Climate Change Management
Importance and Mission
Climate change may impact the environment and PTTEP's business, in terms of more frequent natural disasters, stringent national and international policies and regulations, and a drive towards low carbon future.
PTTEP has continuously initiated actions to reduce and mitigate risks, including an increase in the investment proportion of natural gas as a cleaner transition energy and studies to find ways to reduce greenhouse gas (GHG) emissions. In addition, to support Thailand’s goals to achieve Carbon Neutrality and Net Zero GHG Emissions as committed at the 26th United Nations Climate Change Conference of the Parties (COP26), the Company has set the target to achieve Net Zero GHG Emissions by 2050 for E&P business covering scope 1 and scope 2 under PTTEP’s operational control. PTTEP also set the targets of reduction of greenhouse gas emissions intensity by 30% by 2030 and 50% by 2040 from 2020 base year.
Goals
Net Zero Greenhouse Gas Emissions by 2050 for E&P business covering scope 1 and scope 2 under PTTEP’s operational control
Management Approach
To achieve the target, PTTEP implements the GHG emission reduction projects (Scope1 and 2), incorporating with the energy efficiency management, by means of flare/excess gas recovery and utilization, energy efficiency improvement, production efficiency improvement, methane leak reduction, and renewable energy utilization. In addition, recognizing that greenhouse gas emissions will affect business expansion, PTTEP collaborated with the PTT Group to develop an internal carbon pricing to be taken into consideration when investing in GHG emissions reduction projects. PTTEP also established GHG management criteria, including an internal carbon pricing, for the new mergers and acquisitions (M&A) investment decision-making process in the E&P business. Additionally, to achieve the target PTTEP has focused on research and development about Carbon Capture Utilization and Storage (CCUS), renewable energy, hydrogen, and low carbon fuels, together with GHG emissions reduction from the operations.
PTTEP regularly implements internal and external audits, through internal SSHE MS audit and external SSHE data as well as GHG data verification, with objective to identify opportunities for improving GHG emissions and energy performance. In addition, PTTEP provides trainings and workshops to ensure the employees are aware and understanding on the GHG emissions management and energy efficiency improvement in their operations.
PTTEP's operational transparency reflects in the inclusion of climate change strategy and performance, including energy management performance in the annual reports and sustainability reports. PTTEP has also disclosed environmental and climate change-related performance to CDP since 2010. PTTEP has been ranked at "Leadership Level" for the 7th consecutive years since 2014, and “Management Level” since 2021, reflecting its environmental stewardship compared to its peers.
Climate Risk Management
Company has fully integrated the Task Force on Climate-related Financial Disclosures (TCFD) framework into its climate change management as shown in the TCFD Report. Furthermore, PTTEP incorporates risks that may result from climate change into serious consideration, treating it as the Company’s emerging risk. PTTEP reassesses risks with context-specific for timely improvement across all-new operation assets, upstream & downstream activities, and clients and for compliance with modified requirements both at national and international levels. Assessed climate change risks consist of physical risks and transition risks. Physical risks are related to direct impacts such as heat waves, heavy precipitates, tropical storms, drought and water-related risks. Transition risks are related to changes of risks of policy, legal, technology, market, and reputations. The assessment covers short-term risks (2020 - 2025), medium-term risks (2026 - 2035) and long-term risks (2036 - 2050).
In the assessment of physical risks, 3 scenarios are applied as guided by the Intergovernmental Panel on Climate Change (IPCC): aggressive mitigation scenario or representative concentration Pathways (RCP 2.6); strong mitigation scenario (RCP 4.5); and Business-as-usual (BaU) scenario (RCP 8.5). In the assessment of transition risks, 3 scenarios are applied: Stated Policies Scenario (SPS - previously known as “New Policies Scenario (NPS)”, the underlying assumptions and modelling methodology remain unchanged), Sustainable Development Scenario (SDS) and IPCC's 1.5°C scenario. The first two scenarios are in line with International Energy Agency (IEA)'s impact assessment guidance and the last with IPCC's guidance.
This risk assessment process helps ensure that PTTEP’s climate risk management is appropriate and aligned with the global target to hold temperature increase to well below 2 degrees Celsius. The Company closely monitors and tracks climate change that may affect corporate risk level, as a result of the COP26 and Thailand's commitment on Net Zero target, in order to manage risks by the balancing the risk appetite level and corporate sustainable development. In addition, PTTEP has developed a Climate Management Plan in response to the Company’s physical and transition risks. The plan is an integration of mitigation, adaptation, and resilience actions to allow its understanding on vulnerabilities to climate, manage the risks posed by climate change, place us in a strong position to increase resilience to potential threats, and exploit new business opportunities.
Collaboration and Driving Climate Change Policies
PTTEP engages in addressing climate change through the Company’s EP Net Zero 2050 concept, aiming to support Thailand’s targets of achieving carbon neutrality by 2050 and net zero greenhouse gas emissions by 2065, in alignment with the United Nations Framework Convention on Climate Change and the Paris Agreement. To promote sustainability efforts, including driving energy transition and fostering a low carbon society, the Company collaborates with various partners such as global oil and gas business associations advocating best practices, domestic and international sustainability networks, and government agencies to drive national policies, for example:
- IPIECA and the Thailand Business Council for Sustainable Development (TBCSD). These organizations play a crucial role in setting frameworks for environmental and sustainable practices. More information regarding Sustainability Collaboration and Networking can be found in Sustainability Framework and Long-term Target.
- United Nations Global Compact (UNGC) under the UNGC’s Guide for Responsible Corporate Engagement in Climate Policy
- Greenhouse Gas Reduction Steering Subcommittee (PTTEP as a member) which will steer technology applications for the country’s carbon capture, utilization and storage. The mission will accelerate Thailand’s actions in mitigating climate impacts through the application of capture, utilization and storage technology in the energy and industry sectors.
- A memorandum of understanding (MoU) to strengthen cooperation on climate change and biodiversity conservation with the Department of Climate Change and Environment (DCCE) and the Office of Natural Resources and Environmental Policy and Planning (ONEP), aiming to establish measures and mechanisms for private sector-driven greenhouse gas reduction and support the steering of climate-related efforts.
- Thailand’s CCUS Technology Development Consortium led by the Bio-Circular-Green Economy Technology & Engineering Center (BCGeTEC), Faculty of Engineering, Chulalongkorn University and PTTEP as a member. The consortium will build a collaborative network for the study and development and utilization of CCUS technology in Thailand. PTTEP joins the consortium as a member from the industry sector together with PTT Public Company Limited, Thai Oil Public Company Limited, Global Power Synergy Public Company Limited, PTT Global Chemical Public Company Limited, SCG Cement Company Limited, Bangkok Industrial Gas Co., Ltd., and Sahaviriya Steel Industries PCL., along with state agencies and public organizations as advisors
- Thailand Greenhouse Gas Organization (TGO) and PTT Group in co-developing of Premium T-VER (Thailand Voluntary Emission Reduction Program) methodology for Carbon Capture and Storage
- Thailand Greenhouse Gas Organization (TGO), to seek opportunities to reduce or offset GHG emissions through various channels. For instance, PTTEP buys carbon credit in support of TGO's carbon credit market to offset the emissions for internal activities; launches a reforestation project to capture carbon, participates in TGO’s Low Emission Support Scheme (LESS) by initiating energy efficiency projects and applies the 3Rs principle (Reduce, Reuse and Recycle) in waste management.
PTTEP maintains the Company’s participation in work plan implementation and continuously monitors progress through multiple channels such as joint development activities, meetings, and annual performance review meetings to ensure alignment with the country's climate action goals and government policies.