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Climate change adaptation
Actions
Climate change adaptation
Jan 1, 2024
Climate change adaptation
The increase in the concentration of GHG emissions contributes to the increase in the average global temperature of the planet, which results in the modification of temperature and precipitation patterns of territories in future periods of time. This effect is known as climate change, which, consequently, will increasingly affect the different systems (human, natural, productive), making it necessary to adapt to this new climatic dynamic.
Climate Horizons
Ecopetrol has identified the risks and opportunities related to climate, physical and transition, as well as the potential impacts and benefits in the following horizons:
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Horizon |
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2021 2024 |
The short-term horizon considers the following aspects: (i) establish and achieve the annual and intermediate GHG emission reduction targets, in line with the Decarbonization Plan, (ii) identify short-term risks and establish mitigation actions, controls and Key Risk Indicators (KRIs) within the framework of the annual risk management cycle, and (iii) identify and implement cost-effective opportunities to contribute to the GHG emission reduction goals. |
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2025 2030 |
The medium-term horizon is used to review both the GHG emission reduction and offset targets for 2030, in accordance with the company's Decarbonization Plan. This horizon also allows the identification of emerging risks that will impact the company in the next 5 years or more. |
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+ 2030 |
The long-term horizon is used to review market trends, policy and regulatory changes, and emerging technology developments that may impact the company's climate ambition and long-term business strategy (2040). |
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Physical risks and adaptation
Physical risks
Physical risks derived from climate change can cause events (acute) or long-term (chronic) changes in weather patterns. Physical risks can have financial repercussions for the company such as direct damage to assets or indirect impacts caused by interruptions in the production chain.
Ecopetrol developed the physical risk assessment of the company’s assets in Colombia to understand Ecopetrol’s vulnerability to future climate scenarios. The analysis uses regional climate models with various datasets to analyze the assets’ physical vulnerability related to the potential impact of climate hazards. There is information of seven risks related to chronic hazards (drought, and heat stress) and acute hazards (precipitation, coastal flooding, riverine flooding, wildfires, and wind), under three IPCC climate scenarios to the year 2100, covering the lifetime of the main assets:
- SSP 5 (RCP 8.5), which shows the emissions trajectory under a business-as-usual scenario.
- SSP 2 (RCP 4.5), which shows the emissions trajectory achieving a stabilization in temperature increase at 2°C, with peak emissions in 2040.
- SSP 1 (RCP 2.6), which shows the emissions trajectory achieving a stabilization in temperature increase at 1.5°C, aligned with the Paris Agreement target.
In a critical scenario (business as usual), increases in maximum temperatures and in heat waves duration pose the greatest hazards to the entire asset portfolio. These are the most significant risks in terms of worker safety and even operational disruptions. However, it is not expected to have direct impact on infrastructure. In addition, six locations have a substantially higher risk of coastal flooding and more moderate river flooding is expected at four locations. The remaining climate hazards are not expected to increase substantially across the portfolio.
Climate variability
Regarding acute physical risks, these represent a greater vulnerability for the company due to their intensity and frequency, which materialize with the occurrence of phenomena such as "El Niño" and its opposite phase "La Niña". In this context, Ecopetrol has a specific analysis at regional level, using the RCP 6.0 scenario in line with the Climate Change Management Plan of the Mines and Energy sector and the Third National Communication on Climate Change, based on the following model:
The level of climate risk in climate variability scenarios is presented in the following graph:
Further information, please see in detail: Acute physical risk analysis at regional level.
Adaptation
To manage physical risks, Ecopetrol has adaptation plans that include short, medium, and long-term measures in the following components:
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Water resource management |
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| Objective: Reduce the vulnerability to variability and climate change for water scarcity and floods. | ||
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Short term (< 3 years) |
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Medium term (3 - 5 years) |
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Long term (> 5 years) |
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Strategic ecosistems restoration and conservation |
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| Objective: Reduce vulnerability in strategic ecosystems for operations through conservation, restoration and recovery. | ||
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Short term (< 3 years) |
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Medium term (3 - 5 years) |
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Long term (> 5 years) |
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Climate resilient infrastructure |
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| Objective: Reduce the vulnerability of Ecopetrol facilities due to the impacts generated by extreme weather events. | ||
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Short term (< 3 years) |
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Medium term (3 - 5 years) |
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Long term (> 5 years) |
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Climate compatible operation |
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| Objective: Strengthen operational capacities to deal with the effects of variability and climate change. | ||
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Short term (< 3 years) |
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Medium term (3 - 5 years) |
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Long term (> 5 years) |
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Transition risks and opportunities
Transition risks
The transition to a low-carbon economy may entail political, legal, technological and market challenges to address mitigation and adaptation requirements related to climate change. Depending on the nature, speed, and approach of these changes, transition risks can pose financial and reputational risks of different levels for organizations.
Ecopetrol identified market, technology, reputational and regulatory risks, prioritizing market risk (oil and gas demand) and regulatory risk (carbon pricing and offsetting), to assess the resilience of upstream assets, using the following IEA WEO 2022 scenarios:
- Stated Policies Scenario (STEPS, 2.5 - 2.9°C), which shows the emissions trajectory under current climate policies.
- Announced Pledges Scenario (APS, 2.1°C), which shows the emissions trajectory considering that all published aspirational targets will be met.
- Net Zero Emissions (NZE, 1.5°C), which shows the emissions trajectory achieving a stabilization in temperature increase at 1.5°C.
The assessment developed by Ecopetrol included stress testing to the upstream assets of the long-term strategy. The portfolio strategy was evaluated by comparing the NPV of future cash flows of IEA scenarios with Ecopetrol’s base case NPV.
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Market risk |
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Pathway |
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Potential impact |
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Regulatory risk |
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Pathway |
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Potential impact |
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Opportunities
The efforts made to mitigate and adapt to climate change also create opportunities for companies, to identify and develop opportunities through resource efficiency and cost savings, the adoption of low carbon energy sources, the development of new products and services, access to new markets, and creating resilience throughout the entire production chain, will generate sustainability for the business.
Ecopetrol has identified the following opportunities arising from climate change, which are aligned with the company's corporate strategy.
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Energy source |
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Ongoing opportunities |
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Benefits |
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Resource efficiency |
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Ongoing opportunities |
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Benefits |
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Products, services, and markets |
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Ongoing opportunities |
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Benefits |
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For further details, see: TCFD Report Ecopetrol 2022. |
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