CDP. Module: Introduction. Page: Introduction. Climate Change 2016 Information Request CC0.1

Transcription

1 CDP Climate Change 2016 Information Request BP Module: Introduction Page: Introduction CC0.1 Introduction Please give a general description and introduction to your organization. BP is one of the world s leading integrated oil and gas companies with significant petrochemical, biofuel and wind businesses. We aim to create long-term value for shareholders by helping to meet growing demand for energy in a safe and responsible way. We strive to be a world-class operator, a responsible corporate citizen and a good employer. Through our work we provide customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. Our projects and operations help to generate employment, investment and tax revenues in countries and communities around the world. We employ more than 80,000 people, mostly in Europe and the US. As a global group, our interests and activities are held or operated through subsidiaries, branches, joint arrangements or associates established in and subject to the laws and regulations of many different jurisdictions. The UK is a centre for trading, legal, finance, research and technology and other business functions. We have well-established operations in Europe, the US, Canada, South America, Australasia, Asia and parts of Africa. CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been

2 offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(dd)/month(mm)/year(yyyy) (i.e. 31/01/2001). Enter Periods that will be disclosed Thu 01 Jan Thu 31 Dec 2015 CC0.3 Country list configuration Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response. Select country CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. USD($) CC0.6 Modules

3 As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see Further Information Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility One of the key tasks of the board is to satisfy itself that the material risks to BP are identified and understood and that systems of risk management, compliance and control are in place to mitigate such risks. The board requires the group chief executive to operate with a comprehensive system of controls and internal audit to identify and manage the risks that are material to BP. Within the board, it is the safety, ethics, environment and assurance committee (SEEAC) that is specifically responsible for reviewing processes adopted by BP s executive management to identify and manage significant non-financial risk, including operational and non-operational risks associated with climate change. The group chief executive maintains BP s system of internal control. The system of internal control comprises the holistic set of management systems, organizational structures, processes, standards and behaviours that are employed to conduct the business of BP. Climate change risks are reviewed through two executive committees- chaired by the group chief executive, and one working group chaired by the executive vice president and group chief of staff, as part of BP s established management structure:

4 The ETM, (Executive Team Meeting) covers commercial and strategic risk across the company The GORC (Group Operational Risk Committee), covers health, safety, security, environment, and operations integrity risks The IMWG (Issues Management Working Group) established in 2011, with the terms of reference agreed by the CEO, develops and approves BP positions on public policy issues of strategic relevance to the company, including climate change and related matters, such as methane. Progress on key positions are reported to the ETM, and SEEAC as relevant. CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment Other: Relevant employees Other: Relevant employees Monetary reward Monetary reward Other: Assessment of strategic risk posed by climate change policy. Other: Development of a carbon strategy One example of the output from this process is the highly regarded Energy Outlook 2035, which is an annual assessment of the many global factors, including likely and plausible policy to limit GHG emissions, affecting energy demand in the future Development of a carbon strategy for the group, including an understanding of the carbon implications of different portfolio choices and portfolio balance. Other: Relevant employees Monetary reward Other: Development of operating practice Development of operating practice to manage energy efficiency and operational GHG emissions. Other: Relevant employees Monetary reward Other: Development of operational and engineering practices Development of operational and engineering practices to effectively anticipate and deal with potential physical climate impacts. Other: Relevant employees Monetary Other: Development of Development of positions on emerging climate issues and public policy, and

5 Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment reward positions communication of these positions internally and externally. Other: Relevant employees Other: Relevant employees Monetary reward Monetary reward Other: Develop effective advocacy Other: Development of our renewable and low carbon businesses Effective advocacy to influence policy makers and regulators to develop and implement measures to address climate change that avoids disproportionate impact on BP and thus protect shareholder value. Development of our renewable and low carbon businesses to become sustainable contributors to the revenues of the group. Other: Relevant employees, such as those involved with implementing emissions reduction projects Monetary reward Emissions reduction project Implementation of emissions reduction projects, such as local flaring policy interventions implemented in 2015 at our operations in Angola reduced flaring activity. Further Information Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities

