Plan for the Energy Transition

Transition Plan

Overview

An important component of our Climate Risk Strategy is the Plan for the Energy Transition, first published in our Proxy Statement in 2022. The plan shows how we intend to play a valued role in the energy transition by executing on our Triple Mandate. 

First, meeting transition pathway energy demand requires a focus on delivering production that will best compete in any transition scenario. This production will be delivered from resources with a competitive cost of supply and low greenhouse gas (GHG) intensity, as well as portfolio diversity by market and asset type. Next, in delivering competitive returns, ConocoPhillips has been a leader in shifting the exploration and production sector’s value proposition away from one focused on production toward one focused on returns. Finally, to drive accountability for the emissions that are within our control, we are progressing toward our net-zero Scope 1 and Scope 2 emissions ambition. 

In service of these three objectives, our plan describes how the company will:  

  • Maintain strategic flexibility: 
    • Build a resilient asset portfolio with a focus on low cost of supply and low GHG intensity to meet transition pathway energy demand. 
    • Commit to capital discipline through use of a fully burdened cost of supply, including cost of carbon, as the primary basis for capital allocation. 
    • Track the energy transition through a comprehensive scenario planning process to calibrate and understand alternative energy transition pathways and test the resilience of our corporate strategy to climate risk.  
  • Reduce Scope 1 and Scope 2 emissions: 
    • Set targets for emissions over which we have ownership and control, with an ambition to become a net-zero company for Scope 1 and Scope 2 emissions by 2050. 
  • Address Scope 3 emissions: 
    • Advocate for a well-designed, economy-wide price on carbon and engage in development of other policy and legislation to address end-use emissions. 
    • Work with our suppliers and commercial partners to reduce emissions along the value chain. 
  • Contribute to an orderly energy transition: 
    • Build an attractive LNG portfolio as an important component of responsibly meeting energy transition demand due to its lower GHG emissions than coal used for electricity generation. 
    • Evaluate potential investments in emerging energy transition and low-carbon technologies.  
The energy transition challenge

Meeting the central aim of the Paris Agreement to strengthen the response to climate change is a worldwide imperative for which governments and companies alike have adopted net-zero ambitions. The resulting energy transition will be complex, with many possible pathways and uncertainties — more likely an evolution than a near-term step-change. We acknowledge the urgency and importance of limiting global average temperature increases. ConocoPhillips is applying its strategic capabilities and resources to meet this challenge in an economically viable, accountable and actionable way that balances the interests of our stakeholders. Our goal is to support an orderly transition that matches supply to demand and focuses on returns on and of capital while safely and responsibly delivering affordable energy.  

Our plan does not include a Scope 3 (end-use) emissions target. We recognize that end-use emissions must be reduced to meet global climate objectives. However, it is our view that supply-side constraints through Scope 3 targets for North American and European upstream oil and gas producers would be counterproductive to climate goals. In the absence of policy measures that address global demand, Scope 3 targets would shift production to other global operators, potentially eroding energy security and affordability and increasing emissions. 

The plan was endorsed by the board’s PPSC and was designed to help investors and other stakeholders gain an understanding of the valued role ConocoPhillips intends to play in an orderly energy transition. Since first publishing the plan, we have continued to focus on implementing our Climate Risk Strategy and advancing the plan’s objectives. Our commitment to these efforts is demonstrated by our achievements made to date — many of which have been completed ahead of schedule. As we achieve our goals, we fine-tune our strategy and refine our commitments in ongoing compatibility with the aims of the Paris Agreement. 

Through our ongoing consideration of transition scenarios, the strategic planning process and stakeholder engagement, we expect the plan to continue evolving as the energy transition progresses over time. The following table shows our progress on key milestones since the plan’s first publication. Updates represent progress through the end of 2023 and include some of our 2024 plans to continue advancing our strategy to remain resilient under any scenario. Reflecting the recommended TCFD report structure, the following components of the plan are linked and detailed elsewhere in this report.

