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Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00001 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00002 Introduction from Bob Dudley The world is growing like never before, creating opportunity for billions of people. And all this growth requires energy. But as the world demands more energy it also demands that it be produced and delivered in new ways, with fewer emissions. At BP, we embrace this dual challenge. We have always looked to the future, adapted to change and reel challenges like this head on. In this report, we examine how the energy world Is rapidly changing, set out our low carbon ambitions and show how we are helping to advance the energy transition. Our experience Two decades ago, BP was one of the first energy companies to address the threat of climate change, pioneering alternatives like wmc, solar and biofuels. We invested billions of dollars to make renewable energy a genuine alternative Some of our investments w it - others did not. We were early, but I dc we were wrong, because we learned valuable lessons along the way. To deliver significantly lower emissions, every type of energy needs to be cleaner and better. A race to renewables will not be enough. That's why we are making bold changes across our entire business. Our low carbon ambitions Here's how we are doing it: by reducing, Improving, creating. We're reducing emissions in our own operations: we're improving our products to help customers lower their emissions; and we're creating low carbon businesses. We are able to do this because c ovativs mindset of our people, our unique giobai research network, and the potential being unleashed by digital, big data and advanced technologies. This is allowing us to rapidly develop new ways to tackle emissions and improve efficiency, and to deploy these throughout BIT Reduce We have set clear targets for emissions in our operations. So even as our business grows to meet growing demand, our net carbon emissions will not. We'ii deliver this through sustainable reductions In our greenhouse gas emissions, by keeping a cap on our methane intensity and, as necessary, with offsets to keep net emissions at 2015 levels. We appreciate that there's more to do - but we see this as a critical next step in our journey to reduce emissions. -> improve We're producing more natural gas - a lower carbon alternative to coal and a complement to renewables. And we're working with auto manufacturers to create fuels and iubricants that aiiow drivers to go further with fewer emissions. >> Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition Tier 2 1 ED 002061 00114950-00003 Introduction from Bob Dudley continued Create We are also creating low carbon businesses, such as LightSource BP, adding solar to our long-established renewables businesses In wind and biofuels. And some of our most exciting work is m venturing, where we are making investments in a range of smart technologies and experimenting with new business models. The energy landscape is evolving quickly and no single solution is emerging as yet But we will be ready to scale up the most promising innovations into viable new businesses as the future becomes clearer To validate all these efforts and encourage further action, we are introducing an accreditation programme across BP that we'Ve calling Advancing Low Carbon. A shared challenge I am surrounded by people who want to play their part: engineers, scientists, technicians, economists, specialists in energy policy. We are all hungry to do more. But we know that on our own, it Is never going to be enough. The transition to a lower carbon economy requires everyone to be involved, from Individual consumers to globe: corporations, and from local authorities to national governments. When w s ail work together we can make progress, as happened In Pans in 2015. We support the ambitions of the historic Paris Agreement, but the pledges made then and the actions taken since will not be enough to prevent a 2C rise. To help meet the challenge, we believe carbon must be priced - and only governments can do that. Put a price on carbon and you incentlvize everyone to use less energy. You Incentlvize the use of lower carbon fuels. And you Incentlvize innovation and the hunt tor ail kinds of ways to lower emissions. Ai! my experience over the past 40 years in the energy business tells me that when yon inspire people, human ingenuity will find solutions. it w on't be easy, true progress seldom is, but BP will never stop working to help the world keep moving and, mors importantly, keep advancing. Sierra Club v. EPA 18cv3472 NDCA Bn Tier 2 ED 002061 00114950-00004 The changing energy mix The demand for energy continues to grow - largely driven by rising incomes in emerging economies and a global population heading towards nine billion by 2040. At the same time, the energy mix is changing as technology advances, consumer preferences shift and policy measures evolve. Renewables are now the fastest-growing energy source in history and we estimate that they couid account for 14% of ail energy consumption