Absolute Impact 2021

Why oil and gas “net zero” ambitions are not enough

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Analyst Note May 2021

About Carbon Tracker

The Carbon Tracker Initiative is a team of financial specialists making climate risk real in today’s capital markets. Our research to date on unburnable carbon and stranded assets has started a new debate on how to align the financial system in the transition to a low carbon economy. www.carbontracker.org | [email protected]

About the Author

Mike Coffin – Senior Analyst

Mike joined Carbon Tracker in 2019, and is currently focussing on identifying transition risk within the oil and gas industry as the global energy system evolves. He has co-authored reports to assess impacts at the company level, including Breaking the Habit and Balancing the Budget, alongside writing on company climate ambitions in Absolute Impact and country risk in Beyond Petrostates. Other research themes include executive remuneration and verification of company actions.

Prior to joining Carbon Tracker, Mike worked as a geologist for BP for 10 years on projects across the upstream, from early access to development. Mike has experience working in petroleum basins across the world, including time spent working in Norway, with expertise in unconventional exploration and in leading technical project teams.

Mike has an MA and MSci in Natural Sciences from the University of Cambridge and is a Chartered Geologist (CGeol).

With thanks to Andrew Grant, Mark Fulton and Henrik Jeppesen for critical review.

Readers are encouraged to reproduce material from Carbon Tracker reports for their own publications, as long as they are not being sold commercially. As copyright holder, Carbon Tracker requests due acknowledgement and a copy of the publication. For online use, we ask readers to link to the original resource on the Carbon Tracker website.

Table of Contents

1 Key Findings ...... 1

2 Executive Summary ...... 2

3 Introduction ...... 7

4 Emissions goals at the company level ...... 11

4.1 Assessment of Company Goals ...... 14

4.2 Company climate goal selection and ranking methodology ...... 16 5 Credibility of Climate Goals and Emissions Mitigation ...... 21

5.1 Carbon Capture, Utilisation and Storage Technologies ...... 22

5.2 Carbon Dioxide Removal and Negative Emissions Technologies ...... 22 5.3 CCUS and NETs within corporate goals ...... 22

5.4 Impact for Investors ...... 25 6 Company Specific Notes ...... 26

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1 Key Findings

• Corporate climate goals in the oil and gas industry must link to finite limits that the energy transition places on current business models. • We provide a relative ranking of goals for ten of the largest oil and gas producers (7 majors plus Equinor, Occidental and Repsol), building on our 2020 ranking in Absolute Impact. • Net zero goals are not in themselves sufficient – it’s the pathway to net zero emissions, and the resulting cumulative emissions, that matters in determining the warming outcome for the planet. • We refine our “hallmarks of Paris compliance” to reflect the importance of 2030 emissions reductions on an absolute basis. To link to the global carbon budget, climate goals must include end-use emissions (scope 3) with interim absolute reductions covering companies’ global activities on an equity-share basis. We assess the companies’ emissions goals against these criteria. • An intensity approach fails to link to finite climate limits, particularly for those goals that cover all-energy sales, potentially masking production increases. • We see a three-tier approach to corporate ambitions – similar to our 2020 ranking – with some movements between tiers:

o Eni top our rankings, with absolute emissions reductions covering all activities including scope 3 emissions. Total and bp also fall within this band albeit with shortcomings to their goals, in particular the incomplete coverage of activities.

o Shell, Equinor, Repsol and Occidental include scope 3 emissions, but set interim targets on an intensity basis.

o ConocoPhillips, Chevron and ExxonMobil only have goals covering operational emissions (scope 1 and 2). • Occidental is the first large North American company to set a target covering scope 3 emissions; however, a clear Atlantic divide remains. • ExxonMobil remains firmly at the foot of our rankings. Its new climate goal covers only Upstream operational emissions, with a 15-20% reduction to 2050. • Company goals are heavily reliant on a range of unproven technologies to mitigate emissions, impacting their credibility. We give an overview of these, decoding the alphabet soup of CCUS, CDR, NETs, NBS, and their impact in

reducing atmospheric CO2 levels. • We continue to call for an industry-standard approach to reporting. Nearly every company ambition or target is framed differently, with varying calculation methodologies and exclusions. • Accountability and transparency is critical for emissions mitigations, both to avoid double-counting and to ensure that “offsets” have the intended effect.

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2 Executive Summary

With companies seeking to maintain a social licence to operate, oil and gas companies are continuing to announce new climate goals that frame their business response to the energy transition. For investors, these targets give a clear indication of the transition risks these companies face and offer a window into senior management’s strategy and view of the future.

Climate goals must reflect end use emissions Despite various claims of “net zero”, oil and gas emissions targets are far from equal, with some focussed on reducing absolute emissions associated with the full spectrum of company activities – including end use/combustion. Conversely, other company goals cover just the small minority of life cycle emissions related to the initial production process.

For the world to stay within the finite limits of the carbon budget – and stabilise global temperature rise – carbon emissions must fall rapidly in the coming decades. Given the use of fossil fuels for energy inherently relies on the release of CO2, the use of such fuels must also fall rapidly; accordingly, businesses exposed to the oil and gas value chain are vulnerable to this inevitable fall in demand. Climate targets that fail to reflect the full life cycle emissions associated with activities thus fail to represent the inherent risks involved.

An intensity approach does not link to finite limits However, incorporating end-use emissions into corporate goals is not sufficient; to link to the carbon budget, emissions reductions must also have an absolute basis to them. Some companies have announced climate goals on an average intensity basis (tCO2/J) covering all of the company’s energy production, yet progress can be made against such goals simply by producing more low carbon energy – under such a target, oil and gas production, and thus absolute emissions, could even increase.

Companies need more than a 2050 goal; absolute reductions to 2030 are crucial A stated goal some 30 years hence is one thing, but however ambitious it is, there is little incentive for current management to act to reduce emissions – it is far simpler to continue with business as usual, and leave the challenge to successors. To drive real change, it’s critical that companies have interim goals; since our 2020 analysis, Absolute Impact, we have seen an increasing number of such goals announced.

Of course, for interim goals to drive the desired change, they also need to be an absolute basis, rather than just measuring emissions intensity reductions; over the past year, some companies have announced such goals for 2030 which is a positive step forward.

To help guide investors’ engagement with companies, we bring these elements together into our “hallmarks of Paris compliance” (see box) – a set of pre-requisites for a company to be considered Paris compliant. We then use these as a basis to provide a relative ranking of company targets – see Figure 1 and Table 1.