6 Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment Annually Board or individual/subset of the Board or committee appointed by the Board All geographic areas where BP does business. > 6 years As part of BP s annual planning process, we review the principal risks and uncertainties to the group. We identify those as having a high priority for particular oversight by the board and its various committees in the coming year. BP manages, monitors and reports on the principal risks and uncertainties that can impact our ability to deliver our strategy of meeting the world s energy needs responsibly while creating long-term shareholder value. Climate change and carbon pricing are explicitly assessed as risk factors. Our management systems, organizational structures, processes, standards, code of conduct and behaviours together form a system of internal control that governs how we conduct the business of BP and manage associated risks. CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level BP s risk management system and policy is designed to be a consistent and clear framework for managing and reporting risk, including climate risk, from the group s operations to the board. Management and staff at our facilities, assets and functions identify and manage risk, promoting safe, compliant and reliable operations. BP s system for identifying and managing operational environmental impacts and risks are integrated into our operating management system (OMS). Our OMS includes a set of requirements for all operations and projects, supplemented with specific recommended practices. For example, with respect to potential future impacts from the changing climate we have implemented a screening for major new projects and new business investments to identify environmental features, such as wave height or freshwater availability that may pose additional risk to the project over its expected lifetime. Any risks identified would be entered in the project risk register and managed. Strategic climate-related policy and other relevant non-operational risk is assessed at a group level. Potential responses are coordinated with entities by group policy. Its reviews and recommendations are considered by a formal cross-company group, the Issues Management Working Group (IMWG), which is chaired by the chief executive, alternative energy and executive vice president regions, and has group leadership representation from all relevant functions and businesses. The IMWG would either adopt a recommendation or make proposals to the executive team, group chief executive and, if needed, the board. A key tool in assessing mid to long-term risks/opportunities associated with climate change is BP s Energy Outlook 2035, a 20 year projection of what we consider the most likely energy pathway that society may follow, globally, regionally and in some cases nationally. This is supplemented by consideration of a wide range of scenarios and projections by other organizations, including the IEA.

7 CC2.1c How do you prioritize the risks and opportunities identified? Risks identified are assessed to estimate the potential likelihood and impact based on predefined scales and criteria. We aim for a consistent basis of measuring risk to allow comparison on a like-for-like basis, taking into account potential likelihood and impact, to inform how we prioritize specific risk management activities and invest resources to manage them. As part of BP s annual planning process, we review the group s principal risks and uncertainties. These may be updated throughout the year in response to changes in internal and external circumstances. The group risk team analyses the group s risk profile and maintains the group risk management system. The board, executive and functional leadership provide oversight to identify and understand significant risks to BP. Executive committees periodically oversee the management of relevant group risks to their agenda, and dedicated board committees review and monitor certain risks throughout the year. Risks/opportunities related to climate change, whether considered as a strategic/market risk or as an operational risk, are assessed and prioritized as an integral part of the risk management process to ensure a considered and appropriate response consistent with the overall strategy of the group. CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a