in 2040 - If not more. That said, oil and gas could meet at least 40% of the world's enerav needs in 2040 - even on a course that's con nth the Pans goal of limiting global warm ;s than 2C. Gas offers a much cleaner alternative to coal for power generation and can lower emissions at scale. It also provides a valuable back-up for renewables Infermlttency, delivers heating af the high temperatures required by industry and Is singly used in transportation. Oil is the primary feel for transport today. We expect its share of the total energy m;x will gradually decline as we see more energy efficiency in traditional engines, greater use of biofuels and natural gas, and growth in fully electric and hybrid vehicles in the years ahead W:tn oil and gas in high demand for years to come, it's essential that action Is taken to reduce emissions from their production and use. Energy consumption - 2040 projections Billion tonne:? of o:i equivalent, The 'sum of the fuel hates may not equal 100% due eo rounding. ;i <) G;: S Coa! > Nudear Hydro % ; Renewable:; Evolving transition in this scenario, government policies, technology and social preferences evolve in a manner and speed seen in the recent past. The growing world economy requires more energy but consumption increases less quickly than in the past. Faster transition This scenario sees carbon prices rising taster than m [he evolving transition scenario, w ith other policy interventions encouraging more rapid energy efficiency gains and fuel switching. Even faster tra n sitio n This scenario matches carbon emissions similar io the international energy 13 Agency's sustainable development scenario te m p e rs V is it * bp, oom /energy outlook for more information on our projections of future energy trends end lectors that could effect them out to 2040. BP Advancing the energy transition 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00005 Our strategy for tit energy transition On -. r- W H i-m : n tj d U je j OIK' Of 'W SS^9, - '. o r n e I :== .. i; w r e r -nn h r .. m M ! ::?:=; .. S -1 TMS=!='; ! ====! - - IP :-= this dutd ohoM oogn. A lth o u g h we caret predict the future, Insights horn our Cnergy Ouiiook end Technology Outlook help shape our - ; ?:. ; ihinking. We consider how policy, consumer behaviour end advor::wo In technology could affect the pace ot the energy transition end how we produce and use energy AH our projections eee renewables growing at a last pace - bur w:th Oil end gas continuing to play a prominent role over the next two decodes That's why our portfolio Is a balance or advantaged oi! ar:d a a nornpohtivo downstream, d x trading ot oil forms ot energy and a wide range of low liiiiliilillfc lllilliililllilllllllllllllllllllllllllllllllllllllllllitr.,,. oar business as tho world's onorgy needs evolve When making sirufegio dcdons, we consider different potential ;nedium-ierm supply and demand: scenarios - including a raster i:ousiiiou to lower carbon sources. To lee prepared for uncertainties end opportoniiies, we lest whether a potential inve-ei.rneni wakes cornrnereiai sense using e range oi o il eras and earbon prices. We believe this approach -atlively planning bow we can contribute to and be competitive lit the energy transition - gives us resilience, whatever the pace and path the world chooses. To reinforce this belief, we base part ot our long-terra -executive compensation on delivery oi title strategy. Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00006 1. H o w d o hin!- the no:;jy m:> 0|l||i.filile li 2040? Energy scenarios We consider various scenarios, with different assumptions about policy, technology and consumer behaviour. Evolving transition vaster transition Even raster transition San on sale or cars with Internal combustion engines Greater policy push for renewables Less policy support for a coal to gee switch Impact on CO, emissions (billion tonnes) 30 to 10 last cois Source: 88 llnera/ Outlook. Market scenarios We consider various market scenarios, with different assumptions about supply and demand. Return to oil price volatility 0:1 and gas demand rises lead to a supply crunch and higher prices. Oversupply of oil and gas Oil and gas remain cheaper in the long term. Faster energy transition Driven by policy and advancements in renewables and energy efficiency. 2, How do we see energy markets evolving? 3. What are our strategic priorities? Our strategy We pursue a strategy that's resilient to a broad range of energy and market scenarios. Growing gas and advantaged oil in the upstream Invest In more oil and gas, producing both with increasing efficiency. Market-led growth in ...* the downstream Innovate with advanced products and strategic retail partnership. Venturing and low carbon energy Pursue new opportunities to meet evolving technology, consumer and policy trends. Modernizing the whole group Simplify our processes and enhance our productivity through digital solutions. Progress and reward We reward based on the delivery of our strategy for the evolving energy landscape. We base 20% of our longer-term share awards on progress against our strategic priorities. This includes measures on cur performance in gas, renewables, venturing and renewables trading. As an underpin, the board considers progress on issues such as reducing emissions. Improving our products and creating low carbon businesses - as well as total shareholder return, safety and other environmental factors - before determining the final vesting outcome for these longer-term awards. BL's board and executive team annually review our strategy. 