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Hallmarks of Paris compliance For a company emissions target to be potentially considered as “Paris compliant” we believe that as a minimum it should be in a form that satisfies these three pre-conditions:

1. Includes full lifecycle emissions including both operational (scope 1 and 2) and end use emissions (scope 3) 2. Be bound by finite limits, including interim milestones set on an absolute basis. 3. Covers emissions from a company’s owned production and global product sales on a full equity share basis, including downstream product sales. We stress that these hallmarks are a pre-requisite for a company to be considered aligned with the aims of the Paris agreement. Goals must cover a significant proportion of company activities, with the scale (magnitude) of emissions reductions consistent with a Paris-aligned carbon budget.

Emissions goals should also not rely unduly on emissions mitigations (e.g. carbon capture, utilisation and/or storage technologies, or negative emissions technologies) that are either undemonstrated at the required scale, or require vast areas of as yet unidentified land.

There are other factors in considering whether a company is Paris compliant in a broader sense, including for example project sanctioning decisions, price assumptions used in impairment testing, executive remuneration policies and lobbying practice.

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FIGURE 1. GOAL SELECTION AND RANKING METHODOLOGY

Source: CTI analysis

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TABLE 1. RANKED COMPARISON OF OIL AND GAS COMPANY EMISSIONS TARGETS

Source: Company disclosures, Carbon Tracker analysis.

Notes: 1Total’s goal is split into two parts: absolute scope 3 emissions target for products sold in Europe, and its carbon intensity goal covering all products sold in Europe (net zero in 2050). ^For both Shell and Equinor, emissions reductions to reach their respective net zero goals includes expected reductions made by consumers; Repsol’s net zero goal includes avoided emissions as part of its “Low Carbon Power Bonus”. Shell has interim goals on its intensity metrics, and thus ranks ahead of Equinor which does not. See notes in appendix for full discussion.

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Eni remains atop the ranking, ahead of European peers As in our 2020 analysis, Eni tops our ranking with its goal that covers end use emissions from all activities on an equity share basis, with a 25% reduction in emissions in 2030 on the pathway to net zero in 2050. Total and bp are ranked within the first band, with goals that have 2030 reductions with an absolute basis, albeit failing to cover all activities.

Shell, Equinor, Repsol and Occidental all have metrics which include end use emissions, however with an intensity approach to reaching net zero; accordingly, any 2030 emissions reductions are not on an absolute basis.

North American majors still lag behind, despite updates to goals Despite announcing a net zero target for 2050, ConocoPhillips remains in the lowest band of our rankings – its target only covers operational emissions (scopes 1 and 2) from operated assets. Chevron and ExxonMobil similarly only cover operational emissions, both with just short-term intensity reductions.

For company goals to be credible, they should not rely heavily on unproven technologies Whilst ambitious emissions goals are paramount, even those that fulfil the hallmarks may not be all they seem. All ten companies in our analysis have announced plans to use nascent technologies to reduce emissions, including both carbon-capture, utilisation and storage (CCUS) and negative emissions technologies (NETs) to reduce or offset emissions.

These broad terms cover a range of individual technologies, ranging from enhanced oil recovery (EOR) to direct air carbon capture and storage (DACCS). As yet, many of these are undemonstrated at anything like the scale stated in company announcements, bringing the credibility of announced climate goals into question. For some CCUS applications, the net benefit to climate of their deployment is unclear, and in the case of captured CO2 being used for EOR may even exacerbate emissions.

Some company announcements talk of deploying “nature-based solutions” (e.g. afforestation), which require huge tracts of land to be identified and acquired, with significant knock-on implications for alternative land uses. Even if these issues are solved, there are a host of other issues e.g. a sapling does not absorb as much CO2 as a mature tree does, a forest needs to be protected, and biodiversity concerns.

Investors must be wary of companies looking to produce outside of the Paris aligned carbon budget relevant to them by relying on NETs. Companies should endeavour to follow a Paris aligned production schedule.

Investors must press companies for details behind emissions reduction plans Accordingly, while investors should push for companies to set climate goals according to the hallmarks, they must also engage with companies to disclose how such goals will be achieved, and satisfy themselves that any emissions mitigation plans are credible. Companies with goals that are achieved through a managed wind-down of oil and gas activities, rather than an over-reliance on untried technologies, illustrate a more reliable pathway to lower emissions as well as taking stranded asset risk off the table.

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3 Introduction

The global carbon budget has finite limits

The science is clear: it’s the aggregate level of CO2 emissions that determines the temperature outcome for the planet. For example, to stabilise global temperature rise by 2100 to 1.75°C – consistent with the “well below two degrees” objective of the Paris agreement – the remaining carbon budget is just 920GtCO2. At current average emissions levels (41.5GtCO2/year over the last 5 years), that’s just 22 years; to limit global warming to 1.5°C the remaining budget is just 11 years (Figure ).1

FIGURE 2. GLOBAL REMAINING CARBON BUDGET FOR DIFFERENT TEMPERATURE OUTCOMES

Not all pathways are equal; “net zero” in 2050 is not sufficient alone Of course, emissions are unlikely to remain constant for 22 years and then instantly cease; and the emission pathway adopted towards “net zero” (where annual greenhouse gas emissions are balanced out, or “offset”, by sinks) matters. One way to stay within the carbon budget would be for net emissions to decline rapidly from today, such that the carbon budget is not exceeded prior to net zero. This is conceptually illustrated by the dark green line in Figure 3, with no net negative emissions needed after net zero.

Some scenarios suggest a different pathway to net zero, where net emissions to remain flat (or worse, increase in the short term), and then for rapid emissions reductions to take place some

1 Here we show the remaining carbon budgets for a 50% chance of success. For a 66% chance of staying within 1.75 °C, the carbon budget is 680GtCO2 equating to 16 years at current emissions levels (300GtCO2 and 7 years for 1.5°C).

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decades hence. This is illustrated by the red pathway in Figure 3, where the carbon budget is exceeded in the mid 2030s, but net zero is not reached until 2050. This results in temperature “overshoot”, with significant net negative emissions (greenhouse gas sinks greater than greenhouse gas sources) required subsequently to bring temperatures back down by the end of the century.

FIGURE 3. A) GLOBAL NET ANNUAL CARBON EMISSIONS (TOP), AND B) REMAINING CARBON BUDGET (BOTTOM) TO 2100, FOR THREE ILLUSTRATIVE SCENARIOS, WITH THE SAME CARBON BUDGET, ALL REACHING NET ZERO IN 2050.

Source: Carbon Tracker analysis (updated from Absolute Impact)

Note: schematic diagrams with approximate y-axis values.

A pathway which breaks that carbon budget prior to net zero has two major issues; first, recovering from temperature overshoot may not be possible, depending on how the Earth’s climate system responds and any “positive” feedback loops. Second, who is going to pay for massive deployment of negative emissions technologies needed to achieve this?

