliable (e.g., issues in baseline modeling or double counting under multiple standards) which reflected poorly on the industry at the time.18 If the parties select a registry that possesses an insufficient supply of desired projects (e.g., biomass instead of solar, small-scale hydro instead of wind, etc.) in the jurisdictions most desired by the participants to the carbon-neutral transaction, or lacks satisfactory project-specific validation and verification protocols, the parties may not realize their objectives fully in effecting a credible carbon-neutral oil or LNG transaction. Worse, if parties select projects that raise concerns regarding issues such as permanence (i.e., whether projects maintain GHG reductions or removals permanently, which involve specific requirements stretching over multiple decades and comprehensive risk mitigation and compensation mechanisms, with a means to replace any credits lost), leakage (i.e., where a project results in an increase in emissions outside of the project boundary) and/or additionality (i.e., the question of whether projects genuinely yield emission abatement that would not otherwise occur), then carbon-neutral oil or LNG transaction may become subject to enhanced scrutiny and criticism for not fully effecting the promised and promoted emissions offset. For example, the voluntary carbon market seems to disfavor large-scale solar and wind projects as carbon offsets effecting carbon-neutrality as such projects suffer from such deficiencies in many cases.
In lieu of sourcing offsets from projects listed on a registry, the parties to a carbon-neutral oil or LNG transaction might elect to source COUs from projects within a counterparty’s portfolio or from a counterparty’s offset inventory or work directly with a project developer. For example, in the case of carbon-neutral LNG cargoes sold by a major, the credits were sourced from the major’s global portfolio of nature-based projects, including both afforestation and conservation projects under various international standards. Sourcing offsets from a counterparty’s portfolio may provide cost savings and efficiency but would also favor the majors, financial institutions and traders who have accumulated an inventory of credits (or control a significant pipeline of offset unit generating projects) which can easily be pulled off the shelf for a transaction. Beginning in March 2021, sourcing will also be available from the CME as mentioned earlier. As exchange-traded futures, however, the CME’s GEO contracts will be standardized and thus COUs acquired thereunder will not necessarily bestow the holder with the uplift that is associated with certain COUs generated from specifically identifiable projects with co-benefits (e.g., restoration of a carbon rich ecosystem like a tropical forest or cookstove projects in sub-Saharan African that provide co-benefits in addition to climate change benefits, such as health improvements, poverty reduction and ecosystem protection). It is these unique project-specific features that parties to a carbon-neutral transaction often value highly; accordingly, it is not expected that the CME’s GEO contract will necessarily diminish the demand for COUs sourced from registries or in private (over-the-counter) markets.
5. Eligible Offsets
As mentioned earlier, there are a wide range of projects that generate (or have the potential to generate) COUs. Unless the parties to a carbon-neutral oil or LNG transaction agree at signing to utilize specifically identifiable COUs from a counterparty’s portfolio, the parties will need to agree upon acceptable attributes for projects that can be utilized in their specific carbon-neutral transaction. These attributes might include, among other things, vintage19, project type (avoidance/reduction (e.g., avoided deforestation); CO2 removal through nature-based sequestration (e.g., reforestation); and CO2 removal through technology-based removals (e.g., direct air carbon capture and storage)), applicable validation and verification standards, co-benefits including impact on sustainable development goals or ESG goals, location and the applicable GHG emissions sought to be offset. In certain transactions, parties may elect to limit COUs to United Nations Reduced Emissions from Deforestation and Forest Degradation (REDD+) projects, Afforestation and Other Land Use (AFOLU) projects or equivalent nature-based solutions projects, cookstove projects or other projects with a nexus to any United Nations Sustainable Development Goal co-benefits and/or biodiversity co-benefits, or to projects with specific attributes that help address social, political or legal pressures a party may be subject to in a foreign jurisdiction. In yet other transactions, parties may wish to exclude credits generated from projects in certain jurisdictions (e.g., due to human rights abuses, COUs generated from projects in China or Zimbabwe could be deemed by some parties in some transactions to be ineligible).
6. Transaction-Specific Verification
Besides consideration of project-specific verification and validation matters, the parties to a carbon-neutral oil or LNG transaction will need to agree on transaction-specific protocols. In a carbon-neutral oil or LNG transaction, transaction-specific verification generally means the process by which the actual carbon footprint of the transaction is measured (or, in lieu of using actual measurements due to difficulties in conducting actual measurements, a calculation methodology for “deemed emissions” is agreed upon by the parties). Besides the calculation methodology, the parties generally will also need to agree upon the verification agent/carbon accountant who will be tasked with ensuring that the agreed-upon quantity of COUs actually compensate for the quantity of emissions attributable to the underlying oil or LNG transaction. The parties will also need to prepare reports that document the actual (or deemed) GHG emissions released in the applicable portion of the oil or LNG value chain associated with the underlying oil or LNG transaction in accordance with accepted carbon accounting methodologies.20 Specific attention should be given to ensuring that appropriate safeguards are in place to provide the carbon accountant with appropriate access rights (and legal protections) to gather the information (and inspect the assets) needed to measure emissions, to protect against potential errors and conflicts (e.g., potential conflicts of interest between the verification agent and the project developer, issues in baseline modeling, double counting, etc.), to address contingencies (e.g., in the case of LNG, in the event of a cargo diversion, the process by which the carbon accountant would adjust the applicable carbon footprint) and to ensure that the methodologies deployed by the carbon accountant are consistent with the parties’ internal ESG and accounting policies and procedures.
