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 78% 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 Products¹ Includes 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 Supply² The 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 is part of OMV’s 2030 and 2040 targets is 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 (Energy and Fuels & Feedstock). 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 Energy segment, we will build up around 10 TWh of renewable energy production (including geothermal, PV, and wind). In our Fuels & Feedstock (F&F) 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 2023

• Carbon intensity of product portfolio reduced by 1% vs. 2010
• Absolute Scope 3 emissions reduced by 10% vs. 2019
• Carbon intensity of energy supply reduced by 1.0% 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 Group Sustainability 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, a Sustainability & Transformation Committee was established. 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. For example, one of their responsibilities is to review and evaluate the progress we are making toward OMV’s objectives in relation to our carbon footprint, climate change, and the energy transition.

At Group level, responsibility for GHG accounting and management, sustainability reporting, and ESG governance lies with the Group Sustainability team in Investor Relations & Sustainability, an area overseen by the CFO. OMV’s Group Sustainability 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 Group Sustainability department. To ensure consistency across the Group, there are also dedicated teams in OMV Petrom and Borealis.

The Group Sustainability team developed a Group-wide GHG Management Framework in 2022. This 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.

The OMV Group’s Capital Allocation Framework includes 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 was tested in 2022 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.

Collaboration with Start-ups and Research Institutions

Emissions reduction and sustainable energy solutions play a major role in our transformational path to meet society’s energy needs. The OMV Group is leveraging its existing expertise and collaborating with start-ups and research institutions to find innovative technological solutions that will drive the energy transition and pave the way to becoming a net-zero company by 2050. Innovation is a key element in OMV’s implementation of its Strategy 2030 and critical to the transformation of the value chain from a linear to a circular model. OMV is always looking for innovative solutions to optimize operations, evaluate business opportunities, and develop new business models to make OMV a sustainable company.

The complexities of the competing demand between climate action and the continued demand for energy highlights the importance of investment in innovation and technological advancement. Investments in unlimited, low-carbon geothermal energy, Carbon Capture and Storage (CCS), and renewable power solutions play a key role in OMV’s Strategy 2030. In 2023, the OMV Group entered into several partnerships, which include the following:

• OMV acquired a 6.5% stake in the privately owned Canadian company Eavor Technologies Inc. Eavor is the world’s leading developer of closed-loop geothermal energy solutions. In addition, OMV and Eavor entered into a commercial agreement to pursue large-scale deployments of the Eavor-Loop™ technology in Europe and beyond. Read more in Low- and Zero-Carbon Products.
• OMV partnered with Plug and Play, which serves as a hub for innovation and entrepreneurship, connecting start-ups with corporate partners, investors, and resources. As a core element of the collaboration, OMV is actively engaged in Plug and Play’s innovation program, which offers a structured and efficient pathway to discover, evaluate, and invest in a selected group of promising start-ups.
• For the past four years, OMV has been part of the “VERBUND X Accelerator.” In 2023, OMV was a community partner, which gave the Company access to a vast network of idea generators and thought pio­neers. This collaboration offered the opportunity to engage with start-ups and benefit from the innovative potential of the community. As part of the VERBUND X Accelerator program, OMV entered a strategic collaboration with the American start-up Compact Membrane Systems (CMS) in 2022. As a technology leader in separation solutions for low-carbon intensity processes, CMS has developed a potentially groundbreaking technology for carbon capture. Following an intensive research and testing phase, OMV will implement the technology and test it on an industrial scale.
• OMV announced research funding of approximately USD 6 mn to research teams at Stanford University for the next five years. The funding builds on ten years of existing cooperation with the institute, marking a significant step forward for OMV in spearheading the creation of AI-driven tools aimed at ideating sustainable solutions. Among the notable achievements of this support is the development of a smart AI-based decision-making tool to optimize developments in the low-carbon business areas. It is capable of not only strategically positioning CO₂ injectors, but also selecting the most effective monitoring techniques. This innovation is key in ensuring the highest level of safety in long-term CO₂ storage.
• OMV started a collaboration with Hycamite, a Finnish start-up and a leader in emission-free pyrolysis technology. Through this collaboration, OMV will have access to a technology that will significantly aid the transition from our traditional business approach to a lower-carbon business model. The Hycamite technology breaks methane down into its component elements, hydrogen and carbon, without releasing any greenhouse gas emissions.
• OMV developed and tested innovative technologies for Carbon Capture (CC), which will be tested in a pilot project in 2024. Together with Brusche Process Technology, a Dutch specialist in the design and construction of innovative sustainable process plants, a mobile carbon capture pilot plant is being built with the aim of testing these promising technologies for future application on a large scale at various OMV sites.