Most climate scenarios incorporate some degree of net negative emissions in the years post net zero, however the sooner emissions reductions start – and the lower the reliance on subsequent global net negative emissions – the more orderly the transition and the greater the likelihood of containing global temperature rise.

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The energy transition necessitates strategic choices for oil and gas Whether the energy transition is driven by policy action, investor pressure or out-competition by alternative energies (likely all of the above), the impact felt by oil and gas companies is the same: a lower demand for their products, and as a result, the traditional oil and gas industry has to fundamentally change. Continuing on a business-as-usual path risks sanctioning assets which would take the world beyond finite climate limits, and risk becoming stranded; oil and gas companies – across all parts of the value chain – prepared to sanction such assets are effectively betting on society’s failure to address climate change.

As we have written about at length, to present themselves as Paris-aligned and reduce transition risk, companies with oil and gas activities should sanction only the lowest cost assets that fit within Paris limits2. For most this will mean a near-term decline in production levels. The International Energy Agency (IEA) recently released a report reinforcing our prior conclusion3 that no new oil and gas projects could be sanctioned to limit warming to 1.5 °C in the longer term.4

For existing assets, companies can either allow production to decline naturally or sell them, depending on wider strategic considerations. With the cash generated, that would previously have been invested in new assets, companies broadly have two strategic options:

1. Return the generated cash to shareholders – “wind-down/harvest model” 2. Reinvest into new businesses that will deliver sustainable returns in a low-carbon world – “transition model” Which model is appropriate for a company will depend on its current situation and the desires of its shareholders. An exploration and production company may find it harder to transition than a large integrated company which can pivot its retail distribution businesses to supplying alternative energy. For example, this could be by converting existing petrol stations into electric vehicle charging points, or by developing hydrogen fuel networks. While transition strategies are outside the scope of this note, this is a research area we continue to develop.

Emissions goals in the eye of the beholder While there is now almost universal consensus on the need to act on climate change, the debate continues on who is “responsible” for the emissions from fossil fuels use. Is it those who initially extracted them from the ground? Is it the refiner who turns crude into petrol? Is it the consumer who drives the car, releasing 85% of lifecycle emissions? Or is it the purchaser of electricity generated in a gas power station?

For the companies, climate targets may help maintain a social licence to operate – that is to ensure that consumers continue to purchase their products – by framing the company as part of the solution on climate change rather than the problem.

2 See Carbon Tracker reports “Balancing the Budget”, November 2019, and “Fault Lines”, October 2020. Available at: https://carbontracker.org/reports/balancing-the-budget/ and https://carbontracker.org/reports/fault-lines- stranded-asset/ 3 See Carbon Tracker, “Breaking the Habit”, September 2019 Available at https://carbontracker.org/reports/breaking-the-habit/ 4 Net Zero by 2050: A Roadmap for the Global Energy Sector, IEA, May 2021. Available at: https://www.iea.org/reports/net-zero-by-2050

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From an environmental perspective, climate targets can be viewed based on the extent they reduce emissions, and thus support staying within the finite limits of a Paris-aligned carbon budget.

From a financial perspective, however, it doesn’t matter who is responsible for emissions. Irrespective of any personal viewpoint on accountability, reduced fossil fuel consumption and weak commodity prices will lead to falling revenues though the transition, with impacts greatest for those that have not anticipated the shift. Corporate climate goals can thus be viewed through a risk lens; targets and ambitions may be indicative of a company’s view of the pace of transition and relative willingness to act to reduce risk. Those concerned about both the planet and returns have a dual reason to pay attention.

Of course, climate targets are framed in a myriad of different ways; as a result, assessing targets – both in isolation, but also relative to peer companies – is challenging. In Chapter 4 we review the fundamentals of emissions target setting at the company level for oil and gas, before then ranking some of the largest companies’ targets. In Chapter 5 we then discuss the credibility of company goals regarding the emissions mitigation levers assumed.

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4 Emissions goals at the company level

A focus on production emissions is appropriate for most sectors… For most products – be it a loaf of bread, a t-shirt or a sofa – once the product is created, few (or no) further emissions result from its consumption or end use. In emissions scope terms, the emissions relating to the use of sold products (classified as part of scope 3, see Table 2) are small when compared to those involved in the manufacture of the product. For these products, the concept of emissions intensity (aka carbon footprinting) is potentially useful, as this encourages companies to think how emissions associated with the manufacture and distribution of each item can be reduced. Providing this reduction doesn’t lead to consumption increases, reducing the emissions intensity will lead to emissions reduction.

TABLE 2. EMISSIONS SCOPE TAXONOMY

Scope 1 Scope 2 Scope 3

Purchased goods and services Business travel Fuel combustion Employee commuting Waste disposal Purchased electricity, Company vehicles heat and steam Use of sold products Transportation and distribution (up- and Fugitive emissions downstream) Investments Leased assets and franchises

Source: Carbon Trust5

The same is true of large industrial processes, for example the manufacture of cement. While there is an inherent release of CO2 when converting calcium carbonate (CaCO3) to lime (CaO) these emissions are crucially in the direct control of the factory6. The subsequent use of the cement in concrete does not lead to end use CO2 emissions. As a result, the purchaser of either t-shirts or cement does not need to be concerned with further emissions, and so can make a purchasing decision based on the CO2 emissions generated in creating the product.

…however, emissions targets for oil and gas need to reflect end use emissions For oil and gas products, however, this approach falls down. Considering the emissions associated with the extraction of crude oil, subsequent refining into petrol and use in a light vehicle: around

5 https://www.carbontrust.com/resources/briefing-what-are-scope-3-emissions (accessed 16/04/2021) 6 That the emissions are generated from a point source means that they are also easy to measure, and also there is the potential to decarbonise the process, through for example carbon capture and storage technologies, preventing these emissions even entering the atmosphere.

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85-90%7 of the total emissions result from when petrol is combusted to form carbon dioxide and water, releasing energy to propel the car forward.

Whether “responsible” or not for these end use emissions (or scope 3 emissions more broadly), the reality is that oil and gas company business models rely on their continued creation. Consequently, any emissions goal focussed on just scope 1 and 2 emission – even if with a “net zero” goal – can at best address just 15% of full life-cycle emissions. If consumers move away from carbon-intensive products, then demand will fall; thus, we see it as critical that company emissions goals recognise these end use emissions as a proxy for risk, as well as reflecting the reality of business activities.

