Sustainability

Climate Change Management

Sustainability

Climate Change Management

As an energy business relying on fossil as primary fuel, climate risks and opportunities are key issues to PTT Group. Furthermore, Thailand signed the agreement in Conference of the Parties: COP 21 at Paris, pledging to reduce GHG emission according to Intended Nationally Determined Contributions (INDCs) in all sectors by 20-25% within 2030. This is in in addition to GHG reduction according to Thailand Nationally Appropriate Mitigation Action (Thailand NAMAs) in the energy sector and transportation sector by 7-20%, compares to the business as usual level as of 2020.

In respond to risks induced by climate risks and opportunities, as well as facilitating performance to ensure achievement of the national greenhouse gas reduction target, PTT established "PTT Group Clean & Green Strategy" in 2018. This was a collaborative efforts within PTT Group, combining climate change strategy with PTT Group's business strategy. In 2019, PTT has set the control target of PTT Group’s greenhouse gas emission to be no more than 39.4 million tonne carbon dioxide equivalent. This arrangement enables PTT to effectively monitor its subsidiary's performance, ascertaining alignment towards the Group's climate change strategy. The strategy itself has been approved by PTT Board of Directors and Executives already.


PTT Group Clean & Green Strategy

PTT Group has developed climate change strategy under the title “PTT Group Clean & Green Strategy.” It is executed through PTT Group Clean & Green Alignment Working Team. The Team comprises of representatives from PTT and seven Flagship companies, as a assigned by senior Management. The Team comprises of 21 members. 

PTT Group Clean & Green Strategy


Strategic Direction of PTT Group's according to PTT Group Clean & Green Strategy, consists of:

Strategic DirectionDetails
Design Now Define New Clean & Green Business
  • Strategic Investment in Clean & Green
  • Electrification Value Chain
  • Circular Economy in Value Chain
Define PTT Group's business direction to be more 'Clean & Green', as follows:
  • Defining strategic Investment in Clean & Green
  • Developing and investing in electrification value chain
  • Adoption of circular economy principles in PTT Group Value Chain
Decide Now Increase Clean & Green Product Portfolio
  • Increase Renewables, LNG Value Chain/ Limit Coal
  • More Clean & Green Products
  • Induce Carbon Price in Investment Decision Criteria
Increase the amount of PTT product groups to be more Clean & Green, as follows:
  • Increase Renewables, LNG Value Chain/ Limit Coal
  • Increase Clean & Green Products)
  • Induce Carbon Price in Investment Decision Criteria)
Do Now Reduce Operational Carbon Footprint
  • GHG Reduction in Operations
  • Circular Economy in Operations
Reduce greenhouse gas emission from PTT Group’s performance, as follows:
  • GHG Reduction in Operations through effective energy consumption, reduction and reuse of flare, reduction of methane leakage, to name a few.
  • Adoption of circular economy in operations through efficient use of materials and raw materials for maximum values, recycling materials back into the process

PTT Group Climate Risks and Opportunities Management Process

PTT’s climate change management is in line with sustainable development approach, also in accordance to international standards and approach alike. The following diagram demonstrates PTT Group’s climate change management process. 


  1. Account for and Understanding Impact: Collect data related to management off climate risks and opportunities, such as:
    • Direct and Indirect GHG emission (GHG Emission Scope 1, 2 and 3) for assessment of PTT Group's overall emission performance, inclusive to emission from operations under PTT Group, emission from purchased electricity and external heat, as well as GHG Emission from use of sold products. PTT Group’s calculation process for greenhouse gas emission, for direct, indirect and others, are all in accordance with PTT Group GHG Accounting and Reporting Standard. The activities are divided to three levels, which are Scope 1, Scope 2, and Scope 3.
      • Scope 1 refers to greenhouse gas emitting activities in which PTT Group’s internal functions own. This is considered direct greenhouse gas emission. Examples of scope 1’s activities comprise combustion in PTT’s production units, combustion in PTT’s vehicles, greenhouse gas emission from petroleum process, and leakage of cooling substance, to name a few.
      • Scope 2 refers to greenhouse gas emitting activities from other parties. This may come as electricity generation and heat (in the form of vapors and cooling water, for example) provided to PTT Group’s internal functions. Example of such activities is natural gas combustion by electricity generator outside of PTT Group.
      • Scope 3 refers to activities owned by external party, but are results of operations of PTT Group’s internal functions. This reporting is not on the list of compulsory emission accounting. This comprises of activities such as downstream product usage, stationary fuel combustion activities, mobile fuel combustion activities, raw materials and product logistics by service-provider outside of the organization, transportation of employees relevant to PTT Groups business, to name a few. The data of GHG Scope 3 disclosed on the website is only on fuel combustion activities that PTT and PTT OR sells (use of sold products) only.

