Climate Change and Energy Transition

Responding to the energy challenges

The energy paradigm in the world is changing and Galp aims to play an active role in this transformation, namely by:

Adapting our portfolio to future needs, whenever possible and in synergy with the current business;
Diversification of our assets, with a consequent mitigation of risks resulting from its carbon intensity reduction;
Developing innovative and differentiating solutions that promote the transition into a low-carbon economy.

In the following years, we expect to allocate 5-15% of our capital in order to develop new solutions and explore business opportunities supported by low-carbon energy sources.

Scenario Analysis

In a constantly changing world, in order to guarantee the sustainability of the Company, we test the resilience of our strategy to different scenarios of the future energy paradigm. We have built four contrasting scenarios, considering different levels of technological and political regulation disruption, and we deem these uncertainties critical for the energy sector. One of these scenarios is aligned with the International Energy Agency's Sustainable Development Scenario.

Total primary energy demand mix in 2040 by scenario (bn toe)

IEA - International Energy Agency; CPS - Current Policies Scenario; NPS - New Policies Scenario; SDS - Sustainable Development Scenario (2º C scenario).

For Galp to maintain a sustainable development in the various projected scenarios, in our strategy we reflect the main guidelines that aim at ensuring a resilient and agile organisation, prepared for a complex and uncertain world.

Galp’s strategy remains focused on developing a portfolio that is supported by innovative and differentiating solutions, responding to the challenges of the transition into a low-carbon economy.

We manage risk as an opportunity

Energy transition and climate change risks and opportunities are integrated and evaluated by the Company through an holistic risk management approach. In this context, we identify financial and non-financial risks and opportunities, we seek methodologies and metrics to assess and incorporate them into the business and strategy, and we establish initiatives, action plans and targets to mitigate risks and exploit opportunities.

The climate and energy transition related risks and opportunities integrate the Company's strategic formulation processes and are overseen by the Board of Directors (BoD) and the Executive Committee (EC), with their members participating actively in specialized committees in these areas such as, the Sustainability Committee, Risk Management Committee, among others.

Galp monitors and analyzes the main transition risks, namely the competition, legal and compliance, and market risks, as well as the physical risks caused by disruptive events resulting from climate change.

Aware of the challenges inherent in a transition to a low carbon economy, Galp has made a strategic commitment to gradually diversify the portfolio by integrating energy solutions that lead to lower carbon emissions and new business models. As an integrated energy player our current market presence puts us in a strong position to integrate current products with new services and business models during the decarbonization of the economy.

Carbon management throughout our value chain

Galp integrates climate and sustainability issues, through mechanisms and requirements that are considered in the decision-making processes connected to the various project development stages, throughout their life cycle.

In assessing new opportunities, Galp incorporates carbon into its investment analysis, through two different mechanisms. We consider a carbon price ($40/tonCO₂e) in all investment decision-making processes, which together with a due diligence analysis of the activity’s carbon intensity ensures the alignment of our assets and operations with a lower carbon economy. In this way, we contribute to the sustainability and resilience of our portfolio, which should be competitive, profitable and environmentally efficient and responsible.

In the development phase, we delineate our projects according to the O&G industry best available practices, by working on the adoption of more efficient and sustainable technological solutions, with direct impact on the reduction of the carbon intensity of the activities. This approach has allowed us to achieve an activity carbon intensity of 8.9 kgCO₂e/boe, considering operated and non-operated assets (WI), better than the benchmarks used by the International Association of Oil and Gas Producers (IOGP).

The carbon intensity of our activities and businesses is continuously monitored. See in more detail Galp’s Carbon footprint and carbon intensity metric.

Our objective is to continuously reduce the carbon intensity of our activities, focusing on the development of new solutions and business opportunities supported by a portfolio of competitive and differentiated renewable energy sources.

We actively and transparently participate in global initiatives on climate change

Task Force on Climate-related Financial Disclosures

We take on the importance of a responsible leadership that integrates climate challenges into its strategy. Galp's support to the Task Force on Climate-related Financial Disclosures reflects a commitment to promoting a more balanced relationship between meeting energy needs and minimising our operations’ carbon intensity, as well as to a transparent reporting of climate-related information.

Learn more about this initiative and see here our alignment with the TCFD requirements.

CDP - Driving Sustainable Economies

In 2018, Galp was once again acknowledged by the CDP - Disclosure Insight Action as a leading company in climate change strategy and management. Galp was the only Oil&Gas company to achieve both A or A- classification in the categories of water security and climate change.

Learn more about this initiative.

Zero Routine Flaring by 2030 of the World Bank Group

In 2015, in the capacity of exploration and production operators, we have endorsed the Zero Routine Flaring by 2030 initiative. Our goal is to scale the new E&P projects to zero flaring under normal operating conditions.

Learn more about this initiative.

We mean business

We have joined the We Mean Business coalition, integrated in the NAZCA Tracking Climate Action initiative of the United Nations Framework Convention on Climate Change (UNFCC).

Galp has made a commitment to take action, especially on climate issues, by using an internal carbon price in the investment decision-making processes, by the corporate commitment assumed in the Climate Change Policy, and by implementing the TCFD recommendations.

This platform, which consists of a group of organizations that work with the business sector and investors worldwide, promotes the transition into a low-carbon economy. The platform also fosters proactive climate action, encouraging the creation of new political milestones regarding climate change.

Learn more about this initiative.