An important component of our Climate Risk Strategy is the  Plan for the Net-Zero 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: reliably and responsibly meeting energy transition pathway demand, delivering competitive returns on and of capital and achieving our net-zero operational emissions ambition.

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 GHG intensity, as well as 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 achieving our net-zero Scope 1 and 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 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 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 for alignment on upstream Scope 3 GHG emissions reductions.
• Contribute to an orderly energy transition:
  • Build attractive LNG portfolio.
  • Evaluate potential investments in emerging energy transition and low-carbon technologies.  

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 and the shape and pace of technology and policy yet to be determined, Scope 3 targets would shift production to other global operators, potentially eroding energy security and affordability. 

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 alignment 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 2022 and include our 2023 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. 

2022-2023 Progress Report
Strategic Flexibility
Resilient Portfolio and Scenario Analysis	Continued focus on low cost of supply and low GHG intensity resources that meet transition pathway energy demand. Developed 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. Assets with less than 10 kg CO2e/BOE are projected to represent a larger portion of our portfolio by 2030.
Reducing Scope 1 and 2 Emissions
Methane	Achieved near-term 10% methane intensity reduction target four years early. Reduced methane intensity by ~70% since 2015. Set new target to achieve near-zero methane intensity by 2030 (1.5 kg CO2e/BOE or approximately 0.15% of natural gas produced). Joined OGMP 2.0 and Veritas initiatives to improve methane measurement and reporting transparency.
Flaring	On schedule to meet the World Bank Zero Routine Flaring goal by 2025. In 2022, routine flaring decreased nearly 90% from 2021.
Overall GHG	Strengthened GHG intensity reduction target to 50-60% by 2030 from a 2016 baseline for both gross operated and net equity emissions. Achieved 41% gross operated and 36% net equity GHG intensity reductions by year-end 2022 from 2016. Spent approximately $150 million on Scope 1 and 2 emissions reductions and low-carbon opportunities in 2022. 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. Tasked each global business unit with developing potential options to achieve our operational net-zero ambition. Expanded third-party limited assurance to all sustainability disclosures in this Sustainability Report. Began chairing a National Petroleum Council study on GHG emissions reduction across the U.S. natural gas value chain.
Offsets	Began evaluating diversified investments in offset projects and funds, such as Climate Asset Management’s Nature Based Carbon fund which has supported the Restore Africa Programme and offset projects in Mexico aimed at improved forest management for future offset issuance.
Addressing End Use (Scope 3) Emissions and Contributing to the Energy Transition
Advocacy and public policy	Expanded policy advocacy beyond carbon pricing to include end-use emissions policy and regulatory action such as direct federal regulation of methane, supporting alternative transportation and power generation, and national policy recommendations on natural gas across the value chain. Continued support of the Climate Leadership Council (CLC) and Americans for Carbon Dividends (AFCD) to advance carbon pricing in the U.S. as the most effective and predictable policy action to reduce GHG emissions across the economy. Worked closely with members of the Business Roundtable (BRT) and the American Petroleum Institute (API) to engage with the Voluntary Carbon Markets Initiative. Working with World Bank’s Carbon Pricing Leadership Coalition (CPLC) as a private sector partner to share and expand the evidence base for effective carbon pricing.
Supply chain engagement	Incorporated Scope 3 supplier emissions into targeted supplier evaluations. Held annual ConocoPhillips Supplier Sustainability Forum to share key sustainability messages and best practices. Began building a governance framework for supplier sustainability. Collaborating with industry groups and third-party partners to align on collection, reporting and supplier engagement for supplier emissions.
LNG	Purchased an additional 10% shareholding interest in Australia Pacific LNG (APLNG) in 2022 and in 2023 announced plans to acquire up to an additional 2.49% shareholding interest. In the first quarter of 2023, purchased an equity interest in new large-scale LNG facility with Sempra Infrastructure and secured 5 MTPA of offtake. Signed agreements to supply long-term LNG to Germany in partnership with QatarEnergy.
CCS	Continued evaluation of potential opportunities to develop carbon capture and storage (CCS) hubs along the U.S. Gulf Coast. Joined Canada’s Oil Sands Pathways Alliance working toward net-zero by 2050 through CCS. Established strategic technology partnership with a chemistry innovator to advance CCS process capability for deployment in company projects.
Hydrogen	Evaluating the development of blue and green ammonia as a low-carbon power generation fuel from the U.S. Gulf Coast with Japanese energy company JERA. Invested in venture with Canadian energy technology company Ekona Power to develop hydrogen production technology through methane pyrolysis.

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 and operations teams — for successful strategy alignment and implementation.  

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 2 emissions, addressing end-use emissions (Scope 3) in our supply 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 on our performance.