Galp Energia is a publicly listed fully integrated oil and gas company, headquartered in Portugal. In 2020, it had USD 13.90 billion in revenue and a reported 6,114 employees.* The company’s upstream projects in the Santos Basin in Brazil and the Rovuma Basin in Mozambique are two of the largest oil and natural gas discoveries of the last decades.
Galp demonstrates strong management of climate change issues through its low-carbon transition plan, which details the company’s climate scenario analysis and its establishment of board-level oversight of climate change risks and opportunities. One member of the board was also found to have significant energy expertise. The company’s leadership in this area can be strengthened by building more climate specific expertise among board members and a clear commitment to decouple management incentives from fossil fuel growth.
Galp is a top performer on sold product performance. The company has started to sell renewable power to third parties in 2019 and is developing efficient lighting and solar photovoltaic projects with business-to-business clients through its subsidiary Galp Soluções de Energia. Galp’s decreasing scope 1, 2 and 3 emissions intensity indicates the company is making progress towards a low-carbon transition. However, the company’s current efforts remain insufficient to align with its 1.5°C pathway, which requires a reduction in the emissions intensity of Galp’s sold product portfolio by nearly 4% each year until 2024.
Galp supports climate policies and participates in public consultations on energy and climate policies and laws within Portugal and the European Union. The company can strengthen its climate policy engagement by specifying actions that it intends to take when the positions of the trade associations it is involved with diverge from its own positions.
Galp’s biofuel and renewable energy business activities represent opportunities to drive its low-carbon transition. The company is targeting the production of 3.3 gigawatts (GW) of renewable energy by 2023 and 10 GW by 2030. The company also produced 27 kilotons of biodiesel from animal feedstocks in 2019. Galp’s renewable energy portfolio is mainly based in the Iberian region, but the company is also analysing other regions with competitive advantages for potential expansion. Galp is planning to expand its biofuel and renewable energy business activities and strengthen their growth through investments over the next decade.
Galp has set a target to reduce its scope 1, 2 and 3 emissions intensity by 15%. While this is a step in the right direction, the company will still need to triple its targeted emissions reduction rate to align with its 1.5°C pathway. The company should also implement a 2050 target, aligned with its carbon neutrality objective, with intermediary steps to incentivize near-term action on its longer-term goals. Galp is well on track to achieve its emissions reduction targets for the scope 1 emissions of its refineries, Sines and Matosinhos, and for the scope 1, 2 and 3 emissions of the entire group’s activities.
Galp receives a trend score of =. If the company were reassessed in the near future, its score would likely remain the same. Although the company aims to achieve carbon neutrality by 2050, the rate at which Galp’s future scope 1 and 2 emissions intensity is projected to decrease between 2019 and 2024 is still not aligned with the company’s 1.5°C pathway.
Future investments in biofuels, renewable electricity, green hydrogen and electric mobility projects, substantiated by disclosure of the deployment schedule and profitability of these business activities, will further aid in improving the company’s alignment with its 1.5°C pathway.
Galp’s low-carbon transition plan aims to reduce emissions intensities of all its operations by 30% by 2030, in order to align its portfolio with its carbon neutrality objectives for 2050. This includes reducing the scope 1 emissions intensities of its refineries, Sines and Matosinhos, by 25% and 15% respectively by 2022.
Galp plans to increase its production of renewable electricity to 3.3 GW by 2023 and 10 GW by 2030, and to further reduce its scope 2 emissions by acquiring 100% renewable electricity in Portugal. However, Galp still relies on increased gas production to achieve its climate objectives.
Galp is developing its capacity to produce biofuels and is exploring new biofuel opportunities under the European Renewable Energy Directive (RED) II. The company has also established two long-term power purchase agreements (PPAs) to provide its clients with 650 gigawatt hours (GWh) of solar power per year for a 12-year period.
Although Galp has significantly increased its oil and gas production volumes between 2014 and 2019, it has reduced its scope 1 and 2 emissions intensity by shifting the regions from where it extracts oil. This rate of emissions reduction, while positive, remains insufficient for the company to align with its 1.5°C pathway.
Over the next decade, Galp has committed to allocating more than 40% of its investments to energy transition opportunities and 10-15% to renewable power generation and low-carbon business activities. These investments support its transition plan and can be reinforced by emissions reduction targets with longer-term horizons.