        This data can be utilized to improve work efficiency and disclosure to relevant stakeholders. 
    • Revenue from products refers to revenues from sales of low-carbon products, meaning it emits less during the production or the service period; this may refer to service or products that help customers cut down their own emission). This facilitates measurement of PTT Group's operation in reduction of Scope 3 GHG Emission induced from PTT Group's goods and services, as well as businesses, by measuring GHG Emission from use of sold products
      • Low Carbon Product refers to products (goods or services) of PTT Group that emits lower greenhouse gas emission during production or services compares to other products (goods or services) that serve the same functions, as follows. 
        • Renewable Energy such as wind energy, solar energy, and hydropower, to name a few.
        • Green Building & Green Service refers to building or services with reduced greenhouse gas emission during the period of service, such as LEED-certified at Platinum level, to name a few.
        • Electricity generation from Co-generation system’s stream
        • Bioenergy
        • Energy Efficient Products refers to products whose production process has efficient energy usage and has lower carbon emission (such as certified for greenhouse gas emission reduction, meaning it has reduced over 2% of its emission )
        • Products from Cogeneration/ Tri-generation/ Combined Heat and Power
        • Products from Waste Heat Recovery
        • Products certified for Carbon Footprint Reduction Label from Thailand Greenhouse Gas Management Organization (TGO)
    • Avoided Emission Product refers to products (goods or services) of PTT Group that allows clients or users of products (goods or services) to reduce amount of greenhouse gas emission, compares to other product (goods or services) that serve the same functions. This may refer to both direct and indirect usage. Examples are as follows. 
      • Gasohol E10, E20, E 85 as sell to car users 
      • Biodiesel, Premium Diesel as sell to car users 
      • Natural Gas sell as fuel for electricity generation plant 
      • Products (goods or services) whose Product Carbon Footprint during usage is lower than the Default value in SimaPro database, or prior to improvement 
      • Products certified for EGAT Energy-Saving No.5 label 
      • o Products (goods or services) of PTT Group which are environmentally-friendly, are labelled under GREEN FOR LIFE for environmental aspects, refers to the following.
        • Reduced Energy Consumption during usage
        • Products or packaging with whose carbon footprint (net greenhouse gas emission throughout a product’s life cycle) is zero, or those already offset all carbon emission
  2. Assessing the Global and Local Climate Change Situation: Monitor climate change situation at both the global and local scale with potential impacts to sustainability, such as different laws and regulations, GHG emission management mechanisms (i.e. carbon tax, cap and trade), other approaches and standards related to climate change at an international level (i.e. WBCSD, CDP, DJSI, GRI). This includes participation in conferences and seminars on Climate Change, hosted by the public sector, private sector, among others.

  3. Identifying Climate Changes Risks and Opportunities: identify corporate-level climate change risks and opportunities as follows:
    • Risk and opportunities from regulatory change
    • Risks and opportunities from climate change-induced physical changes
    • Other risks and opportunities
  4. Setting the strategy basing on the data collected on climate change, both on a global and local scale, and identifying risks and opportunities within the operations into 2 aspects:
    • Mitigation Action: Work on controlling, mitigating and absorbing carbon dioxide in the atmosphere to mitigate climate change impacts
    • Adaptation Action: Work on climate change adaptation to ensure business’ sustainable competitiveness
  5. Monitoring and communicating performance : Monitor and review progress according to strategy and work plan, including reporting progress to both internal and external stakeholders.