7. Carbon Footprint & Methodologies
The parties to any carbon-neutral oil or LNG transaction must clearly define the start and end point along the value chain for emissions measurement purposes (and whether to include indirect emissions). This is an interesting analysis because there is no universal approach that will apply to all transactions. For some LNG market participants, for example, one might expect to see attempts to measure emissions associated with the proverbial “wellhead to burner tip” value chain, and all the transportation and other activities in between. That would be the value chain which encapsulates all activities from gas production at a well to the ultimate consumption of that gas in a downstream market (e.g., in the case of LNG, among other activities, emissions associated with flaring, field gas use, compression, gathering, processing, fractionation, transportation, pipeline methane leakage, operations at a liquefaction terminal (including power), shipping, regasification, downstream pipeline activities and LNG by truck emissions). But is that really the appropriate value chain? Some environmentalists argue that the traditional “wellhead to burner tip” value chain is an incomplete value chain. In fact, some would argue participants should be measuring GHG emissions over a much longer value chain, a value chain which involves not just “wellhead to burner tip” activities but also GHG emissions attributable to the activities that occurred long before the applicable well was drilled, such as preparatory activities applicable to the drilling of a well—for example, GHG emissions associated with pre-drilling and pre-leasing activities would need to be measured and offset. Other parties will invariably take a much narrower approach to measuring the carbon footprint—for example, in the case of LNG, limiting the value chain to GHG emissions attributable only to the liquefaction and lifting of a cargo of LNG.
Demand for carbon-neutral oil and carbon-neutral LNG transactions continues to accelerate in alignment with geo-political and investor pressures. These transactions, if well-designed, will make oil and LNG more competitive environmentally with renewable energy in response to ESG pressures, climate change and the decarbonization megatrend. Now is the time for oil and LNG market participants to consider the issues surrounding an effective carbon neutrality strategy for oil and LNG designed to help improve oil and LNG’s sustainability and competitiveness far into the future.
1 In addition to carbon-neutral transactions effected through COUs, some parties structure carbon-neutral transactions through carbon capture solutions and technologies or ancillary carbon services in lieu of the use of COUs. Such transactions are also sometimes styled as “low carbon” or “green LNG” or “net-zero oil” transactions.
2 Tokyo Gas and GS Energy to Receive World’s First Carbon Neutral LNG Cargoes from Shell, June 18, 2019, https://www.shell.com/business-customers/trading-and-supply/trading/news-and-media-releases/tokyo-gas-and-gs-energy-to-receive-worlds-first-carbon-neutral-lng-cargoes-from-shell.html.
3 Oxy Low Carbon Ventures, together with Macquarie, Deliver World’s First Shipment of Carbon-Neutral Oil, January 28, 2021, https://www.oxylowcarbon.com/news/worlds-first-shipment-of-carbon-neutral-oil.
5 Angela Macdonald-Smith, $3.5m extra a shipment but carbon-neutral LNG could take off, Financial Review (Oct. 21, 2020).
6 Since November 1, 2020, EUA (carbon emissions allowances trading on ICE Futures Europe) are up approximately 38 percent.
7 While the voluntary carbon markets and compliance markets (e.g., the EU Emissions Trading System, California Cap-and-Trade Program, etc.) are interlinked, carbon-neutral oil and LNG transactions generally rely upon credits made available in the voluntary market.
8 Carbon emission allowances (and related products), designed primarily for the compliance market, have traded for many years on various exchanges around the world, with a significant share of U.S. volumes traded on the Intercontinental Exchange (ICE), which lists futures and options connected to European and California carbon allowances, regional greenhouse gas initiatives and renewable energy credits. Participants in the compliance markets have utilized these exchange-traded products to effect or hedge compliance market transactions.
10 Matthew F. Kluchenek, The Status of Environmental Commodities Under the Commodity Exchange Act, Harvard Business Law Review (January 10, 2015).
11 The CFTC has held that a “nonfinancial commodity” is a “commodity that can be physically delivered and that is an exempt commodity or an agricultural commodity.” Exempt commodities are nonfinancial by nature.
12 Such transactions consist of leveraged contracts involving a counterparty that does not meet the definition of an “eligible contract participant” or “eligible commercial entity” under the CEA and physical settlement through actual delivery that does not occur within 28 days.
13 See https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguidessummary.pdf. See also discussion of carbon offsets from Statement of Basis and Purpose (pages 59-74).
14 See the FTC’s Green Guides at 10.
15 Id. at 12.
16Oxy Low Carbon Ventures, together with Macquarie, Deliver World’s First Shipment of Carbon-Neutral Oil, January 28, 2021, https://www.oxylowcarbon.com/news/worlds-first-shipment-of-carbon-neutral-oil.
17 Taskforce on Scaling Voluntary Carbon Markets, Consultation Document 34 (Nov. 2020) and Consultation Document 41 (January 2021).
18 Id. at 16, 34.
19 There are three key dates pertaining to each project that are relevant: project start, year of credit issuance, and year the actual emission reduction took place. Taskforce on Scaling Voluntary Carbon Markets, Consultation Document 55, n. 50 (Nov. 2020), Consultation Document 73, n. 78 (January 2021).
20 To date, there are no “generally accepted” carbon accounting methodologies for carbon emissions as standards are developing at various rates and under different guidelines around the globe. However, significant transformation in carbon accounting is expected as new technologies (e.g., the block chain to minimize the risk of double-counting units) rapidly emerge to help industries refine and perfect appropriate science-based emissions measurement methodologies.