Energy Transition

Material Topic: Energy Transition

Supporting the goals of the Paris Agreement by reducing the carbon footprint of our energy supply, specifically by increasing sales of zero-carbon energy products such as renewable mobility fuels and renewable power

Key GRI

• GRI 305: Emissions 2016

NaDiVeG

• Environmental concerns

Most relevant SDGs

As an oil, gas, and chemicals company, we are aware that a large percentage of our emissions come from the use of our products. At present, about 76% of the OMV Group’s products are directly used for combustion, significantly contributing to global climate change. As such, we have a unique responsibility in this regard, and understand that a “business as usual” approach is no longer an option.

GHG Scope 3 Emissions from Products¹Includes Scope 3, Category 10: Processing of sold products, and Scope 3, Category 11: Use of sold products

In mn t CO₂ equivalent

The Energy Transition material topic focuses on reducing the carbon footprint of our energy supply, specifically through increasing sales of zero-carbon energy products such as renewable mobility fuels and renewable power. This is the centerpiece of OMV’s commitment to supporting and accelerating the energy transition, and becoming a net zero business by 2050 or sooner in alignment with the IEA’s Net Zero Emissions (NZE) scenario, which foresees limiting the global temperature rise to 1.5°C. To concretize our 2050 goals, we have set mid- and long-term targets to reduce our absolute Scope 3 emissions by at least 20% by 2030 and by at least 50% by 2040, both against the baseline year 2019. In addition, we intend to reduce the carbon intensity of our energy supply by at least 20% by 2030 and by at least 50% by 2040, both against the baseline year 2019. These intermediate targets on our pathway to net zero by 2050 are approximated to the IEA’s Sustainable Development Scenario (SDS), which foresees limiting the global temperature rise to well below 2°C and is thus aligned with the goals of the Paris Agreement.

Carbon Intensity of Energy Supply²The carbon intensity of the energy supply is measured by assessing the intensity of the Scope 1 and 2 emissions plus Scope 3 emissions (in g CO₂) from the use of sold energy products, against the total energy value of all externally sold energy products (in MJ) (excluding purely traded volumes). GHG data that are part of OMV's 2030 and 2040 targets are subject to baseline recalculation; therefore, historical data has been recalculated. See Environmental Data for more details.

In g CO₂/MJ

Our absolute emissions targets cover all parts of the OMV Group, i.e., the upstream, downstream, and chemicals segments and their respective value chains. These divisions are expected to decarbonize at different rates, with a higher rate of decarbonization forecast in our energy segments (E&P and R&M). This is attributable to the immediate reductions that will be achieved by our plans to minimize fossil fuel production and sales: We aim to decrease oil and gas production levels to around 350 kboe/d and reduce crude distillation throughput by 2.6 mn t, both by 2030. Growth in these segments will instead come from zero-carbon products, such as geothermal energy, photovoltaic, wind, hydrogen, and sustainable fuels. In our E&P segment, we will build up around 10 TWh of renewable energy production (including geothermal, PV, and wind). In our R&M segment, we are primarily focusing on finding solutions for hard-to-electrify market segments, such as heavy road transportation and air travel, as well as providing feedstock for greener chemical production. Overall, we plan to grow production of renewable mobility fuels and sustainable chemical feedstocks to approx­imately 1.5 mn t, and produce and market at least 700 kta of sustainable aviation fuels by 2030. This scale-up of zero-carbon energy product sales while decreasing fossil fuel sales is central to OMV’s climate strategy.

Meanwhile, our chemicals segment is projected to grow by 35% in monomer production volumes and 30% in poly­olefins production volumes by 2030. In this non-energy segment, we will also reduce our Scope 3 emissions by pursuing circular economy technologies, but not at the same rate as our energy segments.

In this material topic, we focus on reducing the carbon footprint of our energy supply, as encapsulated in the key metric “carbon intensity of energy supply,” for which we have also set 2030 and 2040 targets. However, our circular economy solutions also play a central role in our climate and carbon footprint reduction strategy. Read more about our efforts on this topic in Circular Economy.

