Accelerating the Lower‑Carbon Transition
The Beliefs that Drive Us
We recognize the risks and opportunities that climate change poses to our business and have developed a strategy for how we can best address both transition and physical risks. This strategy is underpinned by our values; represents the short-, medium-, and long-term opportunities for our organization; and is built on three foundational beliefs, detailed below.
Belief 1: Natural gas is critical to accelerating a sustainable pathway to a lower-carbon future and achieving global climate goals.
Natural gas is a critical commodity to facilitate the growth of renewables as part of our power supply, domestically and internationally. Among sources of continuous and reliable power, natural gas leads in its combination of accessibility, low environmental impact, and exportability. As seen with recent power shortages, natural gas has served as a necessary fuel source and fills the gap left by the intermittency of renewable power. As the United States develops the technology necessary to scale renewable power, the volatility of demand within the power sector on non-renewable power will only increase. Through 2050, the long-term outlook from the U.S. Energy Information Administration (EIA) is that petroleum and natural gas will remain the most consumed source of energy in the United States as renewables continue to be added to the grid.[1] Furthermore, rapid replacement of coal-fired power generation with natural gas-fired power generation represents the most accessible and significant step to meaningfully accelerate our pathway to decarbonization — not just in the United States, but globally.
Domestically, renewable energy rapidly increases its impact on energy production. The benefits of increased renewable energy sources can be seen through the reduction in the electricity production share held by coal, which is the highest GHG-intensive component of the U.S. electricity generation mix. However, the ability and pace at which the United States can replace coal-fired power generation with renewables will be challenged in areas where replacement is most needed, as a significant amount of coal-fired power generation in the United States is in regions characterized by low renewable power potential.
For instance, solar panels in the northeastern and southeastern United States are only about 15% and 50%[2] as effective, respectively, as solar panels in the southwestern United States. As such, up to eight times the materials and acreage would be needed to generate the same amount of energy from a solar panel in other parts of the United States as it would in the southwestern United States. This reduced efficiency not only impacts the economics of a solar project but also the reliability of the power generated.
U.S. Solar and Coal Resource Availability[3]
Outside of the United States, much of the world still has an energy mix roughly equivalent to that of the United States in 2005. In 2023, as total global energy-related carbon dioxide (CO2) emissions reached a new all-time-high, increasing by 410 million tons compared to 2022, reports indicated that coal accounted for more than 65% of that increase.[4] As natural gas played the leading role in emissions reduction seen within the United States from 2005 to 2019, so too should it play the same role at the international level today.
Even if the United States achieved net-zero emissions today, the world would still be on a trajectory to miss its climate goals, in large part because of the significant global consumption of coal. As the largest producer of natural gas in the world,[5] the United States must accept its responsibility to provide natural gas to coal-reliant countries to assist them with their necessary carbon reduction efforts.
Belief 2: Natural gas (particularly Appalachian natural gas) will differentiate itself from other hydrocarbons as the optimal source for reliable, affordable, and responsibly sourced energy.
As the debate about the energy future plays out, we believe greater differentiation will occur between hydrocarbons and producers of hydrocarbons. We also believe there will be greater differentiation between natural gas-focused and oil-focused companies. While the production methods are similar, the consumption of oil-based products versus natural gas-based products, and the pathways to decarbonize that consumption, most effectively differ.
Emissions intensities of natural gas and oil companies are strikingly different. While we believe that all work to reduce their intensities, natural gas companies have a significant advantage. Much like how we see natural gas different from oil and coal, we see specific natural gas sources different from others. Production of domestic natural gas, and especially natural gas produced in Appalachia — such as in the Marcellus and Utica basin — has emissions intensities lower than other domestic and foreign supply sources.[6] As a result, natural gas companies (and Appalachian natural gas companies in particular) hold a meaningful advantage in the costs that will be incurred by such companies to achieve net-zero emissions.
As principal end uses differ between natural gas (power) and oil (transportation), the trajectories and cost-benefit analysis of natural gas and oil differ as well. Moreover, the primary pathways to accelerating the lower-carbon transition of one product’s end use (transportation) are through increased usage of the other’s (power for vehicle electrification and hydrogen-based transportation). As such, we believe that as the energy transition debate evolves and the focus on potential solutions shifts from supply to consumption, the traditional grouping of oil and natural gas companies will diverge.
Belief 3: U.S. natural gas has the unique potential to be the largest green initiative on the planet.