8 Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process (i) The business strategy is influenced in multiple ways at multiple levels, corresponding to the levels and ways that climate-related risk is assessed, and aggregated at the highest level in the review of the company s risks, which is reviewed by the board. The risk assessment processes described above lead directly or indirectly to risk management and action at the appropriate level within the risk management process. For example, strategic policy, business, reputational or operational climate-related risks or opportunities identified by the line-managed functions will normally be accompanied by recommendations for mitigating those risks, or taking opportunities. Where appropriate, those recommendations would then be considered by the relevant executive committees. Adopted recommendations would then be implemented through a multitude of possible channels, depending on the activity or process involved, either through consolidating a policy position into group advocacy and communications; pursuing a strategic business decision through group or segment business strategies and plans; adopting a particular technology or technologies; or embedding new operational practice into the operating management system (OMS). (ii) The aspect of climate change that has influenced the strategy most heavily to date is the increasing regulation of GHG emissions. In the long term and across the group we consider that there are both risks and opportunities arising from a transition to a lower carbon economy. The risks are from the cost of complying with legislation and regulation while maintaining a competitive business and returning value to shareholders, and from a change in customer demand patterns. The opportunities include developing economically material and self-sustaining low carbon businesses. In the short-medium term, risks include increased costs relating to emerging regulation and compliance. The key issue in this context is the precise form of the legislation or regulation relative to our own operational GHG performance. The opportunities in the near term arise mainly from government support systems to demonstrate and deploy near-commercial low carbon technologies, although there is a policy risk that such support may be withdrawn prematurely. (iii) Climate change has influenced several aspects of the short-term strategy, although most of these changes are intended to be permanent and address long-term climate related risk. For example, OMS has been designed and evolved to address operational risk, including climate change, now and in the future. In 2010 a new set of environmental and social risk requirements and recommendations was implemented for identifying and appropriately managing environmental (including climate) and social impacts for major new projects. Other short-term strategic responses with long-term objectives are policy-related. One such example is the establishment in 2011 of the Issues Management Working Group (IMWG), which was set up to help ensure consistent and appropriate group-wide responses to public policy issues of strategic significance, including climate change. (iv) Long-term strategy may be influenced by climate-related policy considerations that are not yet fully implemented but where the direction of travel is clear. In some cases this may influence strategy regarding portfolio balance between conventional resources. For example, we believe that natural gas, including unconventional gas, is a key component of the pathway to a lower carbon future. In other cases these policy considerations may influence strategic resource allocation to new resources, for example biofuels. Longer-term climate-related policy and technology trends may also influence strategic decisions about technologies, like CCS, that have significant long-term carbon reduction potential, but which are not yet near-commercial. In order to understand what long-term policy and technology trends look like, BP uses its own and others projections of likely and possible supply and demand outcomes for 2030 and 2050 for key sectors and geographies, which are in part determined by energy and climate policy, and lower carbon resources and technologies. These projections inform choices about the types of resources and markets we will seek to develop and the locations we will concentrate on. (v) BP is more likely to gain strategic advantage if it can judge the appropriate pace at which to make strategic and portfolio adjustments in response to climate change policy, and the types of strategic adjustments to make. If this can be done effectively it will provide business growth opportunities in emerging low carbon sectors and technologies, and provide a cost-effective response to increasingly stringent regulatory constraints on carbon emissions from higher-carbon activities. It will also enable us to judge how the pace and type of adjustment might differ in different parts of the world. BP is well aware of the so-called stranded assets debate and is considering it carefully. However, we believe we have effective carbon asset risk assessment and management processes in place. As examples of strategic adjustments that create lower carbon business growth opportunities, BP's upstream portfolio is set to become more weighted towards gas over the next decade, and we continue to grow our investment in sustainable Brazilian sugarcane biofuels. (vi) BP currently has the largest operated renewables business among our oil and gas peers. Our activities are focused on biofuels and onshore wind.

9 Our biofuels business in Brazil produces ethanol and sugar from sugar cane, and electricity from sugar cane waste. Following the expansion of our Tropical mill in 2014, which doubled the mill s capacity making it one of the largest mills in Brazil, our three sites produced 795 million litres of ethanol equivalent (which includes ethanol and sugar) in This represents an increase of 47% versus We estimate that, as a result of BP s 2015 ethanol production, approximately 0.7 million tonnes of CO2 was avoided. That s equal to 334,000 fewer European cars on the road for a year. Also In 2015 BP continued to fund the development of biobutanol in conjunction with our partner DuPont. Compared with other biofuels, biobutanol has the potential to be blended with fuels in higher proportions, and be easier to transport, store and manage. We are also investigating a number of chemical applications for this advanced biofuel. Additionally BP continued to invest in its interests in 16 US onshore wind farms that comprise its US wind business. We are among the top wind energy producers in the US, and in 2015 BP s net share of wind power generation was 4424GWh, which we calculate helped avoid around 2.7 million tonnes of CO2. CC2.2b Please explain why climate change is not integrated into your business strategy CC2.2c Does your company use an internal price of carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price of carbon We require larger projects, and those for which emissions costs would be a material part of the project to apply a standard carbon cost to the projected GHG emissions over the life of the project. In industrialized countries, our standard cost assumption is currently $40 per tonne of CO2 equivalent. CC2.3

