Oil and Gas

Urgent action is required to decarbonize the oil and gas sector and avert further climate catastrophe. The SBTi is developing a standard for companies within this sector to set emission reduction targets aligned with the latest climate science. Read our fossil fuel policy and our Oil and Gas Standard Development Terms of Reference.

Guidance for the oil and gas sector

Why take action?

Fossil fuel combustion and industrial processes represent the largest source of CO2 (85%) and overall greenhouse gas emissions (64%) worldwide. The oil and gas (O&G) industry is also one of the largest sources of methane emissions and represents one of the best near-term opportunities for climate action. To meet the goals of the Paris Agreement and avoid catastrophic and irreversible climate breakdown, the sector must radically transform. That’s why all SBTi guidance is focused on reducing demand and financing for fossil fuels.

Developing a target-setting standard for oil and gas companies

O&G companies are highly exposed to net-zero transformation risks - as well as opportunities. With its considerable scientific, technical, economic and financial assets, the sector wields enormous power to drive ambitious climate action and build the net-zero economy that we urgently need. That’s why the SBTi established the Oil and Gas Standard development project.

The purpose of this project is to develop science-based target-setting methodologies that allow stakeholders, including companies, investors, governments and civil society, to understand the transformation O&G companies must make to align with the goal of limiting global temperature increase to 1.5°C above pre-industrial levels, as outlined in the Paris Agreement.

To further advance this project, the SBTi released the Oil and Gas Standard Development Terms of Reference outlining the timeline and development process. Building upon the knowledge developed thus far, the project team will evaluate options for the key elements of the standard, including:

Required criteria and recommendations
Sector scope and disaggregation
Emissions scenarios and pathways
Target-setting metrics and methods

Aligning fossil fuels with 1.5°C

The production of fossil fuels is unlike any other heavy emitting sector. SBTi guidance and criteria for most other sectors, like cement, steel and transportation, focus on abating emissions associated primarily with the combustion of fossil fuels. They also drive the reduction of emissions from other sources (e.g. process emissions) and electricity. Addressing the emissions from the production and supply of fossil fuels calls for a different approach. The SBTi’s framework tackles the challenge from three angles: supply, demand and finance.

Supply: Fossil fuel companies must set science-based targets to reduce emissions associated with the production and supply of fossil fuels, by driving efficiency improvements and transforming business models. The SBTi is therefore developing a standard for O&G companies to set science-based targets.
Demand: End-users, including companies in heavy industry, power generation and transportation, must transform their operations to cut fossil fuel use. The SBTi drives these emission reductions through cross-sectoral criteria and sector-specific resources.
Finance: Financial institutions (FIs) have incredible potential to influence the real economy to cut fossil fuel demand and drive clean energy investment. The SBTi has therefore included a target-setting method with specific fossil fuel requirements in its financial sector criteria. This is the first time that the SBTi has required FIs to disclose, halt, transition and phase out their fossil fuel sector activities.

The SBTi’s work in developing other cross-sector and sector-specific resources already aims to address the demand and finance of fossil fuels. Now, the development of the Oil and Gas Standard is targeting the supply side.

Project participants

This project is being developed by the SBTi with support of Guidehouse. Stakeholder involvement is possible via the following groups:

Expert Advisory Group (EAG): Composed of technical experts from stakeholder organizations and companies interested in setting science-based targets and contributing to the project execution. EAG members have a volunteer advisory role over the duration of the project.

At the beginning of 2024, the SBTi called for experts to join the EAG for the Oil and Gas Standard development project. Since then, the project has been making steady progress with input from its EAG. Composed by experts from diverse backgrounds, this advisory group has been meeting regularly since it was convened. Over the course of these meetings, discussions have been focused on key aspects of scenario selection, value chain coverage and target-setting methods aligned with SBTi criteria. These deliberations underscore the project's commitment to fostering a scientifically grounded approach to accelerate the decarbonization of the O&G industry.