Company climate goals must have an absolute basis… While net zero is an important goal – when any residual positive emissions are completely offset by negative emissions – the pathway to that net zero year determines the aggregate emissions released. That needs to be compared to a global carbon budget which is finite for a given temperature outcome. While the debate about how this budget is apportioned to different sectors within climate scenarios is unlikely to stop anytime soon, the reality is that however it’s split, then sectors will also have finite emissions limits.

This applies also when going from the sector level to the company level. For company-level goals to link to the carbon budget, the focus must remain on reducing the absolute level of emissions inherent within company activities – this is the same whether from a climate change or transition risk perspective.

…including interim targets also on an absolute basis Some companies, however, have adopted an intensity approach to target setting; a goal of “net zero by 2050” could be viewed as having an absolute basis at that point. However, until that date, there is no constraint on the emissions that result from company activities. Even if such intensity goals covered only oil and gas activities without a cap on oil and gas production, and sought to reduce emissions intensity via mitigation / offsets, there would be no link to the cumulative global carbon budget – even when “net zero” is reached.

It’s therefore critical that company goals have an absolute basis to them that applies from the near term, rather than at some point in the distant future; without such basis to interim goals there is no limit to aggregate emissions on the pathway to net zero. Such goals will thus require management to take action now, rather than leaving it to their successors to respond to the challenge, increasing risk for investors in the interim.

Separate out oil and gas targets from those covering low carbon businesses

For a number of companies in our universe, intensity targets are based on the metric of CO2 emissions per joule of energy produced (tCO2/J), including energy produced from renewable sources. By included non-fossil energy within an emissions intensity target, apparent progress can be made simply by adding renewables: emissions intensity in tCO2/J would fall, while absolute CO2 emissions from company activities would remain flat.

7 Total, “Getting to Net Zero”. Available at: https://www.total.com/sites/g/files/nytnzq111/files/documents/2020- 10/total-climate-report-2020.pdf

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Fundamentally, these all-energy intensity targets would only link to the finite limits of the global carbon budget if there were finite limits on energy production (i.e. the denominator were fixed). But there is no need to cap the energy we produce from all sources, particularly given the energy growth that renewables can deliver with nearly zero emissions.

Emissions targets should therefore seek to focus on reducing absolute emissions from fossil fuels. Integrated oil and gas companies could choose to additionally set targets covering non-fossil activities8, however, they must not use all-energy intensity targets to mask continued oil and gas growth under the guise of average emissions reductions.

Climate goals should cover both upstream and downstream… The traditional split of an integrated oil and gas company is into either two or three main business segments, each of which is exposed to transition risk:

• Upstream: the exploration for hydrocarbon accumulations and the development and operation of infrastructure to produce them. • Downstream: the trading and refining of crude into products and marketing and sales to consumers. Purchases crude either from its own company’s upstream business (an inter- segment transaction) or from a third party. • (Petro-)Chemicals: the conversion of feedstocks into a range of products (including industrial chemicals and plastics) – sometimes included within “Downstream” segment. Accordingly, for company goals to fully reflect transition risk, it is important that they reflect both upstream and downstream activities, particularly so for an integrated company which refines greater volumes of crude than it extracts. This isn’t to say that emissions from upstream and downstream activities should be double counted – the scope 1 and 2 emissions of one are the scope 3 emissions of the other; the end use emissions are counted within scope 3 of both. To adequately reflect transition risk, however, company targets should reflect the full exposure of the company to the oil and gas value chain.

…on an equity share basis, covering global interests If a company has an economic interest in a project – and thus potentially both currently profits from its investment but also faces stranded asset risk – then that activity should be included within relevant company climate goals. Equally, some companies have set targets which only apply to sales in specific geographical regions, or exclude certain business units. While it is true that the pace of transition is likely to faster in some regions (e.g. Europe) compared to others, given that carbon budgets apply on a global basis a company cannot be considered Paris compliant if its targets only cover certain regions. Similarly, goals should not exclude certain business segments, or investments in third parties.

Finally, companies which rely on consumer actions to achieve their climate goals are in effect adopting a passive position, rather than a leading one on decarbonisation. This is a corporate choice, however companies cannot claim Paris alignment in a meaningful sense if the plan is to be carried along by others.

8 We note that despite the rhetoric around becoming energy companies, integrated oil and gas companies derive the bulk of their income, and the spend the vast majority of their capex on oil and gas. For example, Shell’s 2020 cash capital expenditure on “renewables and energy solutions” was just 5% of total capex ($0.9bn of a total of $17.8bn) 8.

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4.1 Assessment of Company Goals Having reviewed some of the key aspects of company climate targets, we now move on to assessing company targets to give a relative ranking for the ten companies covered, using a similar approach to that used in Absolute Impact (June 2020)9. We note that some companies have “ambitions”, while others have “targets” (ostensibly more binding). We refer to these collectively as goals, although may also use “target” to apply to both unless referring to a specific company.

Since that report, there have been significant updates to company climate targets announced, including both updated metrics as well as the scale of reductions – a summary of key updates is shown in Table 4. Given this, we have revised our “hallmarks of Paris compliance” which we first defined in our 2019 report Balancing the Budget10 and is the basis of our company assessment (see box).

TABLE 3. KEY UPDATES TO CARBON EMISSIONS GOALS VS 2020 ANALYSIS

Company Key Updates Date

bp Interim steps added to its three aims Sept 2020

Introduction of 2028 targets in addition to 2023 targets for Chevron March 2021 Scope 1&2 intensity

Introduction of net zero scope 1&2 intensity target for 2050 ConocoPhillips Oct 2020 and more ambitious 2030 target

Both net GHG lifecycle emissions and carbon intensity Eni updated; both reach net zero in 2050, with accelerated Feb 2021 interim goals

Accelerated reduction in upstream scope 1&2 intensity

Net carbon intensity goal updated from -50% to net zero in Equinor Feb 2021 2050

New goal of carbon-neutral global operations by 2030

Introduction of scope 1&2 upstream operations intensity ExxonMobil Dec 2020 metric

Occidental Introduction of two new goals: 1) operated and energy use emissions (scope 1 and 2) and 2) total emissions inventory Dec 2020 (new to universe) including product use (scopes 1, 2 and 3)

9 Carbon Tracker report, “Absolute Impact”, June 2020. Available at: https://carbontracker.org/reports/absolute- impact/ 10 Carbon Tracker report, “Balancing the Budget”, November 2019. Available at: https://carbontracker.org/reports/balancing-the-budget/

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More ambitious interim targets introduced for its net Repsol Nov 2020 carbon intensity indicator

Net carbon footprint ambition now reaches net zero in Shell Feb 2021 2050 although it is reliant on customer actions from 2035.