10 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations Funding research organizations CC2.3a On what issues have you been engaging directly with policy makers? Focus of legislation Corporate Position Details of engagement Proposed legislative solution Other: Reform of the EU ETS Other: Regional cap and trade pilot schemes in China Other: Carbon Pricing Support Support Support We support the EU ETS as the primary policy to limit carbon emissions from the industrial sector. We engage through multiple channels, directly as BP and indirectly (e.g. via Fuels Europe) We support regional and eventually national carbon trading schemes as the most efficient and effective policy to limit carbon emissions. We have engaged directly to advise and support regional authorities to develop effective and efficient carbon trading systems. BP joined with BG Group, Eni, Reliance, Repsol, Royal Dutch Shell, Statoil and Total to call on the UN and governments to put a price on carbon so that businesses and consumers of energy can better work within frameworks that are clear. Our proposed solution is that the EU ETS should create a level playing field for covered sectors, including appropriate protection for sectors exposed to international competition with overseas competitors not exposed to a carbon price. Our proposed solution is for efficient and effective regional carbon trading systems that could eventually be linked at the national level. Governments across the world should provide us with clear, stable, longterm, ambitious policy frameworks. This would reduce uncertainty and help stimulate investments in the right low carbon technologies and the right resources at the right pace. We believe that a price on carbon should be a key element of these frameworks. If governments act to price carbon, this discourages high carbon options and encourages the most efficient ways of reducing emissions widely, including reduced demand for the most carbon intensive fossil fuels, greater energy efficiency, the use of natural gas in place of coal, increased investment in carbon capture and storage, renewable energy, smart buildings and grids, off-grid access to energy, cleaner cars and new mobility business models and behaviors. CC2.3b

11 Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? OGCI (Oil & Gas Climate Initiative) C2ES (Center for Climate and Energy Solutions) Consistent Consistent BP s position is consistent with the OGCI joint collaborative declaration in the 2015 OGCI report, More energy, lower emissions. OGCI members recognize the general ambition to limit global average temperature rise to 2 C, and that the existing trend of the world s net greenhouse gas (GHG) emissions is not consistent with this ambition. Governments set the conditions within which we produce and use energy and have a critical role to play in creating clear stable policy frameworks that are consistent with a 2 C future. OGCI will support the implementation of these frameworks because they will help our companies to take informed decisions and make effective and sustainable contributions to addressing climate change. BP s position is consistent with the four guiding principles of C2ES s Business Environmental Leadership Council, which BP has endorsed. 1.We accept the scientific consensus that climate change is occurring and that the impacts are already being felt. Delaying action will increase both the risks and the costs. 2.Businesses can and should incorporate responses to climate change into their core corporate strategies by taking concrete steps in the U.S. and abroad to establish and meet greenhouse gas (GHG) emission reduction targets, and/or invest in low and zero GHG products, practices and technologies. 3.The United States should significantly reduce its GHG emissions through economy-wide, mandatory approaches, which may vary by economic sector and include a flexible, market- BP s CEO Bob Dudley chairs this CEO-led initiative and BP is actively involved at all levels in this initiative to influence existing and future positions. We influence their positions through our participation in their Business Environmental Leadership Council (BELC) and endorsement of its guiding principles.

12 Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? IPIECA (The global oil and gas industry association for environmental and social issues) IETA (International Emissions Trading Association) Consistent Consistent based program. Complementary policies may also be necessary for sectors such as buildings, electricity generation, forestry, agriculture, and transportation that will help drive innovation and ease the transition to a low-carbon economy. 4.Climate change is a global challenge that ultimately requires a global solution. An international climate framework must establish fair, effective, and binding commitments for all developed and major developing economies. BP s position is consistent with IPIECA s Paris Puzzle. Paris Puzzle key messages: IPIECA recognises that addressing the risks of climate change is a challenge for our generation and will be for those to come. Meeting the challenge will require actions from all parts of society. Significant policy action, technology development and business response will be needed over many decades. The oil and gas industry can play a key role in helping society to meet the challenge. IPIECA believes it is possible to address climate change risks while also meeting growing global energy demand and supporting economic development. As an industry we are already taking a range of actions across our own operations and products to support these goals. BP s position is reflected in IETA s stated objective and vision. IETA s stated objective: Our objective is to build international policy and market frameworks for reducing greenhouse gases at lowest cost. IETA s stated vision: Our vision is a single global carbon price produced by markets of high environmental integrity. We pursue this vision with an eye to pragmatism, political reality and sound economics. BP is represented on the IPIECA executive committee and is on the Climate Change Working Group. BP actively contributed to the IPIECA publication The Paris Puzzle The pathway to a low-emissions future and its presentation at a side-event at COP21. BP was a founder member of IETA and is currently represented on the board of directors. We seek to influence the development of positions on current issues by active involvement in the relevant working groups CC2.3d Do you publicly disclose a list of all the research organizations that you fund? No