2023-2024 progress Report
Strategic Flexibility
Resilient Portfolio and Scenario Analysis
  • Continued focus on low cost of supply and low GHG intensity resources that meet energy transition pathway demand. 
  • Published a new net-zero scenario modelling the collective global government and societal actions that would be required to align with limiting warming to 1.5 degrees. 
Reducing Scope 1 and Scope 2 Emissions
Methane
  • Reduced methane intensity by ~50% since 2015. 
  • Progressed methane emissions reductions activities in support of our near-zero methane emissions intensity by 2030 (1.5 kg CO2e/BOE) and introduced data quality improvements. 
  • Participated in OGMP 2.0 to improve methane measurement and reporting transparency and achieved the Gold Standard Pathway for emissions reporting. 
  • Invested in LongPath Technologies, a scalable laser-based continuous emissions monitoring solution with the potential to cover targeted assets or provide basin-wide multi-operator coverage.  
Flaring
  • On schedule to meet the World Bank Zero Routine Flaring goal by the end of 2025.1 
  • Developing total flaring intensity target for 2030. 
Overall GHG 
  • Accelerated our Scope 1 and Scope 2 GHG emissions intensity reduction target through 2030 from 40-50% to 50-60%, using a 2016 baseline for both gross operated and net equity emissions. 
  • Completed our approved Scope 1 and Scope 2 emissions reductions projects and advanced low carbon opportunities within the allotted capital and cost budget.  
  • Participated in a Ceres-led roundtable to discuss solutions for reaching net-zero emissions with cross-sector participation from the financial sector and exploration and production (E&P) oil and gas companies. 
  • Expanded third-party limited assurance to all sustainability disclosures in our Sustainability Report. 
  • Continued to strengthen sustainability reporting processes, controls and assurance to prepare for pending disclosure requirements. 
  • Chaired a National Petroleum Council study on GHG emissions reduction across the U.S. natural gas value chain.  
Offsets
  • Developed guidelines for company participation in the voluntary carbon market including due diligence requirements. 
  • Increased our investment in the Climate Asset Management Carbon Fund. 
  • Continued to evaluate a wide range of future offset projects and funds to diversify our portfolio. 
Addressing End Use (Scope 3) Emissions and Contributing to the Energy Transition
Advocacy and public policy
  • Expanded policy advocacy beyond carbon pricing to include energy efficiency, end-use emissions policy and regulatory action.  
  • Joined the Alliance to Save Energy to support the development of energy efficiency policies. 
  • Continued engagement with agencies in developing durable federal regulation of methane and leading the National Petroleum Council study which is developing policy recommendations for reducing GHG emissions across the natural gas value chain. 
  • Carbon pricing is the most effective and predictable policy action to reduce GHG emissions across the economy, so ConocoPhillips continues working with the World Bank’s Carbon Pricing Leadership Coalition as a private sector partner to share and expand the evidence base for effective carbon pricing in addition to our continued support of the Climate Leadership Council and Americans for Carbon Dividends in the U.S. 
Supply chain engagement
  • Hosted annual Supplier Sustainability Forum with a focus group of suppliers to identify opportunities to reduce emissions in our value chain. 
  • Collaborated with industry groups and third-party partners to align on collection, reporting and supplier engagement for supplier emissions. 
LNG
  • Secured regasification capacity at the Gate LNG terminal in the Netherlands, in addition to our regasification capacity at German LNG. 
  • Secured 5 MTPA of LNG offtake along with 30% equity in Sempra’s Port Arthur LNG Phase 1 project on the U.S. Gulf Coast which began construction in March 2024. 
  • Signed offtake agreements at Mexico Pacific’s Saguaro Energía LNG, pending final investment decision, and Energia Costa Azul export facility on the west coast of Mexico. 
Low carbon technologies
  • Continued evaluation of potential opportunities to develop CCS hubs along the U.S. Gulf Coast. 
  • Participating in Canada’s Oil Sands Pathways Alliance working toward emissions reductions through CCS. 
  • Completed an equity investment in Avnos, a hybrid direct air capture innovator, and began evaluating the technology for project development. 
  • Evaluating the development of green and blue ammonia from the U.S. Gulf Coast with Japanese energy company JERA.
  • Investing in Radia Gigawind as a potential advantaged power solution with lower cost of supply and high-capacity factor. 

Managing our energy transition plan 

As we navigate an uncharted energy transition in coming years and decades, the plan will evolve in the same way it has developed: through experienced professionals, well- practiced processes, meaningful action, ongoing engagement and learnings from best practices. Our subject matter experts will closely monitor transition drivers including technology, policy and market sentiment. We will continue to actively collaborate with peers, industry experts and financial sector stakeholders to better understand these drivers and learn from best practices. We are also actively engaged throughout the entire organization — including our board of directors, executive leadership team (ELT) and operations teams — for successful strategy alignment and implementation.  

Activities tiles

Our Triple Mandate will drive continued focus and accountability for both returns and resilience, allowing us to play a valued, meaningful role in a managed and orderly energy transition. The updates in this report reflect our commitment to reducing Scope 1 and Scope 2 emissions, addressing emissions in our value chain and through policy advocacy, and developing business opportunities in LNG, CCS and hydrogen. We are well positioned to continue to execute this plan and participate in energy transition opportunities, while also fulfilling our commitment to create long-term value for our stakeholders.  

We intend to report on continued implementation of our plan and provide periodic updates.  

We acknowledge the findings of the Intergovernmental Panel on Climate Change that GHG emissions from the use of fossil fuels contribute to increases in global temperatures. We also recognize the importance that current science places on limiting global average temperature increases to below 2-degrees Celsius compared to preindustrial times, and to achieve that, current science shows that global GHG emissions need to reach net-zero in the second half of this century. We support the Paris Agreement as a welcomed global policy response to that challenge. We have had a public global climate change position since 2003. The position is reviewed periodically, agreed to by the ELT and then recommended to the board. Read more about our Climate Change Position.

1. Per the World Bank’s Zero Routine Flaring by 2030 initiative, “Oil companies that endorse the initiative will develop new oil fields they operate according to plans that incorporate sustainable utilization or conservation of the field’s associated gas without routine flaring. Oil companies with routine flaring at existing oil fields they operate will seek to implement economically viable solutions to eliminate this legacy flaring as soon as possible, and no later than 2030.”

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