Oil and Gas

For the sake of the planet – and business performance – it is imperative that the high-emitting oil and gas sector starts decarbonizing. We're developing a new methodology for companies in this sector to set science-based targets. See our updated policy regarding this sector.

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 (O&G) 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.

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 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 transformation O&G companies must make to align with 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 will 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. While we continue to develop our methodology, the SBTi is unable to accept commitments or validate targets for companies in the O&G or fossil fuels sectors. Find out more about our fossil fuel policy.

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

January 2023: The SBTi and Mott MacDonald publish the outcomes from the EAG review of the draft O&G methodology.
September 2022: The SBTi and Mott MacDonald publish the Oil and Gas Interim Report providing an update on the status of the project and the next steps.
May 2022: The SBTi partners with Mott MacDonald to support the review and finalization of science-based methods and guidance for the O&G sector, through the facilitation of an Expert Advisory Group (EAG) review.
March 2022: The SBTi institutes its policy to pause target commitments and validations for fossil fuel companies while development work continues.
April 2021: The project Steering Committee pauses the O&G project due to several challenges, including resource limitations associated with COVID-19 and the prioritization of other SBTi workstreams, such as the SBTi Net-Zero Standard.
October 2020: The SBTi publishes draft resources outlining science-based target setting methods and guidance for O&G companies. 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?

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 over time.

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 sharedin 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

Initial Development Phase

Member organizations of the initial Technical Working Group:

Resources from our public consultation (now closed):

Contact

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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.

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