13 CC2.3e Please provide details of the other engagement activities that you undertake CC2.3f What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? The Issues Management Working Group (IMWG) was established in 2011 to help ensure consistent and appropriate group-wide responses to public policy issues of strategic significance, including climate change. The IMWG is chaired by the chief executive, alternative energy and executive vice president regions, and has group leadership representation from all relevant functions and businesses. Agreed positions are intended to form the basis of direct and indirect interaction with policy makers and with trade associations and other bodies and partners with which we are associated. CC2.3g Please explain why you do not engage with policy makers Further Information Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year? No

14 CC3.1a Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base year Base year Base year emissions covered by target (metric tonnes CO2e) Target year Is this a sciencebased target? Comment CC3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions covered by target Target year Is this a sciencebased target? Comment CC3.1c Please also indicate what change in absolute emissions this intensity target reflects ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment

15 CC3.1d Please provide details of your renewable energy consumption and/or production target ID Energy types covered by target Base year Base year energy for energy type covered (MWh) % renewable energy in base year Target year % renewable energy in target year Comment CC3.1e For all of your targets, please provide details on the progress made in the reporting year ID % complete (time) % complete (emissions or renewable energy) Comment CC3.1f Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years A company s GHG emissions can be influenced by a variety of factors that may result from shifts in business activity, production or assets. This makes it difficult to establish an appropriate GHG target that can be cascaded throughout the organization with the objective of achieving cost-effective emission reductions. For these reasons, BP like some of our peers does not set enterprise-wide GHG targets and instead manages GHG performance through business-led management discussions at our group operating risk committee, segment operating risk committees and at a local level through our operating management system. Where there are specific business needs we do manage performance through internal target setting. For example at our refineries, we use the Solomon Energy Intensity Index (EII ) to measure energy performance. This well-established industry benchmark allows us to compare performance of our refineries with each other and with our

16 peers. Each of our refineries set and track progress against an EII target specific to its circumstances. Over the next five years, although there may be annual fluctuations, it is likely that as we work in more technically challenging and potentially more energy-intensive areas, the carbon intensity of our upstream operations will continue to increase, while declining production in our mature assets, which requires more energy, also pushes intensity incrementally higher. We expect the GHG intensity of our refining portfolio to remain relatively flat or to decrease at certain refineries due to efficiency projects in progress, even with the trend towards processing heavier crudes. CC3.2 Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions? Yes CC3.2a Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases)

17 Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation To be implemented* Implementation commenced* 0 0 Implemented* Not to be implemented CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Energy Our LNG plant in Tangguh reduced Scope Voluntary <1 year

18 Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment efficiency: Processes Process emissions reductions Process emissions reductions flaring through operational changes and optimization. This was a voluntary activity that resulted in the reduction of Scope 1 emissions. Local flaring policy interventions implemented in 2015 at our operations in Angola reduced flaring activity. This was a voluntary activity that resulted in the reduction of Scope 1 emissions. We upgraded equipment in our operations in Alaska and Azerbaijan that reduced process emissions. This was a voluntary activity that resulted in the reduction of Scope 1 emissions Scope 1 Scope 1 Voluntary Voluntary CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Comment Internal price of carbon We factor a carbon cost into our own investments and engineering designs for large new projects and those for which emissions costs would be a material part of the project. In industrialized countries this is $40 per tonne of CO2 equivalent. We use this cost as a basis for assessing the economic value of the investment and as one consideration in optimizing the way the project is engineered with respect to GHG emissions. This helps us to anticipate a future with a potentially higher carbon