PTT Group Climate Risks and Opportunities Assessment

PTT Group integrates climate risk and opportunity analysis with enterprise risk management. PTT considers climate-induced risk and opportunities in alignment with recommendations from Task force on climate-related financial disclosure (TCFD). This comprises:

Transition Risk: Due to Change in Energy Production and Utilization
  • Policy and Legal: encompassing risks from policy, targets, strategic plans, and laws stipulated by governing Thai government
  • Market and technology: refers to customers' changing behavior, such as reduced fossil fuel demand, low-carbon technology replacing fossil-fuel reliant business – such as electric vehicles, highly efficient batteries
  • Reputation: refers to PTT's reputation risks from climate change
Physical Risks:
  • Natural disasters, including both sudden natural disasters, or gradual climate change impacts, such as increasing temperature, rising sea level.
Opportunities:
  • Technology with greater energy efficiency at a lower price
  • Opportunity to invest in alternative energy, which is becoming more economically viable
  • Access to cleaner and environmentally friendly energy market and products
  • Access to funds supporting environmental works, both nationally and internationally

PTT Group assesses and reports results on climate change risk and opportunity analysis to the Boad of Committee and stakeholders through annual sustainability reports. There are measures responding to risks and changes occurring in various circumstances in an effective manner. This coincides with PTT's Pride and Treasure of Thailand. PTT has produced tangible innovation, from alternative energy comprising E20, E85, and synthetic materials made from biomaterials, which are used to develop hi-tech equipment that is lightweight, durable and environmentally-friendly, such as composite LPG gas tanks and biodegradable plastic for use in coffee cups, popcorn buckets. Furthermore innovation focuses on electricity generation from waste to energy power plant, and developing solar photovoltaic system.

For risks and opportunities arising from climate change at the operational level, PTT takes into account natural risks such as rising sea level and extreme weather events. Appropriate actions are taken to minimize the impacts of such risks. Preparation in prevention and mitigation against these risks is achieved through the implementation of Business Continuity Management System (BCMS). This system covers an emergency response plan for incidents which may occur naturally or anthropogenically. Each business unit is responsible for monitoring and ensuring business continuity on a quarterly basis


PTT Group Greenhouse Gas & Climate Change Target

PTT sets a target in climate change mitigation and emission reduction in alignment to United Nation's Sustainable Development Goals (SDGs), as follows.

Diagram illustrating SDGs in alignment to climate change mitigation and emission reduction target

In 2019, PTT sets target on climate change strategy as follows:

Indicators Details 
Design Now & Decide Now % of Revenues from Low Carbon & Avoided Emission Products 1. Increase proportion of PTT Group's revenue from Low Carbon & Avoided Emission Products within 2023
Investment Decision Criteria Study & Implemented by 2020  2. Study and adopt principle of carbon pricing be part of Investment Decision Criteria by 2020
Do Now 20% Greenhouse Gas Reduction Target from Operation vs  BAU by 2030 3. Reduce Greenhouse Gas Emissions vs BAU by 2030
GHG Intensity Target for each BU/ Company 4. Control GHG Intensity Target for each business unit level and flagship level

PTT Group Greenhouse Gas Accounting and Reporting Standard & Calculation Tool

PTT has conducted Greenhouse Gas Accounting to track its GHG inventory, in emission, absorption and storage continuously since 2006. This mechanism tracks and reports on direct GHG emissions (Scope 1), indirect GHG emissions (Scope 2), and other indirect GHG emissions (Scope 3). GHG data is externally verified by a third party organization on an annual basis.

PTT had developed the PTT Group GHG Project Standard based on ISO-14064-2. The Standard is integrated with PTT's GHG emission inventory and is used as the standard for PTT Group to assess and analyze GHG reduction efforts in accordance with international standards.