Introduction of absolute Scope 3 emissions target for Total Sept 2020 products sold in Europe

Source: company disclosures

Notes: updates shown as those which post-date the analysis in Absolute Impact (June 2020). For further details, see appendix.

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4.2 Company climate goal selection and ranking methodology Before ranking company targets against each other, we first select which targets to use; we review the set of climate goals for each company (ambitions and targets), and select that which most fulfils the hallmarks. This goal is then assessed as to whether it covers a significant proportion of the emissions associated with company activities. If so, then this goal is used in the ranking table. If not, then the company goal that next most fulfils the hallmarks is selected, and the assessment repeated.

Once a goal for each company has been selected, then the companies can be ranked against each other in a two-step process, considering first the characteristics of the metrics, before then reviewing the coverage (breadth of company activities covered) and scale (e.g. does the company reach net zero) of reductions. A summary of the overall process is shown in Table 4.

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FIGURE 1. GOAL SELECTION AND RANKING METHODOLOGY

Source: CTI analysis

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TABLE 4. RANKED COMPARISON OF OIL AND GAS COMPANY EMISSIONS TARGETS

Source: Company disclosures, Carbon Tracker analysis.

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North American majors still lag behind In our 2020 ranking table, the three North American companies lagged their European counterparts. Since that analysis, ConocoPhillips, Chevron and ExxonMobil have all made changes to their climate goals, however none of the three have targets which include either scope 3 emissions or have an absolute basis to interim targets.

ConocoPhillips has announced a net zero target for operational emissions (scopes 1 and 2) which puts it ahead of Chevron – we also note that ConocoPhillips does not have a downstream business.

Shell, Repsol, Equinor and Occidental intensity targets do not link to the carbon budget As in 2020, while Shell, Equinor and Repsol have targets which include scope 3 emissions, their targets are on an intensity basis. In this year’s analysis, Occidental sits alongside them – included as the first large North American company to set a goal including end use emissions.

All four have a net zero goal for 2050, and each has significant shortcomings in addition to an intensity basis. Repsol’s net zero goal includes avoided emissions11 as part of its “Lower Carbon Power Bonus” and also only covers the downstream products which are refined from its own crude oil production. Shell12 is explicitly reliant on customer actions to reduce emissions intensity from 2035, with Equinor13 similarly reliant on customer actions.

In contrast, Occidental only covers operated activities, rather than using an equity share approach, and its net zero target has no interim goals – even on an intensity basis – and appears to be heavily reliant on carbon capture and storage technologies, including direct air capture. This is a big punt on a set of unproven technologies.

Shell ranks ahead of Equinor due its interim goals, albeit on an intensity basis. Repsol ranks behind these two as a result of the exclusion of products refined from third party crude, while Occidental ranks lowest within this band due to the operated-only nature of its goal.

European ranking positions changed from 2020; shortcomings remain Eni, Total and bp all have emissions targets that include end use emissions on an absolute basis, critically including absolute emissions reductions to 2030 – accordingly these three companies rank in the top group. Of these, only Eni include global product sales on an equity share basis, including downstream sales; it tops our ranking table.

Total’s and bp’s approaches fail to fully meet all of the hallmarks, albeit in different ways. Total’s goal including scope 3 emissions on an absolute basis only covers product sales to Europe, while bp’s net zero ambition excludes its stake in Rosneft (around a third of bp’s global production volumes), and only covers upstream production. Accordingly, bp ranks behind Total.

11 Avoided emissions are reductions in emissions that result from customers actions, for example switching fuels from coal to gas. This does not mean that emissions associated with an individual company’s activities have decreased. 12 Our Climate Target, Shell, undated. Available at: https://www.shell.com/energy-and-innovation/the-energy- future/our-climate- target/_jcr_content/par/relatedtopics.stream/1612987226583/4115c96421e7441230e91f1487f44ac2c8e923ab /our-climate-target.pdf (accessed 20/04/2021) 13 Net GHG Emissions Net Carbon Intensity Methodology, November 2020. Available at: https://www.equinor.com/en/sustainability/climate.html

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Of course, emissions goals are just part of potentially being a Paris aligned company – the hallmarks are merely pre-requisites – and it’s critical that companies demonstrate how their investment decisions are also aligned with the Paris goals, and do not sanction assets that could become stranded through the energy transition. We reiterate that there are other factors beyond climate goals in considering broader Paris compliance, including project sanctioning decisions, lobby practice, and executive remunerations policies.

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5 Credibility of Climate Goals and Emissions Mitigation

Ultimately to reduce emissions, oil and gas consumption must fall, so companies are seeking to square more ambitions emissions reductions targets – good for both the planet and investors – with the desire to continue oil and gas production for as long as possible. To resolve this, they are appealing to a range of emissions mitigation technologies, many of which are highly unproven at the required scale, or have massive land use implications. We believe it is critical that company plans not only fulfil the hallmarks we set out, but do so in a way that is credible.

Companies appeal to emissions mitigation technologies in two main ways. First, by relying on the level of such technologies used within climate scenarios that are viewed as “Paris-aligned”, including by publishing their own scenarios. Among a set of scenarios with the same temperature outcome in 2100, the level of emissions mitigation technologies used, and thus the space for continued fossil fuel consumption in the coming decades, will vary – as illustrated by the different pathways in Figure 3.

Second, by deploying emissions mitigations technologies themselves to reduce the net annual emissions associated with their activities; the aim is to effectively to extend their company carbon budget beyond that derived from a Paris scenario14 and enable increased oil and gas activities whilst still meeting stated emissions goals. It is this, and the consequent credibility of company climate goals, which is the focus of the discussion here; many of the concerns, however, also apply to the level of their use within scenarios.

The first, and by far the simplest way, to reduce emissions is simply to stop the activity or process, i.e. reduce production. However, companies seeking to continue activities, even at reduced rates, are appealing to two approaches towards emissions mitigations:

a) Prevent emissions reaching the atmosphere by capturing them at source and permanently storing them. b) Allow emissions to enter the atmosphere, and then “offset” these by removing an equivalent amount from elsewhere, placing into permanent storage. We see either approach as increasing risk both for the climate and to investors.

The landscape around these has become increasingly complicated; many terms are used interchangeably, often without definition, while others encompass a range of technologies with varying climate benefits. Here we discuss some of the major terms, the credibility of these, and the implications for investors.

