California Resources Corporation

CRC targets a 30% reduction in absolute scope 1 and 2 emissions by 2030 compared to 2013. The target applies to both the upstream and midstream value chain, including its power generation activities at Elk Hills Power Plant. The proportion of the target attributed to emissions reduction in the company’s oil and gas activities compared to its power generation activities is unclear.
To demonstrate its commitment to the low-carbon transition, CRC should set a long-term target aligned with its 1.5°C pathway that includes scope 3 emissions, as well as set intermediate targets. The targets should define the emissions reduction CRC plans to undertake in its oil and gas business activities.

CRC does not have a viable long-term strategy to transition away from oil and gas activities. The main driver of CRC’s transition plan is the construction of CalCapture, a carbon capture and storage (CCS) project that will capture carbon dioxide from the 550 megawatt (MW) gas-powered Elk Hills Power Plant. The company anticipates that this project will help achieve its main target to reduce absolute scope 1 and 2 emissions by 30% compared to their 2013 levels. However, CalCapture will also be used to increase the production of oil and gas through enhanced oil recovery (EOR). This will extend the time frame over which CRC continues to produce oil and gas.

CRC has only undertaken scenario analysis for physical climate-related risks, which is relevant as it operates in a region vulnerable to the physical effects of climate change. However, CRC’s lack of transitional scenario analysis leaves its planning at risk from multiple changing conditions in a low-carbon future, such as market and policy changes. This is particularly pertinent as the company operates solely in California, a state that has historically implemented progressive climate legislation. CRC can strengthen its understanding and planning for the low-carbon transition by undertaking scenario analysis aligned with a 1.5°C pathway.

CRC screens all suppliers by requiring them to report annually on their environmental, safety and quality performance. If suppliers are active on the company’s sites, it reviews supplier emissions data and engages them on compliance with the California AB 32 Cap-and Trade-Program. The company can improve its performance by engaging with all suppliers to reduce emissions regardless of whether they are active on the company’s sites and, using the data it already collects, prioritise supplier selection based on low-carbon products.

CRC aims to achieve a 30% reduction in absolute scope 1 and 2 emissions from its entire business, including power generation, by 2030, compared to 2013 levels. CRC also committed to reducing methane emissions by 50% by 2030, which it achieved in 2018. The company has not set any new methane reduction targets.

CRC plans to increase renewable energy use in its operations and to implement a CCS project, CalCapture, at its Elk Hills Power Plant. Although the project is being designed to capture carbon during power generation, it will also be used for enhanced oil recovery (EOR).

In 2019, CRC invested USD 6.2 million in research and development (R&D) for its CCS project, CalCapture. To reduce scope 1 and 2 emissions, it also entered into power purchase agreements (PPAs) for 40 MW of solar energy projects to supply energy to multiple oil and gas fields.

Decreasing oil and gas production volumes have led to a reduction in CRC’s absolute emissions. However, with no significant changes in the company’s fuel mix or sold product offerings between 2014 and 2019, there is no evidence that CRC’s emissions intensity has reduced in line with its 1.5°C pathway.

Although CRC plans to capture carbon emissions from power generation activities, its plan to increase oil and gas production through enhanced oil recovery (EOR) is not a viable option for the company to align with its 1.5° pathway. The plan suggests that CRC has a limited commitment to a long-term transition away from oil and gas activities.