4, How do oer top leaders get rewarded on lower carbon progress? 1 Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition IS Tier 2 ED 002061 00114950-00007 Our commitment to advance a low carbon future The world's rising demand for energy is a real opportunity to expand our business and deliver higher returns for our investors. But as we grow, our net operational emissions won't and we will help others to curb their emissions Our low carbon ambitions We will deliver th:s commit mem by reducing emissions is our operations, improving our products and services, and creating low carbon businesses. This is just the Sorest step in our 20-pius year journey - but a significant one and one we piae to build on In the years to come. By setting tough targets and aims - and sharing them - others can monitor our progress. We'll review these regularly so we can keep 'them up-to-date with changes In our portfolio, protocols and other factors. Reducing z.ero net growth in operational emissions out to 2C25 3.5Mte of sustamabie GHG emissions reductions by 202b Targeting methane intensity of 0.2 % and holding It below 0.3% Improving vT Provide lower emissions gas TT Develop more efficient and iower carbon fuels, lubricants and petrochemicals Grow lower carbon offers for customers Creating lit Expand low carbon and renewable businesses $500 million invested in iow carbon activities each year jifo W Collaborate and invest in the O f ! and Gas Climate initiative's $1 billion fund for research and technology b h r K iiliM p i . Visit Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00008 m i emissions in our operations Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00009 Targeting zero net growth in our operational emissions The International Energy Agency estimates that energy efficiency could contribute around 40% of the em issions reductions needed to stay below the 2C goal. W e are playing o u r part by im proving the efficiency o f ear existing operations and designing our new m ajor projects to em it fewer greenhouse gases jGHGs), We have set a sustainable emissions reductions target of 3.5 million tonnes out to 2025 Our operating businesses will deliver this through improved energy efficiency, tower methane emissions end reduced flaring - ail leading to permanent, quantifiable GHG reductions. We are aiming for zero routine flaring by 2030, as part of an Initiative by the World Bank, And, to ensure that as our business grows, our carbon footprint does not, w e ll offset any increase in emissions above 2015 levels that's ovisitnot covered by our sustainable reductions activity. bp.com /em issians or the specifics of tnese targets. gmoese beat Digital technologies are helping us to reduce energy by innproving how we heat seawater for use at our Deepwater Gunaahii platform in Azerbaijan. Redlaesog Wet eeeeemplioe W e've introduced oil tankers w ith more efficient engines arid advanced energy management systems. Reteafsttseg technology W e upgraded technology at our Cooper River petrochemicals plant m the US, which will significantly reduce the site's energy use and emissions. U$i?3<g eo-gesTeseted power W e now use electricity from our co-generation facility te power the turbines used to pump water to the cooling to w e rs ; our Whwng refinery in the US. 8 Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition Tier 2 ED 002061 00114950-00010 Tackling the methane challenge The Intergovernm ental Panel on Climate Change data suggests that methane accounts for around 20% o f m anm ade GHG em issions. Since m ethane is the prim ary com ponent o f natural gas, BP Is co m m itte d to taking a leading role in addressing the m ethane challenge. Methane has a shorter lifetime in the atmosphere than carbon dioxide, but it has a higher global warming potential. So, we are targeting a methane intensity of 0.2%, and holding it below 0.3% This includes the methane emissions from our operations where gas goes to market as a percentage of that gas To manage our methane emissions, we use Technology' like infrared cameras to identify ar revent small seeps from becoming mors hazardous leaks. Thirteen of our 22 major projects scheduled to be delivered by 2021 are gas, so w e 're designing them in ways that should reduce methane emissions from the outset W e're working on this challenge with our industry peers, sharing best practice and investing in potentially breakthrough technologies. For example, we are active in the Oil and Gas Climate Initiative - whose member companies produce more than 25% of the world's oil and gas - in its aim to work towards near-zero methane emissions from the gas value chain. And, we support research