Scope 1 emission reduction (13% of total) depends on both process and mix changes and we see six main areas of action: (1) reduction in flaring; (2) reduction of methane emissions; (3) exit from highly carbon-intensive extraction processes (such as Canadian oil sands); (4) improvement in overall production efficiency (helped by disposing of older fields and refineries); (5) production shift towards gas (although LNG does not have materially lower scope 1 CO2 emissions than conventional oil); (6) an expansion in renewable production capacity. An increase in biofuel production would actually increase the scope 1 CO2 intensity, although it has lower well-to-wheel emissions. Overall we believe that scope 1 and 2 GHG emissions could be lowered by c.24% by 2030 following the adoption of all these initiatives, achieving a reduction in carbon intensity in line with the IEA's SDS.

Scope 2 emission reduction (1% of total): we assume that the carbon intensity of third-party power and heat acquired to run the operations improves in line with the average improvement in power generation laid out by the IEA's SDS. It could actually improve faster if Big Oils used only renewables and gas to power their own operations (for instance Shell's decision to source hydro power for its Canada LNG development).

Scope 3 emission reduction (86% of total): these emissions are the most important, as they constitute 80%+ of well-to-wheel emissions, but Big Oils have the least control over them, as they are generated by their customers and not directly. The accounting of scope 3 matters, as the levers available to reduce the GHG intensity change according to whether it is calculated at production, refining throughput or final sales. Final sales offer more options of lower-carbon product diversification, especially if the intensity is calculated including the petrochemical output (where carbon is not burned, but sequestered in the materials produced). In Exhibit 18, we take the broadest definition, although we do discuss the company-specific reporting and commitments in the section below 'Big Oils and GHG reduction'. We see five main areas of action that can drive scope 3 carbon intensity reduction and the move of Big Oils towards Big Energy: (1) the shift of production from oil towards gas (including LNG); (2) the shift of downstream oil from refining to petrochemicals; (3) an expansion downstream in gas (similar to what Big Oils have always had in oil, with production/refining/retail marketing) to gas & power retail, including power supplied through CCGTs and renewables; (4) increased sales of biofuels; (5) carbon capture and natural sinks (re-forestation), to reduce net emissions. If Big Oils use all these levers, on our estimates they can achieve a c.21% reduction in scope 3 carbon intensity, allowing an overall 'well-to-wheel' reduction in line with the IEA SDS ambitions.

Scope 1 (direct emissions) occurs from the companies' owned or operated assets, including flaring, venting and fugitive emissions from oil & gas production facilities.

Scope 2 (indirect emissions) refers to emissions from purchased and consumed energy including electricity to run companies' operations.

Scope 3 (indirect emissions), for the oil & gas industry, would refer to GHG emissions arising from the combustion of refined products; i.e. diesel, gasoline, kerosene among the most common fuel burned for transportation purposes.

IPCC: The Intergovernmental Panel on Climate Change is a body set up under the guidance of the United Nations with the sole purpose of providing the world with a scientific view of climate change and its potential impacts. It provides a detailed library of emission factors both at an aggregate product level, and on a per activity basis.

EPA: The US Environmental Protection Agency is a federal government agency with the mission to protect human and environmental health. Under the AP-42 the agency discloses a compilation of accurate, up to date emission factors.