Oil and Gas
Guidance for the oil and gas sector
Why take action?
The combustion of fossil fuels represents the single largest source of carbon dioxide emissions. In addition, the oil and gas industry is one of the largest contributors of methane emissions. To meet the goals of the Paris Agreement and avoid catastrophic and irreversible climate change, the sector must radically transform.
Oil and gas 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.
A new methodology
We are developing a new methodology for oil and gas companies to set science-based targets. Currently, the SBTi is unable to accept commitments or validate targets for companies in the oil and gas or fossil fuels sectors. Find out more about our fossil fuel policy.
Enabling science-based emissions reductions for fossil fuel companies is complex and the SBTi is taking a cautious and deliberate approach. As always, our aim is to develop robust methodologies that will support decarbonization at the pace and scale required by science. To this end, the SBTi has engaged a consultant to facilitate a panel of independent external experts to complete an independent review of the draft oil and gas methods and guidance.
Due to the developing status of our method, in addition to the existing SBTi policy to pause the validation of fossil fuel sector targets, we are also pausing commitments from these companies. During this period, commitments will not be accepted from companies or subsidiaries in categories 1.1 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. The SBTi will share further updates on the development of this guidance and this policy later in 2022.
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 a 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 methodology. Until this method is final, the following will be put in place:
- Companies that fit category 1 with commitments will be removed from the SBTi target dashboard
- The SBTi will no longer accept commitments and/or validate targets for companies that fit category 1
This policy will be reviewed and updated regularly to ensure it is aligned with the latest SBTi position. Further updates will be shared later in 2022. In the meantime, additional information is available in our FAQs. For any questions, contact the team at [email protected]
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
The following companies have been removed from the SBTi website according to our updated policy. This list will be updated regularly and does not necessarily represent all companies affected by the policy.
- CGP PRIMAGAZ
- FLUXYS BELGIUM
- OKQ8 AB
- James Fisher and Sons plc
- PJSC Tatneft
- Nabors Industries Ltd.
- Enagás S.A.
- Halliburton Company
- Schlumberger Limited
- Grupo Energía Bogotá S.A. ESP
- Naturgy Energy Group SA.
- Snam S.p.A.
The combustion of fossil fuels accounted for 85% of anthropogenic CO2 emissions and 64% of all greenhouse gas emissions in 2021. Oil and gas companies are uniquely positioned to significantly impact efforts to limit average global warming to 1.5°C. We must phase out fossil fuels, but need to do so by including them in the movement for private companies to set science-based targets. That’s why the SBTi established the Oil and Gas (O&G) 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 alignment of O&G company emissions reduction targets with the level of transformation required to meet the goals of the Paris Agreement. The project, first and foremost, will address embedded emissions in fuel supplied, but will also seek to address scope 1 emissions (energy and methane process emissions). At a later stage the project should consider scope 2 emissions and links to the refinery and petrochemical industry, consistent with the SBTi’s chemical sector development.
The SBTi is taking a transparent, phased approach to the development of this guidance.
In the initial phase, the SBTi developed draft resources outlining science-based target setting methods and guidance for O&G companies. To ensure strategic cross-sector involvement in the development process, the SBTi convened a technical working group composed of approximately 20 members. These included representatives of civil society organizations, oil, gas and integrated energy companies, investors, policymakers, academics and other experts. The organizations are listed below.
The draft methods and guidance were published on the SBTi’s website and comments were received during a public consultation that took place from August through October 2020. The SBTi received 54 responses from organizations across the globe. A summary and initial assessment of the comments received is here, and a more extensive report on the comments received can be found here. The SBTi also released the Oil and Gas Interim Report to provide an update on the status of the project and next steps.
During the current phase of the development process, the SBTi is working with Mott MacDonald, a global engineering, management, and development firm, to lead an independent expert panel review of the methods and guidance. This review will take into account the experts’ technical knowledge of the sector, as well as the comments received to date via the public consultation and an internal review conducted by the SBTi. On completion, the SBTi will evaluate the next steps required to revise and finalize the methods and guidance. This may include an additional public consultation period. The expert review is expected to be complete in late 2022.
- Agence de la transition écologique (ADEME)
- Aviva Investors
- California Resources Corporation (CRC)
- Carbon Tracker
- Climate Accountability Institute,
- HSBCAviva Investors
- I Care
- Imperial College London
- North Sea Transition Authority
- UN Global Compact
- University of Queensland Business School
- World Benchmarking Alliance
- World Resource Institute (WRI)
- World Wildlife Fund (WWF)
- Guidance on Setting Science-Based Targets for Oil, Gas and Integrated Energy Companies
- Annex A: Non-Energy uses of Petroleum and Gas Products
- Annex B: Rationale for the Approach in Dealing with Overlap Between Oil&Gas and Petrochemical Industry
- Annex D: Fuel Specific Calculations for the Well-to-Wheel Indicator
- Annex F: The Least-Cost Methodology, Carbon Tracker
- Annex H: CH4 Emissions Analysis and Scenarios
Video explanations and guides to the public consultation
- Introduction to the project
- Overview of the methods: Well-to-Wheel Methodology
- Overview of the methods: Least-Cost Methodology
Overview of the methods: Sectoral Decarbonization Approach
- Key Consultation Q1: Scenarios
- Key Consultation Q2: Intensity vs. Absolute Targets
- Key Consultation Q3: Where in the value chain to set targets?
- Key Consultation Q4: Disaggregation of targets by scope
- Key Consultation Q5: Flexibility vs Comparability
- Key Consultation Q6: What counts for reaching a target and net-zero
Relevant papers – released as available
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.