Cheniere is helping to meet the world’s most pressing shared energy challenges, now and into the future. As the leading U.S. LNG producer and exporter, we connect customers to a secure source of affordable, reliable and cleaner-burning energy, supporting our customers’ energy needs and helping to power the global transition to a lower-carbon future. In order to improve the climate benefits of our product and ensure the long-term resilience of our business, we have initiated and invested in a number of specific programs, both in our facilities and throughout our supply chain.
At Cheniere, a central part of our climate strategy is to measure, understand and mitigate emissions — in an effort to ensure our LNG supplies remain economically and climate competitive in a lower-carbon future, providing energy, economic and environmental security to our customers across the world. This strategy is reflected in a cadence of actions that focus on evidence-based science, operations excellence and transparent collaboration along our supply chain, which help us to better understand the emissions profile of the LNG we deliver to our customers and to identify strategic and cost-effective opportunities to improve emissions performance by undertaking a collaborative approach with our supply chain. Supply chain includes production through liquefaction for free-on-board (FOB) LNG cargoes and includes shipping for delivered ex-ship (DES) cargoes. To maximize the environmental benefits of our LNG, we believe it is critical to develop future climate goals and strategies based on an accurate and holistic assessment of the emissions profile of our LNG business, accounting for all steps in the supply chain. Driven by our position at the fulcrum between the North American natural gas market and LNG importing countries and regions around the world, we employ a value chain approach to understanding and mitigating greenhouse gas (GHG) emissions. By providing our natural gas supply chain partners with actionable emissions data, we are supporting opportunities for improved emissions performance beyond our immediate operations. We believe this is where we can have the greatest and most immediate climate impact.
Reliable, science-based measurement is a critical foundation of our strategy. We are expanding our understanding of GHG emissions across our supply chain, using our power of connection as the largest physical processor of natural gas in the U.S. and the second-largest LNG exporter in the world. We are advancing measurement capabilities that generate actionable, accurate data to directly inform strategic and cost-effective mitigation actions and allow reliable verification of data. An emphasis on measurement will also help prepare us for the increasing focus of domestic and international policymakers on measured, as opposed to estimate-based, data.
Our efforts to more accurately measure supply chain GHG emissions are helping us build a data-driven approach that leverages our unique position within the LNG supply chain. We are able to collaborate with our suppliers, scientific experts and customers to improve the climate competitiveness of our LNG and strengthen the resilience of our business over the long term. As we help develop decision-useful emissions information to provide the foundation for effective and targeted long-term mitigation strategies, we are also focusing on what we can do right now to minimize and mitigate our environmental impacts.
We have built our strategy to respond to climate-related risks and opportunities, support the long-term resilience of our business and address the world’s shared energy challenges. We regularly assess these risks and opportunities through our enterprise risk assessment (ERA), climate-specific scenario analysis and other processes and are committed to managing the risks and opportunities we identify. We integrate climate-related risks and opportunities into our business strategy and financial planning. We have also conducted a series of engagements with key external stakeholders, including our largest investors and lenders, to better understand their perspectives on the most important risks and opportunities for our business.
We incorporate climate-related risks and opportunities as a discrete component of our annual ERA process, which is overseen by our Chief Risk Officer (CRO) and reviewed by the Board of Directors. Our ERA process focuses on identifying short- and medium-term risks within a 5-year time horizon, including their related potential financial and reputational impacts. We undertake our ERA process annually, with a midyear review, to determine if there have been any significant changes in the risks identified, potential impacts or mitigating measures.
Cheniere’s Board of Directors oversees the development and execution of our climate strategy and regularly reviews progress. Although the full Board is actively engaged on climate issues, the Governance and Nominating Committee has the formal responsibility of reviewing climate strategy, performance and progress. The Audit Committee oversees Cheniere’s ERA process, which includes consideration of climate-related risks. Members of the leadership team including our SVP of PGPA provide updates to the Board and relevant committees on climate-related risks and opportunities, as well as Cheniere’s climate strategy and performance, at least quarterly. In 2022, quarterly updates to the Board included updates on Cheniere’s climate projects and emerging climate-related risks and opportunities. The Board also oversees Cheniere’s progress against internal goals and the annual performance scorecard, which is based in part on key elements of our climate strategy.
Subject to the formal oversight of our Board of Directors, our executive leaders are directly responsible for identifying, assessing and managing climate-related risks and opportunities, and implementing our climate strategy. The SVP of Corporate Development and Strategy and SVP of PGPA lead the development and execution of our climate strategy. Executives across our business functions, including Finance, Commercial, Trading, Gas Supply and Operations, help guide this effort. Our executive leadership report directly to our CEO on climate strategy and planning on a regular basis.
For more information, see Managing climate-related risks and opportunities.
In 2022, Cheniere began providing our long-term customers with Cargo Emissions Tags (CE Tags) showing the estimated GHG emissions associated with each cargo produced at our facilities. The CE Tags are calculated from our supplier-specific life cycle assessment (LCA) model and provide a value chain emissions estimate from wellhead to point of delivery, supplying our customers with actionable information about life cycle emissions and an input to better understand their own Scope 3 emissions profile. CE Tags are calculated utilizing Cheniere’s LCA model.