Addressing Scope 3 emissions

While we recognize that end-use emissions must be reduced to meet global climate objectives, it is our view that supply-side constraints resulting from Scope 3 targets for targeted North American and European oil and gas producers would be counterproductive in the absence of policy measures that address global demand. Curtailed supply would be replaced with production from less accountable operators and jurisdictions to meet future energy demand. Scope 3 targets do not address demand and do not limit global production and in our view are ineffective in reducing global emissions. 

Some nongovernmental organization (NGO) and activist investors advocate for Scope 3 targets informed by frameworks that contemplate decline in oil and gas production over time. Certain frameworks identify asset “wind down and managed phase-out” as one possible transition pathway. While these approaches are intended to support net-zero objectives, they do not appropriately reflect market demand, technology readiness, energy affordability and energy security to support an orderly and durable energy transition.

This approach also does not fully reflect projections from Paris-aligned scenarios, which indicate that oil and natural gas will continue to be needed in the coming decades, with demand increasingly met by lower-cost, lower emissions-intensity supply. Efforts to translate a science-based global carbon budget into sector-wide or company-specific Scope 3 targets require normative assumptions that are not consistently science-based at the company level. Mandating Scope 3 targets that prescribe a uniform capital shift or production phaseout, irrespective of market demand or relative emissions intensity, is not a realistic or effective way to address energy transition, climate-related risk or shareholder value. 

Our responsibility to shareholders is to strongly compete to meet energy demand by delivering resilient, low cost of supply, low GHG emissions intensity production with goals for operational emissions reductions. This approach provides long-term shareholder value while helping reduce the risk of energy price volatility and supply disruptions.

Other key considerations have also reinforced our rationale at ConocoPhillips not to set a Scope 3 target:

E&P company versus integrated company   

Pure play exploration and production companies do not have the opportunities to influence end-use emissions that integrated oil and gas companies may hold through their ownership and control over the production and sale of end-use energy products. As an upstream producer, ConocoPhillips does not control how the commodities we sell into global markets are converted into different energy products or selected for use by consumers. 

Double counting 

Duplicative counting of end-use emissions along the oil and natural gas value chain makes accurate accounting and credible target-setting problematic. For example, the Scope 3 emissions from refining the oil we produce are a refiner’s Scope 1 emissions. The combustion of that oil in the form of an end-use product such as gasoline are also Scope 3 emissions for the producer of the oil, the refiner and the marketer. The combustion of gasoline is also a Scope 1 emission for distribution and transportation companies. Likewise, our Scope 3 emissions from the combustion of natural gas at a power station would be the electricity producer’s Scope 1 emissions and our own Scope 2 emissions for electricity purchased to run our operations. 

We believe that the most practical way to avoid double-counting of emissions and overlap of targets is for all companies to address their Scope 1 and Scope 2 emissions.

Climate policy to address end-use demand and emissions

We have been clear since our first Climate Change Position in 2003 that end-use emissions must be addressed to meet global climate commitments. Climate policies along with advances in technology and consumer choice will ultimately drive demand and end-use emissions. Our support for effective carbon pricing policy began when we became the first U.S. oil and gas company to join the United States Climate Action Partnership in 2007 and continued in 2018 when we joined the Climate Leadership Council as a founding member. It is also reflected in the fact that our primary industry associations have adopted positions on carbon pricing and other climate policies that align with our public positions.

We support effective and efficient regulations and legislation to advance economic incentives and reduce GHG emissions. To that end, we continue to evaluate additional policy options, aligned with our principles, that address end-use emissions.

Reporting

We calculate Scope 3 emissions using the Greenhouse Gas Protocol and the Ipieca 2016 Estimating Petroleum Industry Value Chain (Scope 3) Greenhouse Gas Emissions methodologies based on net equity production numbers. We report the four largest categories of Scope 3 emissions that apply to our operations. Scope 3 emissions include CO₂, methane (as CO₂e) and nitrous oxide (as CO₂e) for the four material categories of Scope 3 emissions that apply to our operations.

For oil and natural gas exploration and production companies, Scope 3 emissions fall primarily into the “use of sold products” category. Though we do not control how our total production is ultimately processed into consumer products, we make the conservative assumption that the majority of production is ultimately burned as fuel by end users. We use the API Compendium GHG emissions factors for crude oil and natural gas burned as fuel. This method accounts for all possible GHG emissions that could be associated with end use of our production. Our assumptions and method are especially conservative when the “double counting” issues inherent in Scope 3 estimations for an exploration and production company are taken into account.

We conservatively calculate the other three categories of Scope 3 emissions by taking our entire equity volume of crude and natural gas and applying the relevant transportation, distribution and processing emissions factors from academic life cycle analyses, including the 2022 S&P Global "The Right Measure: A Guidebook to Crude Oil Life-cycle GHG Emissions Estimation," and the 2024 National Petroleum Council "Charting the Course: Reducing Greenhouse Gas Emissions from the U.S. Natural Gas Supply Chain." In 2025, Scope 3 emissions increased in line with overall net production.”¹