The Oil and Gas Standard Expert Advisory Group

The Oil and Gas Standard EAG consists of the following individuals:

Clare Anderson - Worley
Ayça Arinan - Consultancy
Nils Bartsch - urgewald e.V.
Luciano Caratori - Climate Champions Team
Mike Coffin - Carbon Tracker Initiative
Gary Cook - Independent consultant
Louis-Maxence Delaporte - Reclaim Finance
Bruce Duguid - Federated Hermes Limited
Frances Fray - Greenergy International Ltd
Dan Gardiner - IIGCC
Urias Goll - EcoHealth Alliance
Shamini Harrington - Sasol
Diego Hopkins - PETRONAS
Michelle Horsfield - Sumitomo Mitsui Banking Corporation
Linda Htein - Wood Mackenzie
Stuart Jenkins - University of Oxford
Ricardo Junqueira Fujii - WWF Brazil
Małgorzata Kasprzak - United Nations Environment Programme - International Methane Emissions Observatory
Helena Kowarick Spiritus - WWF
Margriet Kuijper - Independent consultant
Michael Lazarus - Stockholm Environment Institute US
Shengnan Li - Enbridge Inc.
Mike Hemsley - Systemiq / Energy Transitions Commission
Rita Maina - Independent consultant
Greg Muttitt - International Institute for Sustainable Development (IISD)
David Neilson - ERM
Dongjae Oh - Solutions For Our Climate (SFOC)
Lorena Perez Bajo - Ipieca
Saphira Rekker - University of Queensland
Ella Villen - Neste
Kelly Trout - Oil Change International
Sjoukje Van Oosterhout - Millieudefensie / Friends of the Earth Netherlands
Molly Walton - We Mean Business Coalition
Yann Robiou du Pont - Utrecht University
Alice Evatt - University of Oxford and Kellogg College
Matthew Ives - GTI Energy

Note that the composition of the EAG may change over time. EAG members volunteered in a personal capacity to provide technical advice over the duration of the project. While their expertise helped guide the development process, final content decisions rested solely with the SBTi. As a result, the final output does not necessarily represent or imply endorsement by individual EAG members or their employers.

Public stakeholders: Will be able to provide feedback on each project component through a public consultation process. These opportunities will be promoted on the SBTi website, newsletter and social media platforms.

SBTi’s process for developing standards set out in its Standard Operating Procedure (SOP), includes public consultation, review and approval by the independent Technical Council and formal adoption by the Board of Trustees.

Project background

The SBTi began developing target-setting methodology and guidance for O&G companies in 2019. Acknowledging the diversity of views on the initial resources and the prioritization of the Corporate Net-Zero Standard, the O&G project was put on hold in 2021.

The project recommenced in 2022. The SBTi published an external expert review in January 2023, outlining specific technical and methodological issues related to the development of an Oil and Gas Standard. The conclusions enabled the SBTi to define the further activities and research needed. New expert talent and specialist knowledge was also recruited into the team.

Initial Development Phase

Member organizations of the initial Technical Working Group

Agence de la transition écologique (ADEME)
Aviva Investors
bp
California Resources Corporation (CRC)
Carbon Tracker
Climate Accountability Institute,
Eni
Galp
HSBCAviva Investors
I Care
Imperial College London
Repsol
Shell
Total
North Sea Transition Authority
UN Global Compact
University of Queensland Business School
World Benchmarking Alliance
World Resource Institute (WRI)
World Wide Fund for Nature (WWF)

Members of the 2022 EAG

Ramiro Fernandez - Race to Zero
Laetitia Pirson - Ceres
Heidi Westlake - Origin Energy
Bobbie Thoman - NOCO Energy Corporation
Deborah Gordon and colleagues - RMI
Mike Coffin - Carbon Tracker Initiative
John Scott - Zurich Insurance Group
Michelle Horsfield - Sumitomo Mitsui Banking Corporation
Krista Halttunen - Imperial College London

Project timelines

To date, the SBTi has taken the following actions in the methodology development process:

March 2024: The SBTi appointed Guidehouse as external consultant to support the development of the Oil and Gas Standard.
February 2024: The SBTi convened the Oil and Gas Standard EAG.
January 2024: The SBTi released four Requests for Proposals (RfPs) for consultancies to help develop key project deliverables.
November 2023: The SBTi called for new EAG applicants to support the development of new resources. The SBTi also released a new project Terms of Reference.
January 2023: The SBTi and Mott MacDonald published the outcomes from the EAG review of the draft O&G methodology.
September 2022: The SBTi and Mott MacDonald published the Oil and Gas Project Interim Report providing an update on the status of the project and the next steps.
May 2022: The SBTi partnered with Mott MacDonald to support the review of science-based methods and guidance for the O&G sector, through the facilitation of an external review by a new EAG.
March 2022: The SBTi paused science-based target commitments and validations for fossil fuel companies.
April 2021: The project Steering Committee paused the O&G project due to several challenges, including the prioritization of other SBTi workstreams, such as the SBTi Corporate Net-Zero Standard.
October 2020: The SBTi published draft resources outlining science-based target- setting methods and guidance for O&G companies and held a public consultation. This work was the outcome of a collaborative process involving a technical working group composed of approximately 20 members, representing civil society organizations, oil, gas and integrated energy companies, investors, policymakers, academics and other experts. Resources and a list of participants in this process can be found here.

