ENEOS Holdings is a publicly listed fully integrated oil and gas company headquartered in Japan. In 2020, it had USD 92.67 billion in revenue and a reported 40,983 employees*. ENEOS is the largest oil company in Japan, and its business areas include oil and gas exploration and production, petrochemicals, lubricants, and mining and metals. This assessment covers its oil and gas activities. ENEOS’ low-carbon transition plan is yet to deliver clear results.
ENEOS is among the top performers for the share of total capital expenditure (CapEx) it allocates to low-carbon and mitigation technologies. The company’s CapEx share for these technologies has been around 26% and 24% in 2020 and 2021 respectively.
Although this represents a significant proportion of ENEOS’ spending, it is still far behind the sectoral expectation for oil and gas companies to direct 77% of CapEx towards low-carbon projects to align with a 1.5°C scenario. ENEOS can improve its performance by ramping up its current CapEx share allocated to low-carbon and mitigation technologies and beginning to invest in carbon removal technologies.
ENEOS plans to achieve carbon neutrality for its scope 1 and 2 emissions by 2040. The company has also set up intermediate targets for 2022 and 2030 to reduce its total absolute emissions by 15% and 35% respectively compared to 2009 levels. This illustrates the company’s ambition to reduce its emissions across all its operations, including mining and metals. However, these targets include offsets and could therefore not be assessed. Reducing emissions related to its own activities and products should remain ENEOS’s priority, and the company should disclose the proportion of each target that will be met through direct action, rather than offsets.
ENEOS reports that it is working to reduce scope 3 emissions from the use of its sold products by 1.2 million tonnes of CO2 by 2022 compared to 2009 levels. However, its absolute scope 1, 2 and 3 emissions increased by 52% between 2014 and 2019, increasing the emissions impact of the company as well as its dependence on oil sales.
The share of renewable electricity in the company’s sold product portfolio has shown only a negligible increase between 2014 and 2019 (going from 0.0015% to 0.0030%) in comparison to the share of oil, gas and coal. ENEOS has a slightly decreasing scope 1, 2 and 3 emissions intensity trend but this is insufficient. If this trend continues the company will significantly diverge from its 1.5°C pathway, which requires an annual emissions intensity reduction of around 4% until 2024.
ENEOS is actively developing low-carbon electricity projects. The company’s biomass power plant located in Muroran has reached a total generation capacity of approximately 121 megawatts (MW) as of June 2020. The company is also developing an offshore wind farm in Taiwan. By 2022, ENEOS aims for a renewable energy generation portfolio with capacity of more than 1,000 MW. The company can improve its low-carbon business performance by increasing the profitability and size of its renewable energy generation projects and by diversifying its range of low-carbon business activities.
ENEOS receives a trend score of =. If the company were reassessed in the near future, its score would likely remain the same. The company’s scope 1 and 2 emissions reductions are on track to keep pace with the rate of reduction required by the company’s 1.5°C pathway. Future investments in the areas of renewable electricity and low-carbon mobility are likely to improve the company’s alignment with its 1.5°C pathway, but the scale at which the company is implementing these business activities remains limited. Furthermore, the size of ENEOS’ low-carbon electricity projects planned until 2022 remains negligible compared to the size of its oil and gas operations.
ENEOS is aiming for carbon neutrality for its scope 1 and 2 emissions by 2040. It has set intermediary targets until 2022 to reduce its scope 1 and 2 emissions intensity by around 7% and its scope 3 emissions by 1.2 million tonnes of CO2 compared to 2009 levels.
ENEOS plans to rely on energy efficiency measures and the use of carbon capture, use and storage (CCUS) to reduce its scope 1 and 2 emissions, and to sell less emissions-intensive products to its clients to reduce its scope 3 emissions. ENEOS is also developing its renewable energy operations and plans to pursue business activities in electric vehicles.
In 2019, ENEOS established a renewable energy department within its energy business operations and invested in an offshore wind farm project in Taiwan. The company has also constructed a biomass power generation plant in Muroran whose commercial operations began in 2020.
Between 2014 and 2019, ENEOS’ scope 1, 2 and 3 emissions intensity has not decreased in line with the company’s 1.5°C pathway and absolute scope 1, 2 and 3 emissions even increased by 52% between 2014 and 2019. However, the company’s scope 1 and 2 emissions intensity has significantly decreased.
ENEOS has a detailed low-carbon transition plan covering its scope 1, 2 and 3 emissions and is planning significant investment in low-carbon technologies and business areas between 2020 and 2022. However, the results of the company’s transition plan are not yet evident as only ENEOS’ scope 1 and 2 emissions intensity significantly decreased between 2014 and 2019. The company’s scope 1, 2 and 3 emissions intensity currently fails to show a steep decline.