Scope 1 and Scope 2 emissions reduction activities

Marginal abatement cost curve (MACC) process

During our annual budget planning process, we use the MACC process to collect potential operational greenhouse gas (GHG) emissions reduction projects from our business units (BUs), prioritize them based on their cost and reduction volume, and implement the most cost-effective projects. The MACC plots the break-even cost of carbon dioxide equivalent (CO₂e) reduction, considering capital and operating cost, and the potential increased revenue for each project against the cumulative GHG emissions that can be reduced.

Project funding may be based on criteria including but not limited to:

• Regulation: Existing or anticipated.
• Cost efficiency: Cost per tonne of CO₂e abated.
• Durability: Reduces emissions permanently.
• Adoption readiness: Reliable technology, systems and processes proven to reduce emissions by the forecasted amount.
• Strategic: Scalability, repeatability, timing, risk and other means of justification.

We typically consider projects that are expected to provide the greatest overall contribution in reducing our GHG emissions with a break-even cost of below $60/tonne CO₂e, as well as projects that anticipate forthcoming regulatory changes. By prioritizing and confirming projects through the MACC process with Low Carbon Technologies team colleagues, BUs are able to embed emissions reduction efforts within their budgets and long- range plans (LRPs). Our goal is to allow innovation, flexibility and accountability at the local level while providing support, guidance and oversight from corporate peers. This approach allows BUs to reprioritize and adjust within their budgets to account for regulatory and/or technology changes while maintaining consistency in process.

In 2024, ConocoPhillips supported more than 80 emissions reduction projects across our global operations through the MACC (excluding heritage Marathon Oil assets). These projects address improvements relating to methane and flaring, electrification, process optimization, efficiency, and include strategic pilots and studies. We prioritized methane and flaring projects in support of our near-term methane and flaring initiatives in 2024.

• Methane venting: Eliminate natural gas-driven pneumatics and modify facilities to reduce natural gas venting.
• Flaring: Eliminate flares where possible; incorporate vapor recovery units at facilities where economically and technically viable; recover waste gas for sales.
• Electrification: Reduce combustion needs on drilling and completions; electrify operations and pursue renewable energy sources where viable and economic.
• Optimization and efficiency: Streamline process equipment and facilities, tanks and equipment; improve waste heat utilization, insulation and power distribution. Consolidate older tank battery facilities to modern facilities to take advantage of existing emissions control equipment while improving operating efficiency.

To progress projects and achieve reductions in these areas, we have set up regional teams in North America, Australia, China and Europe to use the MACC process. Operational GHG emissions management is an expected core competency for our BUs managing oil and gas production. Those BUs are required to review their GHG emissions profile and identify opportunities to enable design and operating improvements that can reduce emissions. Output from the MACC informs our annual budget, LRP and technology strategy.

In 2024, we spent approximately $245 million on Scope 1 and Scope 2 emissions reductions.¹ Emissions reduction activities resulted in approximately 0.8 million tonnes per annum (MTPA) in CO₂e reductions.

Projects below the line are economic and have a negative breakeven cost of carbon.² Projects above the line are not economic without considering cost of carbon — the taller the bar, the higher the breakeven cost of carbon. The width of the bar indicates the annual operational emissions abatement that would occur should the project be undertaken — the wider the bar, the greater the emissions abated.

A summary of select emissions reduction projects is provided in the tables below.

Methane and emissions detection technologies

Flaring

Operational efficiency

Electrification and alternative power

^{1. Emissions reduction projects include both voluntary and regulatory activities.
2 New projects with a negative breakeven cost of carbon may continue to be brought forward for consideration each year as we advance our technology and identify possible new angles for emissions reductions.}