Maximizing Our Climate Impact Through Multi-Year Offtake Agreements

In this article, we discuss:

• Our New Multi-Year Offtake Strategy
• A First-of-Its-Kind Agreement With Tradewater: Addressing Well Emissions
• Why Long-Term Offtake Agreements Are Beneficial

At Workday, we lead and act first and foremost with our values. We value integrity, which to us means that we do right by our employees, customers, and the larger communities we impact. We also value innovation, so we consistently look to form partnerships that help scale sustainable innovation and positive long-term impact for our planet.

Announcing Our New Multi-Year Offtake Strategy

We’re entering into a new multi-year carbon credit offtake agreement in partnership with Patch—an organization focused on quickly scaling unified climate action by building technology that helps organizations manage, sell, and buy carbon credits with efficiency, transparency, and rigor. Furthermore, Patch provides access to a variety of high-quality, high-integrity, and innovative projects to scale climate solutions.

Workday is preordering credits through a multi-year offtake agreement construct that helps:

• Ensure access to high-integrity carbon credits
• Maximize climate impact through catalytic-forward purchase agreements
• Amplify impact by sending a clear signal to the market

Our projects include forest protection with advanced remote sensing and AI, scaling carbon removal with biochar, and an innovative approach to plugging orphaned oil and gas wells using new American Carbon Registry (ACR) methodology to address methane emissions. The specific projects we’re funding through Patch are with Pachama, Planboo, and Tradewater. 

Pachama’s Avoided Unplanned Deforestation (AUD) conservation project is designed to protect a 79,000-hectares tract of land in the heart of the Amazon in Brazil from deforestation. Pachama harnesses AI and satellite data—the latest technological advances that include benefits such as derisking investments in nature-based projects by setting more accurate baselines, monitoring for leakage, and ensuring permanence.

Planboo’s biochar project in Namibia tackles multiple challenges by transforming encroaching bush into biochar. This pioneering initiative removes CO2 from the atmosphere, while also addressing bush encroachment, water scarcity, and global inequality. Applying biochar to soils enhances nutrient retention, increases water-holding capacity, and improves agricultural productivity, reducing the need for chemical fertilizers. By combining ancient agricultural techniques with innovative technology, we boost farmer incomes, improve soil health, and ensure permanent carbon removal with accuracy and total transparency.

Our agreement with Tradewater is especially impactful because it’s addressing the negative climate impacts from leaking orphaned oil and gas wells, a serious but often overlooked source of methane emissions. Below we dive deeper.

First-of-Its-Kind Agreement With Tradewater: Addressing Well Emissions

Roughly 30% of planetary warming since the Industrial Revolution has been caused by methane, which stays in the atmosphere for fewer than 20 years but manages to create a warming effect 84x greater than CO2. Efforts to reduce methane emissions by 2030 will have an outsized influence on our ability to prevent catastrophic climate change.

Recognizing the important role that controlling methane plays in preventing runaway climate change, Workday is partnering with Tradewater, an organization that works to permanently prevent the world’s most potent greenhouse and ozone-depleting gasses from releasing into the atmosphere through safe containment or destruction. To date, Tradewater has collected, controlled, and destroyed the equivalent of 7.5 million metric tons of CO2, and has the goal of collecting, controlling, and destroying at least 3 million tons of CO2 emissions annually.

Workday is the first corporation to make a commitment to and significant investment in the prevention of methane gas from leaking orphaned oil and gas wells. Workday has committed to purchasing carbon credit projects from Tradewater’s orphaned oil and gas program over the next 4 years; this advance purchase commitment enables Tradewater to help quickly address a significant climate challenge that’s historically been overlooked.

Orphaned Oil Wells: What’s the Impact for Climate Change?

Orphaned wells are abandoned, unplugged, inactive oil and gas wells that are without a solvent operator, leaving no corporation responsible for plugging them. In some cases, the companies that put them in place are no longer in business, and regulations on keeping thorough records were not enforced back then.

The problem: These wells are actively leaking due to a number of issues including abandonment without an attempt to seal them; the long-term impacts of weather and erosion; and the fracking boom, which has caused deterioration of the cement and metal casing used to plug them. For decades, many of these wells have been leaking methane and often other air pollutants and toxins such as benzene (a known carcinogen) and hydrogen sulfide (a highly toxic gas). These leakages can pollute the air, contaminate groundwater, degrade soil, and damage ecosystems, in addition to accelerating climate change. Furthermore, research released by the Environmental Defense Fund and McGill University found that 4.6 million people live within a half-mile of an orphaned oil and gas well.

Leading scientists at The Intergovernmental Panel on Climate Change (IPCC) have determined that we will not be able to limit global warming to 1.5°C and prevent catastrophic climate change without preventing emissions from non-CO2 gasses such as methane. Currently, there are 117,672 documented orphaned wells—all without a solvent operator. But, there are likely over one million undocumented orphaned wells in the U.S. that need to be plugged.

What’s Been Done to Help Control Leaking Orphaned Wells? What’s the Cost?

Across industries and governments, sustainability leaders are recognizing the impact of methane on climate change and working to scale and implement methane reduction solutions. Upwards of 155 countries have signed the Global Methane Pledge, first introduced at COP 26 in 2021, committing to reduce methane emissions by 30% by 2030.

The American Carbon Registry (ACR) is bringing awareness to corporate and government leaders to advocate for the capping of orphaned wells; some federal money has been allocated already. The U.S. Congress approved $4.7 billion in the 2021 bipartisan infrastructure law to plug wells, but there are no state or federal requirements to revisit plugs and ensure that old wells aren’t leaking. This funding, while helpful, is not enough to address the full scope of this large problem. Additional funding from the private sector is needed.

Continuing to support organizations such as Tradewater that identify actively leaking orphaned wells, calculate the methane that has the potential to be emitted into the atmosphere if left untreated, and then plug the wells to permanently prevent further leakage, is essential.

Why Long-Term Offtake Agreements Are Beneficial

Companies such as Workday that make multi-year commitments are making a significant impact by unlocking the essential capital that’s needed for these solutions to actually scale.

Long-term offtakes facilitate early-stage project finance. This means that this financing can help launch carbon projects that may not otherwise have gotten off the ground, and allow them to scale. As well, projects that span multiple years can keep moving forward without having to pause for additional funding.

Other benefits of long-term projects include the associated economic growth and job creation. For example, a report from the Ohio River Valley Institute, a think tank focused on job growth and sustainability in Northern Appalachia, estimates that plugging more orphaned and abandoned wells could create 13,000 new jobs in Ohio and Pennsylvania alone. The California Workforce Development Board has launched a new apprenticeship program to expand the well-plugging workforce as well. Plugging orphaned wells provides an opportunity to take highly skilled people who are at risk of losing their jobs as clean energy proliferates and bring them to the forefront of climate-change mitigation.

Recognizing that we’re at an especially pivotal time in the voluntary carbon markets right now, there’s been an increase in players focused on trust, integrity, and quality that weren’t a decade ago. We were pleased to see the recent announcement from the White House that shares principles for high-integrity voluntary carbon markets and follows on the heels of private sector efforts such as the Voluntary Carbon Markets Integrity Initiative (VCMI). We are aligned with these efforts and are excited about the intense focus on quality, impact, and what we—the private and public sectors—can achieve together.

To help move our planet toward a net-zero future, we’ll continue to do our part and evolve our strategy to ensure we’re making the most impact. We’ll focus on our science-based emissions reduction targets. And, we’ll continue to support offtake agreements that enable high-quality climate action, scale catalytic projects, and help close the climate finance gap.

Learn more about how Workday is committed to creating a sustainable future.