such as Princeton University's work to enhance the scientific understanding of methane and its contribution to global warming, Q Visit ^ bpxam ?m &ih8n& -or more inrorn'sation and specifics on our methane target. Our Kriazzan project will pnovioe a major new source of gas tor Omari, with production expected to represent around 40% of the country's total gas supply From the start, w s designed Khazzan to be inhere it has a c there's n at each v Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition Tier 2 9 ED 002061 00114950-00011 ess is responsibl thane reduction We introduced the technique known as green completions, which captures gas that would otherwise be flared or vented during the completion and commissioning of wells. We have also been swapping out high-bleed controllers with ones that emit less methane And, by drilling horizontal wells, we reduce the number of production facilities, along with their associated emissions. We periodically remove liquid from our wells so gas can flow. Methane can be emitted during this process, so we're using new technologies, such as enhanced automation, to reduce these emissions. We are also trialling pumps powered by solar energy rather than gas, as well as the use ot drones and truck-mounted laser sensors to detect and quantity methane leaks. ED 002061 00114950-00012 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00013 Producing more natural gas Gas produces around had the carbon dioxide (CO,) em issions o f eoai when burned to generate power, That means gas can make a m ajor difference, as has happened in the US, w here abundant use o f gas from shale has helped drive the country's CO,em issions b ackd ow n to 1990s levels. Gas is the ideal complement to renewables as It can be a lower carbon, cost-effective back-up to the variability of wind, solar and hydropower generation. Emitting fewer pollutants, It is also better for air quality. Just as importantly, gas is widely used for heating homes and businesses, as well as delivering the high temperatures needed in heavy Industries like steel, cement and metals. And, gas is becoming more accessibie and affordable around tbs world thanks to a growing global gas market connected by ship and pipeline BP is active in finding and producing gas, as wei! as its transport, storage and saie This puts us in a good position as the gas market grows and becomes increasingly competitive. And, by tackling methane emissions, we are helping to make sure that gas is a major lower carbon resource for years to come. P t see w page 14 for information on our renevvaole gas rue!. ili The Southern Gas Corridor, one of the largest projects in BP's portfolio, will connect gas from the Caspian directly to Europe for the very first time. Gas will travel 3,500 kilometres from our Shah Deniz field In the Caspian Sea across five countries to Italy. We plan to deliver gas supplies to Turkey in 2013 and to European markets in 2020. 12 Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition Tier 2 ED 002061 00114950-00014 UK: North Sea Trinidad & Tobago Egvpt Mauritania and Senegal -Azerbaijan India Oman llllllll A ustralia Key 201 ? gas start-a a Expected gas start-ups 2018-2021 Liquefied natura; gas LN0 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00015 Helping consumers lower their emissions A round 80-90% o f carbon dioxide em issions from oii and gas products are fro m th e ir use by consum ers in transportation, power plants, industries and buildings. So one of the biggest contributions we can make to advance the energy tra n sitio n Is by p ro vid in g products and services that help consumers lower their carbon footprint. We provide fuel tor transport, 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. Many of our products and services have been accredited with our Advancing Low Carbon programme - see pages 20-21. We've developed more than 20 carbon neutral products and services through the use of advanced technology and our offsetting programme. And, v/e offer our customers the opportunity to offset their own carbon emissions. Cm W:WI: nenWWkWtWliliOtS Our Castro! Professional lubi cants - 'supplied to car dealerships for use In servicing cars -- are certified as carbon neutral in accordance w ith PAS 2060, In the US. w e've redesigned some off our Casco! engine oil peckaging to use less please, resulting n a reduction in CCA emissions of about 2,000 tonnes a year. Lowerr easitoo chemscsW Our p'S'Air, used ;o make terns s trh ac W d-e^ aW plastic k o > a iq iaa s carbon ft mu - - n c 30% low a I Jb< assessne tec: m< I ji N :x Supply mg t<i aimports W e make jet biofuel available using e a s in g fuelling infrastructure at Oslo and Bergen in Norway and Halnnstad in Sweden. Vvu litre me [argosi. pn.'OU'i.-or of renewable gas fuel for US transport This fuel can reduce greenhouse gas emissions by around 70% compared w ith gasoline or diesel-fuelled vehlciea. O ffsetting em kskm e with o w fund earhis customers can use our.AW ana SAfuel cards In Austria., Germany, the Netherlands and the UK to offset their carbon emissions. 