The Company complies with existing regulations. Its emissions in New Zealand are subject to an emissions trading scheme, which requires the Company to purchase carbon credits (NZUs) and surrender one for each tonne of carbon emitted. Indonesia has enacted laws that plan to implement a carbon tax, although the implementation has been postponed for most industries. There is currently no mandated carbon pricing mechanism in Australia for Cue emissions. Emissions from Scope 3 use (use of oil and gas products by other businesses and consumers) are not able to be reliably measured, are subject to double counting of total emissions, and are not meaningful in jurisdictions applying national emissions caps. All Cue produced gas in Indonesia and most in Australia is used in electricity generation. The high proportion of coal fired power generation in Australia and Indonesia means that gas from Cue substitutes higher emissions alternative sources. 3.4. Resilience in alternative scenarios The Company monitors the International Energy Agency’s World Energy Outlook, and models produced by other industry forecasters and consultancies. In all scenarios, we expect to see continuing strong demand for gas in the short term in all our markets. A more rapid decarbonisation outlook could affect the longer-term outlook. Gas fields cannot easily or quickly increase supply in response to increased demands, and therefore increased demand is likely to contribute upward price pressure. In the longer term, the response to lower prices would be likely to be slower investment in deliverability. In both Australia and Indonesia, regulatory appetite for capturing carbon emissions is high. In a scenario where CCS becomes more economic than the cost of emitting, Cue would expect to investigate the potential to reduce emissions and continue production through CCS. No such abatement plan is currently under consideration, but it exists as a response in an alternative scenario where emissions pricing is high. If oil prices fall significantly, our interests in the Mahato and Maari oil fields may be affected. This risk is reflected in the forward price curve that forms the basis of impairment analysis and reviews of the expected value of the assets. Resilience to financial or economic changes is tested as part of financial audit and assurance processes, which includes impairment testing. Financial planning incorporates expected prices and revenues, including carbon costs, insurance costs, maintenance costs, and the availability of corporate finance. Specific material risks or changes to financial outlooks are disclosed in financial reports where these are material. 4. Risk management TCFD category Recommendation Summarised in this document at Risk management Disclose how the organisation identifies, assesses and manages climaterelated risks. 4.1 Describe the process for identifying and assessing climate risks. 4.1 Describe processes for managing climate risks. 4.1 Describe how processes for identifying, assessing and managing are integrated into overall risk management. 4.1 4.1. How we identify, assess and manage climate-related risks The Company’s Risk Management System Framework applies consistent and comprehensive risk management practices. Climate risks are recorded in the central risk register, which considers the risks, reviews the controls, assigns ownership of risk and tracks treatment plans. Climate risks are identified on an ongoing basis and consideration is given to industry and peer information and expertise, shareholder and community feedback, regulatory changes, and analysis by our own staff and contractors. Risk assurance and oversight of climate risk management is provided through internal review by the board Operation Risk and Sustainability committee. The Chief Executive has responsibility for climate risk, including risks to individual assets and financial and investment risks associated with climate change. Taskforce on Climate–Related Financial Disclosures (TCFD) Statement continued 23 Cue Energy Resources Limited Annual Report 2023
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