Petroliam Nasional Bhd (PETRONAS)

Petronas’ commitment to reach net zero by 2050 in its scope 1 and 2 emissions has not been accompanied by short-term ambitious targets. It has one target that merely seeks to peak its emissions at 49.5 million tCO2e by 2024, which is 3% higher than its 2019 emissions. To align with its 1.5°C pathway, Petronas should be delivering a nearly 9% reduction in scope 1 and 2 emissions intensity annually to 2024. The company has not set a target covering the scope 3 in-use emissions from the combustion of its products by customers, which accounted for 77% of its total scope 1, 2 and 3 emissions in 2019.

Petronas’ biggest source of emissions are the scope 3 emissions associated with the combustion of the oil and gas it extracts and sells. If the company utilises all its reserves and fields currently under production, its scope 3 in-use emissions from upstream production are expected to exceed its 1.5°C carbon budget by 36% between 2019 and 2050. This does not account for the development of any new, unsanctioned oil and gas fields, which cannot be approved under the International Energy Agency’s (IEA’s) 1.5°C scenario.

Petronas is aiming for a renewable capacity of 3 gigawatts (GW) by 2024. To achieve this, it acquired Amplus, a leading distributed solar energy solution provider, which owns a portfolio of 800 megawatts (MW) of solar assets in India. Petronas is also hoping to explore opportunities in onshore and offshore wind in Southeast Asia, though a clear plan to achieve this has not been published. The company also established Petronas Hydrogen to develop blue and green hydrogen and is evaluating a large-scale hydrogen production facility with electric utility Sarawak Energy. The company should set clear roadmaps to scale up its renewable and hydrogen business and set ambitious short and medium term targets for these.

Petronas has an aspiration to reach net zero emissions by 2050 but has no emissions reduction targets. It has only committed to peaking its scope 1 and 2 emissions by 2024 at a level which is 3% higher than its 2019 emissions. It has also committed to reducing flaring to zero on all new projects, installing 3 gigawatts (GW) of renewable energy capacity and developing CCUS.

The lack of detailed emissions reduction targets reflect the gaps in Petronas’ transition plan. The company has stated its aspirations and intent to decarbonise, pursue technological solutions and implement a carbon price. But without clear low-carbon capital expenditure (CapEx) plans and targets, these are unlikely to drive a significant change in the company’s emissions. A further gap in the company’s low-carbon aspirations is its failure to consider its scope 3 emissions.

In 2019, Petronas created a Gas and New Energy Division to develop both its gas business and renewables and hydrogen businesses. It is implementing an Energy and Loss Management System and seeking to minimise flaring to reduce scope 1 and 2 emissions.

Petronas’ absolute scope 1, 2 and 3 emissions increased by 20% from 2014 to 2019.

Petronas’ transition plan lacks detail and ambition, and until the company considers its scope 3 emissions, the plan will not be credible. The company is also represented on the management committee of the International Organisation of Oil and Gas Producers (IOGP), which has lobbied against the 100gCO2e/kWh rule for power generation in the EU Sustainable Finance Taxonomy.