In 2005, the United States was a major consumer of coal. Over the next approximately 15 years, the United States proceeded to become a world leader in emissions reductions, predominately with the use of gas-fired power in lieu of coal-fired power generation. Between 2010 and 2022, the United States reduced its carbon emissions by nearly 800 million MT[7] with coal-to-gas substitution as a significant portion of U.S. emissions reductions.[8]
According to the International Energy Agency (IEA), global coal demand reached a record high in 2022 due to the global energy crisis, up 4% compared to 8.42 billion tons in 2021.[9] Two countries, China and India, account for the significant majority of global coal consumption — China alone accounted for nearly 55% of global coal consumption in 2022.[10] Approximately 124 gigawatts (GW) of coal power plants were under construction in China and India as of the end of 2021 (comprising over 70% of global coal plants under construction), with another 182 GW in pre-construction.[11] These newly constructed coal plants would equate to over three times the coal capacity retired by the United States from 2013 through 2020.[12]
China and India Combined Coal CO2 Emissions[13]
Natural gas power generation has unique attributes that make it an optimal alternative to coal power generation, including the following:
- Natural gas power plants provide baseload energy, which complements intermittent energy sources like wind and solar;
- Natural gas plants run more efficiently than coal plants (approximately one natural gas plant can replace two coal plants);[14]
- Natural gas emits 60% less carbon than a comparable amount of coal;[15]
- Natural gas has a lower emissions intensity compared to oil and coal; and
- Natural gas is relatively affordable compared to other fossil fuels and renewable sources.
We believe that the replacement of international coal with U.S. natural gas should be our primary focus in global emissions reduction. If we were to quadruple U.S. liquefied natural gas (LNG) capacity to 55 Bcf per day[16] by 2030, we believe we could reduce international carbon emissions by an incremental 1.1 billion MT per year — a 60% reduction in global carbon emissions.
The emissions reduction impact of an unleashed U.S. LNG scenario would have a combined effect equal to the following:
- Electrifying every U.S. passenger vehicle;
- Powering every home in America with rooftop solar and backup battery packs; and
- Adding 54,000 industrial-scale windmills, doubling U.S. wind capacity.
Additionally, as U.S. LNG is unleashed from the basin, U.S. citizens that own land resources with natural gas production capacity would be paid for this initiative in the form of tax revenues and annual royalties.
Highlight Story EQT Joins the Oil and Gas Decarbonization Charter
In 2023, as part of our engagement in The 28th United Nations Climate Change Conference (COP28) in Dubai, EQT became the first independent, domestic operator to sign onto the Oil and Gas Decarbonization Charter (OGDC). The OGDC supports the aims of the Paris Agreement and calls for the industry to align around net-zero by or before 2050, zero-out methane emissions, and eliminate routine flaring by 2030. It was signed by 50 oil and gas companies from around the world.
Beyond decarbonization, signatories recognize it is essential for the oil and gas industry to increase actions, including engagement with customers, invest in the energy system of the future, and improve transparency in measurement, reporting, and independent verification of GHG emissions. The charter is a key initiative under the Global Decarbonization Accelerator (GDA)[17] — and it is a testament to our leadership on emissions reduction.
Natural Gas and a Lower-Carbon Future
Evolve focuses on realizing the full potential of the assets under our control. This evolution started in mid‑2019, has progressed rapidly, and can be measured by our financial and operational performance to date. At its core, the purpose of Evolve is to distinguish our capabilities from those of our peers as we pursue our next strategic path.
Growth generates value by applying our evolved approach to a broader set of assets, allowing the acceleration of emissions reduction efforts within the natural gas space. Growth means strategic control over a greater number of absolute emissions in the short-term based on our belief that we can have a greater impact on the pace of emissions reductions in the medium- and long-terms. This is best evidenced by our 2021 acquisition of the Alta Assets and the subsequent reduction in emissions we have been able to achieve. In a matter of less than 3 years of ownership and operation of the Alta Assets, we have reduced the Production segment Scope 1 and Scope 2 GHG emissions from such assets by approximately 65%, and we have reduced the Scope 1 GHG emissions intensity of such assets by 59%. While our company-wide emissions profile initially increased when we acquired the Alta Assets, we have been able to scale our emissions reduction initiatives, such as our electric frac fleets and pneumatic device replacement program, to significantly reduce the emissions from these assets at a pace that few other operators would have been able to achieve.
New Ventures focuses on the foundation for our evolution over the long-term through meaningful participation in energy transition opportunities. We believe that we will not only have opportunities to accelerate the path to a lower-carbon future, but also to develop, invest in, partner with, and acquire attractive, new, lower-carbon-supporting products and solutions to enhance the value of our durable base business.