14 BP Advancing the energy transition Sierra Club v. EPA 18cv3472 NDCA Tier 2 waste We are working with Fulcrum: BloEnergy to supply biojet fuel at key hubs across North America. ED 002061 00114950-00016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00017 Expanding our renewables business Renewables are the fastest-growing source of energy today, on course to provide at least 14% of the global energy mix by 2040, BP has been in the renewables business for more than 20 years - we're one of the largest operators among our peers and we're expanding as we see more opportunities. Biofuels The ethanol we produce from sugar cane in Brazil has life cycle greenhouse gas emissions 70% lower than conventional transport fuels. And, our joint venture to operate a major ethanol storage terminal with our partner Copersucar will help us expand further into Brazil's large fuels market. We are working in partnership With DuPont on a technology called Butamax, which converts corn sugar into bio-isobutanol - a biofuel that is more energy rich than ethanol and can be blended with gasoline :n higher concentrations and transported through existing fuel pipelines and infrastructure. %)2,3m tonnes of CO, equivalent avoided through our renewables business in 2017 Our efhanoi produc avoided emissions equal to Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00018 Biopower We create biopower by burning bagasse, the fibre that remains after crushing sugar cane stalks. Around 70% of the biopower generated is exported to the local electricity grid. This Is a low carbon power source, with the CO. emitted from burning bagasse offset by the CO. adsorbed by sugar cane during irs growth. y y Visit ' brj.com/ren&w&bi&res&rv&s to see how vve sre creating a new way tor reserves ot renewable energy to be assessed on a like-roidike basis with fossil fuels. Solar energy BP ;s partnering with Llghtsource, Europe's largest solar development company, which focuses on the acquisition and long-term management of large-scale solar projects. We are bringing our global scale, relationships and trading capabilities to drive further growth across the world. Wind energy BP Is one of the top wind energy producers in the US. We operate 13 sites in seven states and hold an interest in another facility in Hawaii. 200 Solar $m investment over three years in Europe's largest solar development company. W ind The net generating capacity from our portfolio is enough to power almost homes. Tier 2 17 ED 002061 00114950-00019 Investing in low carbon ventures and start-ups Innovation has the potential to disrupt and have big impacts. For example, one company's technology for carbon reduction in concrete could reduce manmade greenhouse gas emissions by 1%, if deployed globally. That's why BP is Investing in this company and many others, so we can learn fast and scale up where we can We plan to invest around S200 million every year to help :ncuba;e and grow lower carbon solutions This is ail part of our near-term plan to allocate at least $500 million a year for low carbon activities, which also includes our renewables businesses and acquisitions. We view these activities as core to our strategy - w ith the potential to make a real contribution to our future. f y Carbon management With the world needing oil and gas tor much of its energy for decades to corns - possibly 40% of el! energy used in 2040 - we are investing in ways to reduce the amount of carbon dioxide at Is emitted into the atmosphere. nabling carbon offsets We are one of the world's largest carbon traders id we are making investments that help businesses and other organizations offset their irbon footprint through emission-reducing prelects. See page 22 for more on our carbon trading activities. in into concrete atIon accounts for 5-7% of total missions. W e've invested in Soiidia, ................. rhnolonv to nroduoe linhtweinht Advanced mobility By 2040 over 30% of kilometres travelled by passenger cars could be powered by electricity. And, we think more and more people Will take advantage of ride sharing and car pooling Charging points fo r electric vehicles We are partnering with Free'vVIre, which develops smart battery systems for fast charging of electric vehicles. And, we are piloting charging points at retail sites from the US to Europe and New Zealand. Digitally connected convoys We're investing in Peioton, whose technology enables tw o or more trucks to travel closely hut safely together. This reduces aerodynamic drag, generating savings in fuel use and carbon emissions. 