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We have incurred and will continue to incur substantial capital, operating and maintenance,
and remediation
expenditures as a result of these laws and regulations.
Any failure by us to comply with existing
or future
laws, regulations and other requirements could result
in administrative or civil penalties, criminal
fines, other
enforcement actions or third-party litigation
against us.
To the extent these expenditures, as with all costs, are
not ultimately reflected in the prices of our products
and services, our business, financial
condition, results of
operations and cash flows in future periods could
be materially adversely affected.
Existing and future laws, regulations and internal
initiatives relating to global climate change,
such as
limitations on GHG emissions, may impact or limit
our business plans, result in significant expenditures,
promote alternative uses of energy or reduce demand
for our products.
Continuing political and social attention to the
issue of global climate change has resulted in
both existing and
pending international agreements and national,
regional or local legislation and regulatory
measures to limit
GHG emissions, such as cap and trade regimes, carbon
taxes, restrictive permitting, increased fuel efficiency
standards and incentives or mandates for renewable
energy.
For example, in December 2015, the U.S. joined
the international community at the 21st Conference
of the Parties of the United Nations Framework
Convention on Climate Change in Paris that
prepared an agreement requiring member countries
to review and
represent a progression in their intended GHG
emission reduction goals every five years
beginning in 2020.
While the U.S. previously withdrew from the
Paris Agreement, the new administration
has recommitted the
United States to the Paris Agreement, and a significant
number of U.S. state and local governments
and major
corporations headquartered in the U.S. have also announced
their intention to satisfy these commitments.
In
addition, our operations continue in countries around
the world which are party to, and have not announced
an
intent to withdraw from, the Paris Agreement.
The implementation of current agreements
and regulatory
measures, as well as any future agreements or measures
addressing climate change and GHG emissions,
may
adversely impact the demand for our products,
impose taxes on our products or operations or
require us to
purchase emission credits or reduce emission of
GHGs from our operations.
As a result, we may experience
declines in commodity prices or incur substantial
capital expenditures and compliance, operating, maintenance
and remediation costs, any of which may have
an adverse effect on our business and results of operations.
In October 2020, we announced the adoption of a
Paris-aligned climate risk framework, whereby
we
committed to a reduction of our gross operated
(scope 1 and 2) emissions intensity, with an ambition to
achieve net zero by 2050 from operated emissions.
We also endorsed the World Bank Zero Routine Flaring by
2030 initiative, with an ambition to meet that
goal by 2025 and reaffirmed our commitment to advocate
for
reduction of scope 3 emissions intensity through
our support for a U.S. carbon price.
Compliance with, and
achievement of, climate change related internal initiatives
such as the foregoing may increase costs, require
us
to purchase emission credits, or limit or
impact our business plans, potentially resulting in the
reduction to the
economic end-of-field life of certain assets
and an impairment of the associated net book
value.
Increasing attention to global climate change has
also resulted in pressure upon stockholders,
financial
institutions and/or financial markets to modify
their relationships with oil and gas companies
and to limit
investments and/or funding to such companies.
For example, in 2019 Norway’s Government Pension Fund
announced it would reduce its investment exposure
to companies that explore for oil and gas,
and in 2020 a
number of major financial institutions
announced that they would no longer finance oil and
gas exploration
projects in the Arctic.
As public pressure continues to mount, our access to
capital on terms we find favorable
(if it is available at all) may be limited and our costs
may increase or our business and results
of operations
may be otherwise adversely affected.
Furthermore, increasing attention to global climate
change has resulted in an increased likelihood
of
governmental investigations and private litigation,
which could increase our costs or otherwise adversely
affect
our business.
Beginning in 2017, cities, counties, governments
and other entities in several states in the U.S.
have filed lawsuits against oil and gas companies,
including ConocoPhillips, seeking compensatory
damages
and equitable relief to abate alleged climate change
impacts.
Additional lawsuits with similar allegations
are
expected to be filed.
The amounts claimed by plaintiffs are unspecified
and the legal and factual issues
involved in these cases are unprecedented.
ConocoPhillips believes these lawsuits are factually
and legally
meritless and are an inappropriate vehicle to address
the challenges associated with climate
change and will