Occidental Petroleum

Occidental has set a target to reduce its scope 1 and 2 emissions intensity by 13% by 2025 compared to 2017. This target is not aligned with the company’s 1.5°C pathway. Occidental has also set a target for methane emissions reduction. Occidental aims to achieve net-zero scope 1 and 2 emissions by 2040, with an ambition to reach this goal ahead of time by 2035, and to achieve net-zero scope 1, 2 and 3 emissions by 2050. Both these net-zero targets include offsets and could therefore not be assessed. Occidental should focus on reducing its emissions through direct action, and remove the need for offsetting in its targeted goals.

Occidental’s net-zero strategy is almost entirely reliant on carbon capture, use and storage (CCUS) technologies, which the company is undertaking through its subsidiary Occidental Low Carbon Ventures (OLCV). The company provides no information on its financing plans for these technologies. In fact, in 2019 almost 90% of the company’s capital expenditure (CapEx) went towards oil and gas activities. Occidental needs to provide transparency on its low-carbon financing plans and align its CapEx in CCUS technologies with the sectoral expectation (minimum of 5% per annum) to demonstrate the feasibility of its net-zero commitments.

Between 2014 to 2019, Occidental achieved a slight reduction in its scope 1, 2 and 3 emissions intensity through a declining share of coal in its sold product mix and fluctuations in its oil to gas ratio. However, fossil fuels, which accounted for 100% of the company’s sold products over this period, increased in total sales volumes so Occidental was responsible for increasingly more greenhouse gas emissions entering the atmosphere between 2014 and 2019. The company has no clear expansion plans for its low-carbon products and services. Occidental is currently headed towards achieving just 6% of the reduction required by its 1.5°C pathway for scope 1,2 and 3 emission intensity.

Occidental has one low-carbon business model: its subsidiary OLCV. OLCV principally focuses on developing CCUS technologies, but it also offers expertise to third-party businesses to help them assess and develop CCUS projects. Although this business model is the focal point of Occidental’s low-carbon strategy, the company provides limited information about the profitability, expansion plans and deployment schedule for this business. Relying on this one business model without a clear plan in place is a risk to the success of Occidental’s low-carbon transition.

Occidental does not directly oppose climate policy; however, it only advocates for policies in favour of enhanced oil removal (EOR) technologies that are not considered low-carbon in this benchmark assessment. The company has board-level involvement with the American Petroleum Institute (API), an association reported to have opposed numerous climate policies in the USA. API has pledged itself to fighting the Biden Administration’s commitment to halt new oil and gas development on federal lands, as well as efforts to phase out gasoline and diesel fuelled cars and trucks. Occidental can add credibility to its climate rhetoric by setting a transparent policy governing actions that it intends to take if the trade associations it is involved with, like API, oppose climate policies.

Occidental aims to achieve net-zero scope 1 and 2 emissions by 2040, with an ambition to reach this goal ahead of time by 2035, and to achieve net-zero scope 1, 2 and 3 emissions by 2050. The company has also set intermediate targets for reduction in scope 1 and 2 and methane emissions by 2025.

Occidental’s net-zero goals are almost entirely reliant on the roll out of CCUS technologies through its subsidiary OLCV. The company also plans to use efficiency improvements and lower carbon electricity to reduce its scope 1 and 2 emissions.

Occidental has several partnerships and initiatives underway for its CCUS technologies, including its first-ever direct air capture plant. However, the company continues to focus its capital expenditure (CapEx) on oil and gas activities.

Geographic changes to its oil mix and an increasing share of midstream gas put Occidental’s scope 1 and 2 emissions intensity on a downward trend between 2014 to 2019. The company has had more limited reductions in its scope 1, 2 and 3 emissions intensity with overall fossil fuel sales volumes increasing.

Occidental’s ambitions to achieve net-zero emissions by 2050 are not grounded in realistic planning. The scale of CCUS roll out required to achieve net-zero emissions requires significant CapEx, but the company has not published or demonstrated any plans for this. Further, Occidental’s strategy still facilitates the extraction and combustion of fossil fuels and shows no intention to transition away from oil and gas activities.