What is the SBTi’s policy on fossil fuel companies?

Due to the developing status of its fossil fuel sector work, the SBTi has paused all commitments and validations of targets from the fossil fuel sector. During this period, commitments will not be accepted from companies or subsidiaries in category 1 below. This policy is effective immediately and removal of previous commitments by oil and gas sector companies has been completed.

The SBTi reserves the right to remove other committed companies that, after careful evaluation, are considered to fall within category 1 below. Companies subject to this policy with targets that were approved prior to the policy's implementation will remain valid for five years from the approval date.

1. Companies that cannot commit to the SBTi until the oil and gas method is finalized.

1.1 Companies with any level of direct involvement in exploration, extraction, mining and/or production of oil, natural gas, coal or other fossil fuels, irrespective of percentage revenue generated by these activities, i.e. including, but not limited to, integrated oil and gas companies, integrated gas companies, exploration and production pure players, refining and marketing pure players, oil products distributors, gas distributors and retailers and traditional oil and gas service companies (except as noted in category 2 below).

2. Companies that can join the SBTi

2.1 Companies that derive less than 50% of revenue from a) sale, transmission and distribution of fossil fuels, or b) providing equipment or services to fossil fuel companies (see 1.1).
2.2 Companies with less than 5% revenue from fossil fuel assets (e.g. coal mine, lignite mine, etc.) for extraction activities with commercial purposes.
2.3 Electric utilities that mine coal for their own power generation.
2.4 Subsidiaries of fossil fuel companies (see 1.1) may join the SBTi if the subsidiary itself is not considered a fossil fuel company.

SBTi evaluates the eligibility of subsidiaries of fossil fuel companies on a case-by-case basis. The subsidiary’s operational model and relevance of its emissions to its parent company will be assessed. Subsidiaries that are established for the sole purpose of setting science-based targets on a portion of a fossil fuel companies’ GHG inventory are not permitted to join SBTi.

For transparency, subsidiaries who set targets but whose parent companies are ineligible will be identified via a footnote in their target wording.

In summary, the SBTi is continuing work on the Oil and Gas Standard. Until this method is final, the following will be put in place:

Companies that fit category 1 with commitments were removed from the SBTi Target Dashboard.
The SBTi will no longer accept commitments and/or validate targets for companies that fit category 1.

Further updates will be shared in due course. In the meantime, additional information is available in our FAQs. For any questions, contact the team at OGSector@sciencebasedtargets.org.

Policy change log

07/26/2022 - policy updated to clarify approach regarding subsidiaries of fossil fuel companies
04/19/2022 - policy updated to improve clarity
03/07/2022 - policy update published

Company commitments removed from the SBTi website under the policy update

The publication of this policy resulted in the removal of the following companies from the SBTi Target Dashboard:

CGP PRIMAGAZ
FLUXYS BELGIUM
OKQ8 AB
James Fisher and Sons plc
PJSC Tatneft
Nabors Industries Ltd.
Enagás S.A.
Halliburton Company
Schlumberger Limited
Cadent
Grupo Energía Bogotá S.A. ESP
Naturgy Energy Group SA.
Snam S.p.A.
Centrica
Worley Ltd
McDermott International
Adani Green Energy Ltd.

Resources from our public consultation in 2020 (now closed)

Consultation feedback summary

Draft guidance

Consultation resources

Key Questions & Logistics for consultation

Video explanations and guides to the public consultation

Overview of the methods: Sectoral Decarbonization Approach

Relevant papers – released as available

Contact

For enquiries about the oil and gas sector project, email the team at OGSector@sciencebasedtargets.org

Join the SBTi mailing list for updates on this and other SBTi work, including sector projects.

Browse more sectors

If your sector is not listed here, you can still set a science-based target using our methods and resources. Consult the step-by-step guide to get started.

Sector Status