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00020 ':wi;.. Bio and low oarbon prod ucts There is increasing demand for lower carbon versions of fuels, Indusfrlai materials and other products. The aviation industry, for one, expects a growth In air travel but is pledging to cut Its emissions m half by 2050 A viation fare I from waste Our partner, Fulcrum BloEnergy, has developed a jet fuel made from household waste that has 20% of the carbon footprint of its conventional equivalent. We will distribute and supply biolet Into aircraft at key hubs across North America. Susisinshie building materia is We're working with Tricoya to produce a less carbon-intensive alternative to concrete, metals and elastics. Using acetylation to change the b properties of wood, we can create a -resistant construction material that does ill or shrink. nsforrnation Artificial intelligence, faster data processing and other digital technologies have great potential for increasing efficiency and driving down emissions Casroi's oint venture with Onyx InSight provides engineering and software services to wind farm operators so that they can monitor the condition of wind turbines and avoid breakdowns. Low carbon power and storage Nearly tw o thirds of the projected growth m world energy demand over the corning decades could come in the form of electricity BP is looking at ways to meet customers' power and storage needs, for example through developing advanced battery technology. Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00021 Accrediting our lower carbon activities BP's new Advancing Low Carbon accreditation programme is specifically designed to encourage every part of BP to pursue lower carbon opportunities, by providing a framework for us to highlight activities that demonstrate a better carbon outcome. low carbon * Qualifying activities range from emissions reductions in our operations to carbon neutral products, from investments in low carbon technologies to our renewables businesses. We undertake these activities through our own businesses as well as m partnership with others. Deloirre has assessed our programme and criteria and independently assured the activities and their greenhouse gas (GHG! emissions savings or offsets. Our Advancing Low Carbon programme highlights many, but not all, of BP's actions on low carbon. Assessm ent criteria The activities must: A Deliver a better carbon outcome by doing one of the following: <Reducing GHG emissions <Producing less carbon than competitor or industry benchmarks * Providing renewable energy * Offsetting carbon produced * Furthering research and understanding to advance iow carbon enabling 8P or others to meet their iow carbon objectives A Go beyond what is required to meet relevant carbon emissions regulations. A Be either directly delivered by 8P or by a BP partner A Be up arid running. > Comply with Advancing Low Carbon programme requirements on CiHCi calculation methodologies A Deliver a carbon outcome that is intended to be irreversible. Q Visit h p x o m ^ d v & n c ifig io w c & tv o n for mote gaLa a on each activity and our accreditation programme. BP Advancing the energy transition Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00022 activities accredited m .jgg pM P ' tonnes of C 0?equivalent estimated to be saved or offset through activities delivered by BP be saved or offset through activities delivered by BP partners Accredited activities in the first year of the programme Reducing GHG emissions * Sustainable GHG emissions reductions - actions to improve energy efficiency and reduce methane emissions and fianng In our operations. Producing less csrbon then competitor or industry benchmarks * BP hioiet ~ let fuel made w :ih recycled cooking ob * Oil tankers ~ new, more energy efficient ships * Castro! low viscosity lubricants --which help Improve vehicles' fuel economy. * Ony>: InSight - Investing in Improving the maintenance efficiency of wind turbines. * P T A ir- a chemical feedstock w ith a lower car'bon footprint than the average European PTA. Providing renewable energy * Bras!! biofuels and blopower. * Wind energy. C produced * Am 3P Into-plane fuelling cervices * SP and Aral fuel cards ~ help fleo; customers offset their carbon emissions. * PTAir Neutral - a csrbon neutral chern icaI reeds tec i<. * Castro! EDGE Blo-syntneUc and Castro! MAGNA TEC B iosynthetic -ca rbon neutral engine oils manufactured using 25% piant-denveoi p:i compounds * Castro! Ootlgear - carbon neutral lubricants for the wind industry. * Castrol Professions! - carbon neutral engine oil. * Castro! Transrnax - carbon neutral transmission fluids. * Castro! VCCTQN - a carbon neutral range of lubricants for the commercial trucking industry, Furthering research and understanding to advance iew carbon * Anhydride - a chemical feedstock w ith a lower carbon footprint. * Butamex -- e joint venture with DuPont to develop advanced biofuels. * Castro! GTX ECO ~ a motor oil that delivers a GO,, reduction over the product's life cycle, compared w ith Castro! GTX Duasei 1 5VV-40. * lbEXCEL -a n oil ceil that Is designed to reduce CO. ernlsciona by helping oil to 'warmi up more quickly. * Solldla investing in producing concrete w ith a lower carbon footprint * Tricoya Technologies - investing in producing more durable wood products. * Carbonfree Chemicals investing in a new technology that captures carbon emitted during cement production. * Acadenuc partnerships - BP march programmes at Princeton, Harvard and Tufts universities. BP's participation in; * Climate and Clean Air Coalition's Oil and Gas Methane Partnership. * C O. Capture Project. * Oil and Gas Climete Initiative. * World Bank's Global Gas Flaring Reduction Partnership and Zero