14 In our 2019 report, “Balancing the Budget”, we translated oil and gas sector targets into targets for some of the largest upstream companies; we used our least cost methodology to determine company carbon budgets and thus production reductions required to 2040 and beyond to fit within Paris limits.14 The scenarios used already incorporated significant global deployment of emissions mitigations technologies. Available at: https://carbontracker.org/reports/balancing-the-budget/

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5.1 Carbon Capture, Utilisation and Storage Technologies The IEA15 uses the abbreviation “CCUS” as an umbrella term to cover a “suite of technologies” across a range of applications, including:

a) CCS (carbon capture and storage) b) CCU (carbon capture and utilisation) c) CCUS (carbon capture, utilisation and storage) Accordingly, “CCUS” has both general and specific meanings; close investigation is required to understand the net benefit (if any) to the climate from application. Unless specified otherwise, in this report we use “CCUS” as the umbrella term. The commonality of CCUS is that it is used to capture emissions from a point source; the impact to the climate depends on what subsequently happens to the captured CO2.

5.2 Carbon Dioxide Removal and Negative Emissions Technologies While large, static, point sources are candidates for the deployment of CCUS technologies, a significant proportion of emissions come from sources which are decentralised, mobile, or both. While electrification, combined with low-carbon electricity generation and battery storage, has the ability to reduce emissions associated with light transportation applications, this isn’t yet a viable option for e.g. shipping or long haul aviation.

As a result, fossil fuel companies are looking beyond CCUS to attempt to achieve stated emissions goals. Instead of capturing CO2 at the point of generation, the aim is offset emissions via carbon dioxide removal (CDR). CDR involves the removal of carbon from the atmosphere using a range of negative emissions technologies (NETs). We use the categorisation defined by the European Academies Science Advisory Council, who describe 6 main types of NETs:16

1. Afforestation and reforestation 2. Land management to increase and fix carbon in soils 3. Bioenergy production with carbon capture and storage (BECCS) 4. Enhanced weathering 5. Direct capture of CO2 from ambient air with CO2 storage (DACCS) 6. Ocean fertilisation to increase CO2

The common attribute of NETs is that they result in a reduction in atmospheric CO2 levels versus if they had not been deployed. Of course, this is only true if deployed alone. If a NET is deployed to “offset” (or justify) the continued burning of fossil fuels – for example planting trees to continue to enable internal combustion engine vehicle usage – then there may be no net reduction in global emissions. Many of these technologies are nascent, and have yet to be demonstrated as technically achievable.

5.3 CCUS and NETs within corporate goals The broad range of CCUS technologies and NETs touted as part of emission mitigations plans is summarised in Figure 2. With some technologies considered within the scope of both terms, the climate benefit of CCUS can range from carbon dioxide removal from the atmosphere (e.g. BECCS)

15 Special Report on Carbon Capture Utilisation and Storage, IEA (September 2020). Available at: https://www.iea.org/reports/ccus-in-clean-energy-transitions/a-new-era-for-ccus#abstract 16 EASAC policy report 25, February 2018. Available at: https://unfccc.int/sites/default/files/resource/28_EASAC%20Report%20on%20Negative%20Emission%20Technologi es.pdf

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to the decarbonisation of an industrial process, to the merely hypothetical “avoided” emissions of a EOR or CCU application.

Company plans are increasingly describing some NETs as “nature-based solutions” (NBS), and while there seems little consensus over the term, we take it to include applications where human intervention can catalyse increased emissions via natural processes, for example via reforestation, as in Figure 5.

FIGURE 2. INTERACTION BETWEEN CCUS TECHNOLOGIES AND NETS

Source: IEA and EASAC

Notes: Diagram shows some key terms only; it is not an exhaustive list of technologies. CCUS = carbon capture, storage and utilisation technologies; NETs = negative emissions technologies; CCS = carbon capture and storage; NBS = nature-based solutions.

CCS applications rely on permanent storage of captured emissions In CCS applications, for example where the emissions from a particular process (e.g. cement manufacture or electricity generated from coal) are captured and then permanently sequestered underground, then – at least conceptually – 100% of the emissions could be prevented from reaching the atmosphere. Even if not all emissions were captured, the product could be at least partially “decarbonised”. In either example, however, CCS decarbonises an existing product, but it does not lead to net negative emissions that could be used to offset emissions elsewhere (BECCS and DACCS are exceptions to this).

Who “benefits” from the reductions depends on how they are deployed. In the example of the cement producer, while an oil and gas company may be able to monetise their technical expertise – including geological, fluid modelling, drilling and operations – by providing a decarbonisation service, it does nothing to reduce the life cycle emissions of the oil and gas company’s main products. Nor does it reduce the transition risk of the core oil and gas business.

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Of course, the CCS process itself is unlikely to be zero-carbon; even if the energy required came from renewable sources; the manufacture, installation and operation of the infrastructure would likely also lead to CO2 emissions. Equally, the sequestered CO2 needs to remain underground for centuries to come. There are only a finite number of viable sites for this, and to date only a small number of CCS plants are operational, restricted to a handful of coal power stations and gas extraction operations. At best, CCS is a bridge solution towards a low-carbon world.

Many CCUS applications at best lead to avoided emissions

CCU technologies, however, involve the subsequent use of CO2 as a chemical feedstock to make products ranging from synthetic fuels to resins/polymers with long (decadal-plus) lifespans. In most cases, the capturing of the emissions merely leads to a temporary delay in the carbon dioxide released to the atmosphere, rather than any net reduction. While this CO2 use could potentially reduce the need for new crude to be extracted, it doesn’t necessarily lead to emissions reductions, particularly at the individual company level. At best, the deployment of CCU technologies could be described as leading to avoided emissions from other activities.

Similarly, the use of CCUS for enhanced oil recovery (EOR) could have no net impact on carbon dioxide levels emissions. It really depends on the ratio of additional oil extracted vs the CO2 sequestered, and whether the additional oil produced displaces other oil supply, or not.

Nature based solutions have significant land use implications Whilst NETs have the potential to remove large amounts of carbon dioxide from the atmosphere, many also have significant implications for global land use17. As we noted in a recent blog, Eni and

Shell’s plans involve a combined 140Mt/CO2 of carbon dioxide removal per year through afforestation, effectively implying a forest larger than Bulgaria, and potentially nearly as large as Spain18. This is a huge land area needed to address just 0.3% of current average emissions

(41.5Gt/CO2 per year).