Target 2025

• Reduce carbon intensity of product portfolio (Scope 3) by >6% vs. 2010

Targets 2030

• Reduce absolute Scope 3 emissions³ For our GHG targets 2030 and 2040 the following Scope 3 categories are included: Category 11: Use of Sold Products for OMV’s energy segment, Category 1: Purchased Goods (feedstocks) from OMV’s non-energy segment, and Category 12: End-of-Life of Sold Products for OMV’s non-energy segment. by ≥20% vs. 2019
• Reduce carbon intensity of energy supply by ≥20% vs. 2019

Targets 2040

• Reduce absolute Scope 3 emissions by ≥50% vs. 2019
• Reduce carbon intensity of energy supply by ≥50% vs. 2019

Status 2022

• Carbon intensity of product portfolio reduced by 3% vs. 2010
• Absolute Scope 3 emissions reduced by 8% vs. 2019
• Carbon intensity of energy supply reduced by 3.3% vs. 2019

Most relevant SDGs

SDG targets:
7.2 By 2030, increase substantially the share of renewable energy in the global energy mix
7.3 By 2030, double the global rate of improvement in energy efficiency
13.1 Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries

Governance

OMV’s energy transition is the cornerstone of our Group’s business strategy. Our sustainability framework and “net zero by 2050” target were the basis for developing the business strategy 2030 approved by the Executive and Supervisory Boards in December 2021. The Group’s decarbonization strategy is overseen by Carbon, Energy & ESG Management and Strategic Planning & Projects.

Our climate ambitions are at the heart of our strategy, and responsibility for meeting these ambitions is embedded at the highest levels. Our Executive Board is responsible for setting our climate targets and ensuring that our Group’s business strategy is aligned with meeting these targets. Correspondingly, meeting our climate change targets is a part of executive remuneration, with GHG reduction targets included in the Long-Term Incentive Plan (LTIP) and in the annual bonus paid to the Executive Board. Read more in Sustainability Governance.

The responsibility for our role in the energy transition is also entrenched at Supervisory Board level. In 2021, we established a new committee, the Sustainability and Transformation Committee. Their purpose is to support the Company’s Supervisory Board in reviewing and monitoring OMV’s sustainability strategy, ESG-related standards, performance, and processes, and specifically our performance in HSSE and impact on climate change. Furthermore, the committee serves to support and oversee the transformation process toward a more sustainable business model, including the cultural integration of strategically significant acquisitions.

At Group level, responsibility for GHG accounting and management, sustainability reporting, and ESG governance lies with the Carbon, Energy & ESG Management team in Investor Relations & Sustainability, an area overseen by the CFO. OMV’s Carbon, Energy & ESG Management department is responsible for generating OMV’s GHG inventory based on international standards and best practice. This team coordinates activities throughout the business, providing guidance to stakeholder groups such as subsidiaries, business units, and assets on GHG and energy-related topics. Low- and zero-carbon products enabling the energy transition are developed in the business units. Support for carbon impact assessments for new products is provided at Group level by the Carbon, Energy & ESG Management department. To ensure consistency across the Group, there are also dedicated teams in OMV Petrom and Borealis.

Also in 2022, the Carbon, Energy & ESG Management team developed a Group-wide GHG Management Framework. This new OMV Group regulation defines how to measure, report, and manage greenhouse gas emissions and contains the definitions, boundaries, and rules for the OMV Group’s strategic GHG reduction targets and “net zero by 2050” ambition. It also defines the requirements for purchasing voluntary carbon offsets and their contribution to achieving the Group’s GHG target.

In 2022, OMV updated its Capital Allocation Framework and developed a strategic scoring methodology for investment projects based on four pillars: business strategic targets, financial metrics, risk profile, and climate targets impact. This new methodology has been tested in a pilot phase. The scoring helps to objectively define and review OMV’s most important strategic projects and allows for holistic portfolio optimization across the OMV Group to support our strategy delivery, including our GHG reduction path. Climate scoring is an integral part of this overall scoring and covers the investment’s impact on the OMV Group’s Scope 1, 2, and 3 climate targets for 2030, as well as EU taxonomy relevance.

As part of the updated Capital Allocation Framework, OMV also introduced a new definition for “sustainability CAPEX,” which encompasses investments that meet one of two criteria: either they are aligned with the EU taxonomy or they are investments that support the implementation of OMV’s 2030 Sustainability Framework. The goal of the new Capital Allocation Framework is to promote and facilitate investments in projects aligned with our climate targets, including our long-term net zero target, rather than traditional fossil fuel-related investments. For more information, see Sustainability Governance.