Routine Flaring by 2030 initiative. Enabling BP or others to meet their low carbon objectives * BP Globa; Environments: Products business - investing in forestry projects to reduce emissions and generate carbon credits. * BP Target Neuirai - developing ca; oon neuti si p;ooucts and services. * Encourage Capital's EKO Green Carbon Eund - Investing in forestiy projects that generate carbon offsets. W e essimase 'lie total emission; saved or offset Teen the accredited activities using variety o methodologies six! baselines The ligures ate aimed at illustrating the im pact o as a whole rattier then a qnanuheation o1 specific savings made by BP or by BP partners. The scope or accredited activities Is w ider than, end imaligned with, the scope of activ emissions vvkhin BP's operational emissions boundary. The;sore, the figures are not ditectiy comparable to BP's reported emissions. BP Advancing the energy transition inte se to 21 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00023 Using carbon offsets to support our low carbon ambitions With carbon offsets, a reduction in greenhouse gas emissions in one place compensates for emissions made elsewhere. BP is a leader in developing and using offsetting programmes. And, we will use offsets to underpin our iow carbon ambitions. Carbon offsets are created through investment m activities that reduce greenhouse gas (GHG) emissions or absorb carbon dioxide (CO.). That could be initiatives that provide lower carbon alternatives, like renewable energy or cookstoves to replace open fires. Or it could be projects that protect or enhance natural resources that soak up CO, from the atmosphere - such as land and forests. Carbon offsetting is essential tor reaching the Paris goals - and we consider it a valuable supplement to our own emissions reduction activities. Our Target Neutral programme provides a means for individuals and organizations to redoes their carbon footprint through offsetting. Over the past 10 years, we have built up Significant expertise in carbon management projects around the world and have helped our customers offset more than three million tonnes of CO, equivalent. We plan to offset any increase in our operational emissions above 201 5 levels that's not covered by our sustainable reductions activity. This means that, out to 2025, w e ll have no net increase in our carbon footprint, even as our production grows. We currently offer more than 20 carbon neutral products and services to our customers, using Target Neutral to offset the emissions. And, we are helping to grow markets for carbon credits through the sale and purchase of credits and by increasing their overall supply. We are able to use our powerful market Insights and Innovative platforms to help companies meet their own emissions reduction commitments, while providing income to the people who run the projects, in 2017 alone, we financed low carbon projects that resulted m emissions reductions of more than 12 million tonnes of CO, equivalent How offsetting works ^ o- .e* gM' c"> Carbon reduction Investments - BP helps people and companies reduce their carbon footprint for: Compliance needs Corporate responsibility Individual choice 22 Sierra Club v. EPA 18cv3472 NDCA BP supports a diversity of projects, including: Forest protection Biogas initiatives Cookstoves BP Advancing the energy transition Tier 2 Offset our own operational emissions growth Make some of our products carbon neutral Trade with companies to meet their compliance and voluntary needs ED 002061 00114950-00024 Advocating for better policy and clearer incentives Carbon pricing We bsheve that carbon pricing is the most effective way fo incenfivize everyone - energy producers and consumers aiike - to play their part in reducing emissions. If makes energy efficiency more attractive and low carbon solutions, such as renewables and carbon capture, use and storage (CCUS), more cost competitive. We expect around two thirds of BP's direct emissions will be in countries subject to emissions and carbon policies by 2020. BP has played a major role In helping governments design their trading systems and we've been active as a trader In the world's current emissions trading systems since their Inception. Pricing carbon adds a cost to our industry's production and our products -but It also benefits the sector by providing a roadmap for future investment and a level praying field for all energy sources We are members of the US-based Climate Leadership Council and the international Carbon Pricing Leadership Coalition - two groups that advocate tor carbon pricing How CCUS works Internal carbon price To help anticipate greater regulatory requirements affecting our GHG emissions, we use a carbon cost when evaluating our plans for large new projects and ones where there could be material emissions costs. In industrialized countries, our Internal carbon price is currently S40 per tonne of CCy equivalent, and we also stress test at a carbon price of $80 per tonne Carbon capture, use and storage We believe CCUS has a vital role to play In meeting the objectives of the Paris Agreement. It can achieve