Chevron Corporation

Chevron has an emissions reduction plan which has been informed by scenario testing using the International Energy Agency’s (IEA’s) 450 Scenario. The plan provides general commentary on improvement areas such as flare reduction, CO2 injection, energy efficiency and technology research and development (R&D), and biofuels development.

The company needs to appoint climate experts to its board, remove remuneration incentives for fossil fuel growth and instead, focus on incentives for increasing the share of revenue from low-carbon products. It should set itself more ambitious long-term and intermediate performance indicators to monitor transition progress. These should include scope 1, 2 and 3 emissions reductions targets aligning with its 1.5°C pathway, indicators to drive increased investment on and revenue from low carbon products, and indicators to drive climate positive engagement with all stakeholders.

Chevron reports about 22% reduction in the emissions intensity of its upstream oil activities and about 5% reduction for its gas-related activities between 2016 and 2019. Changes in the company’s extraction from more emissions-intensive regions such as Nigeria, Thailand and Indonesia to less emissions-intensive regions like the USA and Australia are likely to have contributed to these reductions. The company needs to double its overall rate of emissions reduction to align with its 1.5°C pathway.

The cumulative emissions from the combustion of oil and gas projected to be extracted from its current and already approved assets between 2019 and 2050 will exceed the company’s 1.5°C carbon budget by nearly 36%. This means that without a rapid increase in permanent carbon capture and storage (CCS), even the company’s current assets cannot be fully exploited. The company needs to be much more transparent on its investment plans for low-carbon and carbon removal technologies.

Chevron needs to proactively apply its significant market influence to engage suppliers and clients in initiatives to adopt low-carbon consumption and circular economy practices. The company’s current action includes USD 100 million pledged to the Oil and Gas Climate Initiative’s (OGCI’s) 1bn+ climate investment fund and increasing use of renewable power purchase agreements (PPAs) to power its operations. However, no details were found in the company’s reporting on how such funds are to be allocated or on future targets for renewables use.

The company should establish action levers such as awareness campaigns, purchasing rules, sectoral workshops and initiatives, common R&D programmes and partnerships to support low-carbon purchasing and sales strategies.

Chevron plans to reduce the emissions intensity of its oil extraction and processing activities by 40% by 2028 compared to 2016, with a 26% reduction for gas. It plans a 35% reduction in total upstream intensity over the same period. However, this falls short of the 60% emissions reduction in total scope 1 and 2 emissions required by 2028 to align with its 1.5°C pathway. The company has not made any commitments to reduce its scope 3 emissions. It plans to adjust investment patterns and portfolios to reflect policy and demand circumstances as they evolve but does not share financial details.

Chevron plans to achieve emissions reductions by reducing flaring and venting, increasing CCS, improving energy efficiency and investing in technology R&D and biofuels development. It is increasing use of renewables to power its operations, has pledged USD 100 million for OGCI low-carbon technology projects, and is spending USD 1 billion on its Gorgon CCS system in Australia. Further plan details are not available and it is not clear what proportion of the company’s total capital expenditure (CapEx) is dedicated to low-carbon and carbon capture technology overall.

Chevron sets financial incentives for scope 1 and 2 emissions reduction. Evidence of incentives to increase the share of low-carbon products in its sold product portfolio was not found. There was also no evidence of strategies and actions taken by the company to apply influence in its value chain to reduce suppliers’ and clients’ emissions. There is, however, evidence of the company lobbying to resist climate policy.

The company is investing in new business activities, such as fast electric vehicle charging networks (ChargePoint), new generation sodium-ion battery products (Natron Energy), deep-geothermal power generation (Eavor), smart utility data monitoring solutions (Vutility) and direct air capture carbon removal and ‘air-to-fuels’ (Carbon Engineering). It does not share details on the profitability, current size, expected growth and deployment schedules of these projects.

The company reports a near 22% reduction in the emissions intensity of its upstream oil activities from 2016 to 2019 and a near 5% reduction for gas. This rate of emissions reductions needs to double to put the company on its 1.5°C scenario compatible pathway for its scope 1 and 2 emissions. The company reports it has spent USD 75 million on carbon capture, use and storage (CCUS) R&D over the last decade.

Chevron’s emissions reduction plans do not cover its total emissions impact, and are not sufficiently long-term and ambitious enough. Growth in the company’s oil and gas production volumes is outpacing emissions intensity improvements so emissions volumes are rising. The company’s plans and actions are consistent with its strategy to become a more highly efficient producer and increase production levels but not with the need to reduce its overall emissions impact and ready the business for a low-carbon economy.