19 Method Comment Partnering with governments on technology development Partnering with governments on technology development Compliance with regulatory requirements/standards Other Other price and greater regulatory GHG requirements. BP is a founding partner in the World Bank s Global Gas Flaring Reduction partnership, we fully participate in the various programmes under this partnership, we directly support the partnership through both funding and assistance with work items, and we continue to work towards reduced flaring and venting from our world wide exploration and production operations. This is a voluntary activity and is aimed at reducing Scope 1 emissions. This partnership was launched in 2002, is on going and expected to continue. BP is a charter partner and active participant in the US EPA Natural Gas STAR Program. This is a flexible, voluntary partnership that encourages oil and natural gas companies to adopt cost-effective technologies and practices that improve operational efficiency and reduce emissions of methane, a potent greenhouse gas and clean energy source. In some countries and cases, complying with regulatory requirements/standards can require investing in equipment or actions that results in lower emissions. Internal requirements: Our company practice on environmental and social requirements for new access projects, major projects, international protected area projects and acquisition negotiations contains various requirements which we expect will result in lower GHG emissions. Internal requirements: We seek to increase energy efficiency across BP by requiring our existing operations to incorporate energy use in their business plans and implement technologies and systems to improve energy efficiency where it makes business sense. CC3.3d If you do not have any emissions reduction initiatives, please explain why not Further Information Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s)

20 Publication Status Page/Section reference Attach the document Comment In mainstream reports (including an integrated report) but have not used the CDSB Framework In voluntary communications Complete Complete Our Market Outlook, pages and Environment and society pages The energy challenge and climate change, pages 12-19, and Greenhouse gases and other air emissions, page Change 2016/Shared Documents/Attachments/CC4.1/2016_03_03_BP_ARA_FINAL.pdf Change 2016/Shared Documents/Attachments/CC4.1/bp-sustainability-report-2015.pdf We have attached a low resolution version of our Annual Report that is below the 5MB threshold. Please see our corporate website to view the high resolution version. Further Information Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments

21 CC5.1a Please describe your inherent risks that are driven by changes in regulation Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other regulatory drivers Changes in laws, regulations and obligations relating to climate change could go further or happen faster than we suggest is most likely in the base case scenario in our Energy Outlook Reduced demand for goods/services >6 years Indirect (Client) About as likely as not Lowmedium BP s reserves are produced and historically replaced over a 13-year time frame, on average. This gives us the opportunity to adapt our investment strategy dynamically to meet faster or greater than expected changes in policy, market or technology conditions without adversely affecting margins and/or the value of assets or investments. There may be the potential for faster than expected changes in policy to have an impact on demand for our We seek to further reduce the potential impact on our business through a number of significant activities. Through these we proactively assess changes in policy, markets and technology and project future energy trends to optimize our investment strategy. Example 1: We periodically undertake energy technology assessments out to around 2050, summarized in our Technology Outlook, most recently in December Example 2: We make regional and global assessments of energy supply There is little if any incremental cost in factoring the impact of potential climate policy into the projections we currently undertake for product and energy demand.

22 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management sector s conventional products and services, but we are able to adapt to that risk through normal investment cycles. BP s portfolio is currently about half gas and half oil, but we expect the proportion of gas to grow over the next decade. We have an onshore wind business in the US and growing investments in biofuels. Additionally, we have been investing in startup companies to better understand evolving alternative and advanced technologies such as electric vehicles, batteries and bio-lubricants. and demand in our Energy Outlook 2035 and we undertake detailed analysis of the transport sector. Our annual Energy Outlook takes the long-term view, considering a wide variety of factors. That means that we look past the nearterm volatility in oil prices and try to identify the structural trends, such as sustainable technological advancements enabling faster growth in shale gas, tight oil, CCS and renewables. While our Energy Outlook presents what we think is likely to happen, we recognize that there are many uncertainties. One key uncertainty is climate change policy, so we included an example of an

23 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other regulatory drivers Substantial changes in laws, regulations and obligations relating to climate change that go much further and/or happen much faster than we suggest is most likely in the base case scenario in our Energy Outlook 2035 Reduced demand for goods/services >6 years Indirect (Client) Unlikely Medium BP s reserves are produced and historically replaced over a 13-year time frame, on average. This gives us the opportunity to adapt our investment strategy dynamically to meet much faster or greater than alternative faster transition scenario for the 2016 Energy Outlook. It s based on a carbon price rising to $100 per tonne in the OECD and other leading economies, and at least $50 per tonne elsewhere; tougher CO2 standards for vehicles; and 80% of estimated technically feasible potential energy efficiency gains for industry and buildings in place by We seek to further reduce the potential impact on our business through a number of significant activities. Through these we proactively assess changes in policy, markets and technology and project future energy trends to optimize our investment strategy. There is little if any incremental cost in factoring in the impact of potential climate policy into the projections we currently undertake for product and energy demand.