deep emissions reductions in existing power infrastructure and energy-intensive Industries that rely on the use of fossil fuels. The technology has been in use for more than 20 years, but needs governmental support -- through a carbon price and other policy measures - fo accelerate Its deployment. Through the Oil and Gas Climate Initiative, we are working fo identify the policy mechanisms that may best promote the deployment of CCUS on a regional basis. At BP, we are exploring opportunities to deploy CCUS In our own operations, projects arid products. For example, as pail of a joint venture In the United Arab Emirates, we are using CO, from industrial processes to enhance oil recovery Carbon is captured and s i O ^ i ll l typically in u n d e ^ IllIIllilllil formations, : : v ; u can be Injected into oil stimulate production o r bo used ie : create building end other tdateriaia. Sierra Club v. EPA 18cv3472 NDCA BP Advancing the energy transition Tier 2 I 23 ED 002061 00114950-00025 As a business that operates in 70 different countries, d o l i o n s of people warm, working and on vrfhe';rdpveail\aroQnd-tft'd'wdHd, In tfiis publication, we've set out our commitment; to keep doing that while advancing progress towards a cleaner, iower carbon future. Keys to success What you have read In these pages applies to every part ot our business, from the deep sea to the desert, from rigs to retail. The experience and expertise we have acquired over decades inform our actions, our future plans and our belief that, to meet global climate goals, the world should prioritize: -> Reducing emissions rather than prom oting any one fuel as the answer. The world will need all forms of energy for a long time to come, so we need to make all fuels cleaner Improving energy efficiency, where the greatest reductions in emissions can be achieved. Advances in technology for everyone - from industry to individuals -are creating huge opportunities to achieve gains over the coming years. ---> Carbon pricing as one o f the m ost significant steps that can be made. The more governments can do to bring about dear, stable pricing frameworks, the greater the Incentives for innovation and lower carbon choices. No one company or sector alone can deliver a low carbon future. Everyone, from consumers to corporations to governments, needs to take responsibility. If we respond collectively, even a challenge as complex as climate change can be met. BP Is dedicated to being part of the solution. 'If Bob Dudley Group chief executive, BP Sierra Club v. EPA 18cv3472 NDCA Tier 2 M liliil^ p v ip ED 002061 00114950-00026 Advancing the energy transition \ Sustainability Report 2017 Covers our sustainability performance with additional information online. bp.com/s ustainability BP Technology Outlook How technology could influence the way we meet the energy challenge Into the future. bp.camAechnologyoutiook BP Energy Outlook Provides our prelections of future energy trends and factors that could affect thorn out to 2040. bp. com/energyou ttook Cautionary statem ent This docu m en t contains certain fo rw a rd iooidng statem ents - t h e f is, statem ents related to future, not past events end circum stances - which m ay reiete to the am bitions, aims,, targets, plana and objectives o f BP - aa w e ll as statem ents related to tine future energy m ix, fmrvvarddookirig statem ents involve risk arid uncertainty because they relate to eve tits end depend on circum stances that w ill or m ay occur in the future and ere outsid e of th e control o f BP, A ctual results o r outcom es m ay d iffe r from those expressed in such statem ents, depending on a variety o f factors including those set out in the 'R isk factors'' in o u r A n n u a l R eport an d Form 20-F 2017 and o th e r m atters referred to at bp.com /energytrenaition. ' ..s _ _ Sierra Club v. EPA 18cv3472 NDCA Tier 2 Acknowledgements Design: SAl.TciRSAXTIrR MSLGROUP Typesetting: SAD; cRSAXTFR MSLGROUP Printing: Pureprint Group Untiled. UK, ISO 14001, FSC-Certified and CatbonNeulraP Photography: Chris Moyse, Marc: Morn don Mehmet Binay, Richard Davies. Simon Kreitem. Paper This report is printed on Munken Polar Smooth paper and Poard. This paper is made Iron': elemental onlorlne free pulps. Munken Pola; Smooth benefits from the vel of environmental cenilioahon. inducing FSC chain of custody. FIMAS and ISO 14001, the- pnip is sourced Pom sustainably managed 'forests. You can order BP's printed publications free o f charge front: bp.a^rn/p&psrccpi&s US and Canada Issuer Direct TolPiree: ad 888 301 2508 bpr&poni':Sii'inserdirs<7i\co(r> UK and rest o f w o rld BP Distribution Services Tel: -4 4 OS'/O 241 3.269 Pax: +'14 (0)870 240 5753 b p i& r ib u tio r is e rv ic e s t b p .c o rr t Feedback Your feedback is important 1c us. You can email the corporale reporting team at corpor.eterepoidngAbp.corrs ; : IPltll$:l|Jl iliilll! MIX Papar firem responaible ssureaa wwi/fsc-org FSC O22S13 Printed in the UK by Pureprlnl Group using their pureplit priming technology. WMMMm ED 002061 00114950-00027 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00114950-00028