If such huge areas of land are reforested, then there will inevitably be significant implications for global agriculture. If the developed world buys up huge swathes of land in developing nations, then in some ways this swaps the negative externalities of carbon emissions for increased cost of food production; both disproportionately impact the world’s poor. The Nature Based Solutions Initiative outlines some of these challenges and the need for NBS to support the planet’s biodiversity ahead of continued oil and gas production.19

CCUS and NETs are nascent technologies; save them for the hardest to abate emissions However, most climate scenarios, for example the Sustainable Development Scenario published by the IEA, already incorporate the use of CCUS technologies at significant scale, alongside widespread land use changes and a reduction in fossil fuel consumption. Whilst climate scenarios are not explicit

17 See for example “An investor guide to negative emissions technolgoies and the importance of land use”, PRI, October 2020. Available at: https://www.unpri.org/land-use-implications/an-investor-guide-to-negative-emission- technologies-and-the-importance-of-land-use/6644.article 18Carbon Tracker Blog, March 2021. Available at: https://carbontracker.org/shell-and-eni-revise-emissions-plans- into-the-weeds-or-into-the-forest/ 19https://www.naturebasedsolutionsinitiative.org

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on who is responsible for afforestation, any land use changes invoked in company plans must not conflict with those already invoked within the scenario.

However, the reality is that CCUS has been touted for many years, but at the end of 2020 there were just 28 operational worldwide projects, capturing on average just 1.5Mt/CO2/year (of which not all will have been permanently sequestered)20. To achieve reductions implied by these scenarios requires spectacular growth in the deployment of CCUS projects. Similarly for DACCS, while there are pilot projects, the required scale and speed of implementation is huge (as well as economic barriers at present). Equally, a field of saplings does not absorb CO2 at the same rate as a mature forest, so there is a time lag of potentially decades to the deployment of NBS.

The limited potential for CCUS and NETs that we have line of sight to must be reserved to mitigate emissions inherent in hard to abate uses that are critical for society, e.g. petrochemicals used in medical applications, rather than to justify continued oil and gas product sales for easily substituted applications.

Third-party “offsets” may not be all they seem A further issue regarding emissions mitigation concerns the use of purchased “offsets”. This is where instead of reducing emissions itself, either via CCUS or NETs, a company pays a third party to “offset” emissions for them, potentially via an exchange. Theoretically this should be no different to deploying the technologies directly, however accountability is critical: the greater the chain from carbon source to sink, the greater the risk of double counting and no actual reduction in emissions.

The quality of offsets therefore varies; investors and companies alike should ensure that they result in actual emissions reductions, rather than just “avoided” emissions.

5.4 Impact for Investors The implication for investors is simple. To reduce transition risks, oil and gas companies must reduce the emissions that are an inherent result of their activities; for most this will mean reducing production of fossil fuels and their products. Those companies with climate goals plans reliant on the widespread deployment of CCUS and NETs are placing at best a risky bet, which may detract from the seriousness with which companies view their own goals. Those ambitions which adopt a conservative approach to such emissions mitigations must be viewed as more credible.

In Chapter 4 we outlined our pre-requisite hallmarks of Paris compliance for the way climate goals are framed; to determine the credibility of such goals, investors should additionally ask companies for details about they will be achieved:

• Have the mitigations technologies been proven at scale to date for this particular application? • Is the company operating it directly, or is it reliant on the purchase of third-party offsets? • If land is required, has this been purchased or even identified? • Over what timescale do the emissions reductions occur?

20Carbon Tracker Blog, March 2021. Available at: https://carbontracker.org/shell-and-eni-revise-emissions-plans- into-the-weeds-or-into-the-forest/

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6 Company Specific Notes

Here we give a brief overview of company climate goals, noting that which is included within the ranking table. We also note the baseline year for reductions; something which is potentially relevant when considering company’s stated reductions. For those companies with multiple goals, the one in bold is that which is included within the ranking table. bp bp announced five climate aims21 in February 2020, three of which cover carbon dioxide emissions; interim goals were then announced22 in August 2020 in support of these:

1. “Net Zero operations” (scopes 1 and 2; absolute) – upstream and downstream. o 20% reduction by 2025 o 30-35% reduction by 2030 o Net Zero by 2050 2. “Net Zero” on oil and gas production” (scopes 1, 2 and 3; absolute) – upstream. o 20% reduction by 2025 o 30-40% reduction by 203023 o Net Zero by 2050 or sooner 3. “Halving intensity of energy products” (scopes 1, 2 and 3; intensity) – upstream and downstream o 5% reduction by 2025 o 15% reduction by 2030 o 50% reduction by 2050 We note that bp does not include the production from investment in Rosneft within its emissions ambitions, as noted in the ranking table with a “partial” under the question relating to the extent of emissions covered. bp’s baseline is 2019.

Chevron In October 201924, Chevron announced plans “to reduce emissions intensity from oil and natural gas production”, which cover scope 1 and 2 emissions, and apply to “all upstream Chevron oil and natural gas, whether Chevron has operational control or not”.

Chevron has two goals for this metric, with a baseline of 2016:

• Intensity reductions of 5-10% for oil and 2-5% for gas by 2023

21 https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bernard-looney-announces-new- ambition-for-bp.html 22 https://www.bp.com/en/global/corporate/news-and-insights/press-releases/from-international-oil-company-to- integrated-energy-company-bp-sets-out-strategy-for-decade-of-delivery-towards-net-zero-ambition.html 23 Originally announced as 35-40%, but currently described as 30-40% on bp’s website - https://www.bp.com/en/global/corporate/sustainability/getting-to-net-zero/ghg-emissions.html (Accessed 17/05/2021) 24 https://www.chevron.com/stories/chevron-sets-new-greenhouse-gas-reduction-goals

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• A combined intensity reduction of 35% by 202825

ConocoPhillips Since 201826, ConocoPhillips has a target to reduce the “GHG Intensity Reduction” of its operated upstream production (it has no downstream business). In October 2020, it announced a net-zero ambition for 2050, with an interim goal of a 35-40% reduction by 203027. ConocoPhillips’ baseline is 2017.

Eni Eni has a number of different climate goals, which have evolved over the past few years. Its current goals were first announced in 2020, with interim goals updated28 in February 2021, and include:

• Net-zero carbon footprint upstream (scopes 1 and 2; intensity) o Net zero by 2030 • Net greenhouse gas lifecycle emissions (scopes 1, 2 and 3; absolute) – upstream and downstream o 25% reduction by 2030 o 65% reduction by 2040 o Net zero by 2050 • Net carbon intensity (scopes 1, 2 and 3; intensity) – upstream and downstream o 15% reduction by 2030 o 40% reduction by 2040 o Net zero by 2050

All three goals are calculated on an equity share basis. Eni’s net greenhouse gas lifecycle emissions goal is used within the ranking table, as it most fulfils the hallmarks. Eni’s baseline is 2018.