24 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management potentially consistent with the long term temperature objective agreed in Paris of holding temperature rise well below 2 C. expected changes in policy, market or technology conditions and reduce impacts on margins and/or the value of assets or investments. There may be the potential for much faster or greater than expected changes in policy to have a significant impact on demand for our sector s conventional products and services, but we are able to adapt to that risk through normal investment cycles. BP s portfolio is currently about half gas and half oil, but we expect the proportion of gas to grow over the next decade. We have an onshore wind business in the US and growing Example 1: We periodically undertake energy technology assessments out to around 2050, summarized in our Technology Outlook, most recently in December Example 2: We make regional and global assessments of energy supply and demand in our Energy Outlook 2035 and we undertake detailed analysis of the transport sector. Our annual Energy Outlook takes the long-term view, considering a wide variety of factors. That means that we look past the nearterm volatility in oil prices and try to identify the structural trends, such as sustainable technological advancements enabling faster

25 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management investments in biofuels. Additionally, we have been investing in startup companies to better understand evolving alternative and advanced technologies such as electric vehicles, batteries and bio-lubricants. growth in shale gas, tight oil, CCS and renewables. While our Energy Outlook presents what we think is likely to happen, we recognize that there are many uncertainties. One key uncertainty is climate change policy, so we included an example of an alternative faster transition scenario for the 2016 Energy Outlook. It s based on a carbon price rising to $100 per tonne in the OECD and other leading economies, and at least $50 per tonne elsewhere; tougher CO2 standards for vehicles; and 80% of estimated technically feasible potential energy efficiency gains for industry and buildings in place by 2035.

26 CC5.1b Please describe your inherent risks that are driven by changes in physical climate parameters Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in mean (average) temperature Increased local air and water temperatures that could impact some of our plant processes (e.g. cooling systems). Other: Increased capital costs; increased operational costs >6 years Direct More likely than not Lowmedium Financial impact on affected locations could include increased capital and/or operating costs such as installing additional cooling systems to maintain efficiency of cooling. We seek to address potential climate change impacts, such as sealevel rise, higher temperatures, extreme weather events and greater precipitation, on our new projects from the start, in the design phase. Climate change risks are considered on major projects, where these projects have a long operational life (e.g. greater than 10 years). We have guidance for existing operations and projects on how to assess potential climate change risks BP recognizes that unmitigated there could be a cost to future business to adapt to a changed environment at a later time or possibly disruption to current infrastructure. This is why we feel a proactive approach to adaptation can be lower risk and a less costly option than deferred action and we are driving the risk and cost reductions by implementing the actions identified above in our business today.

27 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Sea level rise Rising sea levels could impact our refineries, terminals and petrochemical facilities located on the coast and our offshore platforms. Increased sea level increases the potential for coastal flooding Reduction/disruption in production capacity >6 years Direct More likely than not Low Financial impact on affected locations could include an increased operating cost to deal with more frequent shutdowns due to storm surges combined with increased sea level. It could and impacts to enable mitigation steps to be incorporated into project planning, design and operations. For example, in Iraq, where we are working with partners to redevelop an existing oilfield, we are selecting new equipment to better withstand extended periods of high temperatures. We seek to address potential climate change impacts, such as sealevel rise, higher temperatures, extreme weather events and greater precipitation, on our new projects from the start, in the design phase. Climate BP recognizes that unmitigated there could be a cost to future business to adapt to a changed environment at a later time or possibly disruption to current infrastructure. This is why we feel a proactive

28 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management during storm events and may increase the wave loading on offshore platforms during storms. also include increased capital cost for future project design requirements (e.g. increased platform heights). change risks are considered on major projects, where these projects have a long operational life (e.g. greater than 10 years). For example, at our Clair Ridge project, West of Shetland, the platforms were designed to incorporate sea level rise, among other factors. With a service life of around 40 years, the air gap between the lowest astronomical tide and the bottom of the steel deck was increased by 0.5m on the Clair Ridge platforms to account for water depth tolerance, subsidence and wave crest surge values in approach to adaptation can be lower risk and a less costly option than deferred action and we are driving the risk and cost reductions by implementing the actions identified above in our business today.