Equinor Equinor have five climate goals relating to carbon emissions:

• Upstream CO2 intensity (scope 1; intensity) - upstream • Absolute greenhouse gas emissions without offsets (Norway) – (scopes 1 and 2, absolute) – upstream and downstream sales in Norway only o 40% reduction by 2030 o 70% reduction by 2040 o “Near zero” by 2050 • Achieve carbon-neutral global operations by 2030 (scopes 1 and 2)

25 Chevron report, “Climate Change Resilience”, March 2021. Available at: https://www.chevron.com/- /media/chevron/sustainability/documents/climate-change-resilience-report.pdf 26 ConocoPhillips, Sustainability Report 2018 27 https://www.conocophillips.com/sustainability/sustainability-news/story/conocophillips-adopts-paris-aligned- climate-risk-framework-to-meet-net-zero-operational-emissions-ambition-by-2050/ 28 Eni 2021-2040 strategic plan press release. Available at: https://www.eni.com/assets/documents/press- release/migrated/2021-en/02/PR-strategy-2021-2024.pdf. More detail available at: https://www.eni.com/en- IT/low-carbon/strategy-climate- change.html#:~:text=Eni%20will%20pursue%20a%20strategy,strengthening%20the%20intermediate%20decarbo nization%20targets. (Accessed 8/4/2021)

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• Net carbon intensity (scopes 1, 2 and 3; intensity) – upstream and downstream o Net zero by 2050 • Become a net zero company by 2050.

To achieve net zero in 2050 Equinor is reliant on customer actions, “where customers, including refiners, decarbonize Equinor’s sold products prior to use, we will reflect this in our scope 3 emissions calculation”.

Equinor’s net carbon intensity target is that which is used within the ranking table.

ExxonMobil ExxonMobil announced in December 2020 a goal to reduction the intensity of upstream emissions by 15-20% by 2025.29 This plan covers scope 1 and 2 greenhouse gas emissions from its operated (not equity share) upstream activities, with a baseline of 2016. As this goal includes methane reductions, for which it has a separate intensity reduction of 40-50%, the carbon dioxide reduction goal is unclear.

Occidental In December 2020, Occidental announced30 its net zero aspirations with two new climate goals:

• Operated and energy use emissions (scopes 1 and 2) – upstream and downstream o Net zero by 2040 • Total emissions inventory, including product use (scopes 1, 2 and 3; intensity) – upstream and downstream o Net zero by 2050 We have not been able to determine Occidental’s baseline year for its reductions for either metric (although as there are no interim reductions, even on an intensity basis, then this is somewhat moot).

Occidental’s total emissions inventory goal is used within the ranking table.

Repsol Repsol first announced in December 2019 that it would become “a net zero emissions company by 2050”, using its previously-announced net carbon intensity indicator.31 This metric covers scope 1, 2 and 3 emissions, on an equity share basis, from upstream activities and the downstream use of its upstream production (“Scope 3 O&G E&P based” – so excludes downstream products from third party crude).32

29 https://corporate.exxonmobil.com/News/Newsroom/News-releases/2020/1214_ExxonMobil-announces-2025- emissions-reductions_expects-to-meet-2020-plan 30 Climate Report 2020, Occidental (December 2020). Available at: https://www.oxy.com/Sustainability/overview/Documents/ClimateReport2020.pdf 31 https://www.repsol.com/en/press-room/press-releases/2019/repsol-will-be-a-net-zero-emissions-company-by- 2050.cshtml 32 “Carbon Intensity Indicator (CII), Repsol (undated). Available at: https://www.repsol.com/imagenes/global/en/carbon_intensity_indicator_tcm14-198668.pdf (accessed 18/05/2021)

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This was followed in November 2020 by the announcement of accelerated interim reductions on the pathway to net zero.33 Interim reductions are currently –12% to 2025, -25% to 2030 and -50% to 2040.

Shell Shell’s climate metric is its “net carbon footprint”; a metric which covers scope 1, 2 and 3 emissions intensity from all of the products that it sells globally on an equity share basis. Updated interim targets were announced in February 202134:

• 6-8% reduction by 2023 • 20% reduction by 2030 • 45% reduction by 2035 • 100% reduction (net zero) in 2050 We note that Shell’s approach is to decarbonise in step with society, and that the “2035 and 2050 targets also take account of any action by customers”.35

Total Total has 4 main climate ambitions to get towards net zero, with the first three announced in May 202036 with the fourth metric added in September 2020 alongside updated interim targets:

1. Net zero across Total’s worldwide operations by 2050 or sooner (scopes 1 and 2) 2. Net zero across production and energy products used by its customers in Europe by 2050 or sooner (scopes 1, 2 and 3; absolute) – upstream and downstream (Europe products) a. 15% reduction by 2030 b. Net zero in 2050 3. Carbon intensity of energy productions used worldwide by Total customers (scopes 1, 2 and 3; intensity) – upstream and downstream a. 15% reduction by 2020 b. 35% reduction by 2040 c. 60% reduction by 2050 4. Scope 3 emissions (scope 3; absolute) – upstream and downstream products Total uses a baseline of 2015.

33 https://www.repsol.com/en/press-room/press-releases/2020/repsols-new-strategic-plan-accelerates-the-energy- transition.cshtml 34 https://www.shell.com/media/news-and-media-releases/2021/shell-accelerates-drive-for-net-zero-emissions- with-customer-first-strategy.html 35“Our climate target”, Shell (undated). Available at: https://www.shell.com/energy-and-innovation/the-energy- future/our-climate-target.html#iframe=L3dlYmFwcHMvY2xpbWF0ZV9hbWJpdGlvbi8 (accessed 18/05/2021). 36 https://new-publications.total.com/05052020/pr/original-joint-statement-total-climate-action-100-plus.pdf

Disclaimer

Carbon Tracker is a non-profit company set up to produce new thinking on climate risk. The organisation is funded by a range of European and American foundations. Carbon Tracker is not an investment adviser, and makes no representation regarding the advisability of investing in any particular company or investment fund or other vehicle. A decision to invest in any such investment fund or other entity should not be made in reliance on any of the statements set forth in this publication. While the organisations have obtained information believed to be reliable, they shall not be liable for any claims or losses of any nature in connection with information contained in this document, including but not limited to, lost profits or punitive or consequential damages. The information used to compile this report has been collected from a number of sources in the public domain and from Carbon Tracker licensors. Some of its content may be proprietary and belong to Carbon Tracker or its licensors. The information contained in this research report does not constitute an offer to sell securities or the solicitation of an offer to buy, or recommendation for investment in, any securities within any jurisdiction. The information is not intended as financial advice. This research report provides general information only. The information and opinions constitute a judgment as at the date indicated and are subject to change without notice. The information may therefore not be accurate or current. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made by Carbon Tracker as to their accuracy, completeness or correctness and Carbon Tracker does also not warrant that the information is up- to-date.

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