  • Direct GHG Emissions (Scope 1) and Indirect GHG Emissions (Scope 2)
    • Direct GHG emissions (Scope 1) encompasses operational activities from combustion, carbon dioxide separation, release of hydrofluorocarbons (HFCs) and sulfur hexafluoride (SF6), fugitive emissions, vented emissions, flares, and other process emissions.
    • Indirect GHG emissions (Scope 2) refer to the release of GHG from the consumption of purchased energy, such as electricity, heat and steam in PTT's business operations.
    • PTT has an approach in GHG emission reduction, either direct GHG emission (Scope 1) or indirect GHG emission (Scope 2), by focusing on management process to increase energy efficiency, alternate fuel used, generate electricity from co-generation power plants, and utilize waste heat. These are the efforts taken to facilitate progress towards the set goals.
  • Other Indirect GHG Emissions (Scope 3)
    • PTT's other sources of indirect GHG emissions (Scope 3) include the transportation of raw materials and products, employees transportation by air, as well as combustion from products sold. In 2015, PTT planned to expand GHG accounting to cover Scope 3 emissions, namely emissions from waste treatment, to align with the PTT Group 2020 Strategic Objective of Zero Hazardous Waste-to-Landfill
    • PTT's approach for reducing other indirect GHG emissions focuses on reducing product carbon footprints through product research and development to meet market needs in correspondence with the Pride and Treasure of Thailand strategic direction and Alternative Energy Development Plan (AEDP). In addition, PTT plans to expand manufacturing of bio-fuels in order to serve the increasing demand for bio-fuel in Thailand.



Performance

Progress against plan

Climate change is a highly prioritized issue at PTT. The awareness is reflected through management in accordance with PTT Group Sustainability Management Framework. The components and preferred approach with regards to climate change are as follows: setting emission target in alignment with PTT Group's target, conduct sensitivity analysis in monetary impacts, and giving considerations on large scale project investment, either new project, expansion or significant changes to fundamental utility infrastructure, climate change adaptation, and implementation according to climate change work plan.


Participation in CDP: Climate Change

2019 Targets 2019 Performance 
Report GHG data and performance through participation in the CDP program annually PTT’s Score: C

Greenhouse Gas Emission Intensity

(Kilogram CO2 per barrel of oil equivalent)

Direct and Indirect GHG emissions from PTT Group activities (Scope 1 and 2) 








Direct and Indirect GHG emissions from PTT activities and the combustion of fuel product sold by PTT (Scope 1, 2, and 3) 






Remark : The scope of data covers companies in Thailand in which PTT holds direct shares of more than 20%, and holds the majority of shares.


Barrel of crude oil equivalent used to assess intensity of greenhouse gas emission is a value developed from nine month worth of data. The data will be further adjusted to ensure alignment and accuracy with next year’s performance reporting.

PTT Group Direct and Indirect Greenhouse Gas Emissions1 

(million tonnes of CO2 equivalent)

 

Direct GHG emissions (Scope 1)​






Indirect GHG emissions (Scope 2)


GHG emissions from the combusion of fuel sold by PTT (Scope 3) (2,3)


Remark:
1  The scope of data companies in Thailand in which PTT holds direct shares of more than 20%, or indirect shares of 100%
2  Scope 3 GHG emissions coverr the combustion if PTT's fuel product (gasoline, diesel, jet fuel oil, liquefied petroleum gas, and kerosene). PTT manages the volum of its Scope 3 GHG emissions by setting a target to reduce direct and indirect GHG emissions (Scope1, 2, and 3) per unit ot PTT product sold, as defined by the State Enterprise Performance Appraisal (SEPA).
3  The scope of data for Scope 3 GHG emission covers PTT and OR.

Carbon Pricing Mechanism for PTT’s Investment Criteria 

Carbon pricing mechanisms, used as part of PTT’s investment consideration criteria, serve as a tool supporting investment for greenhouse gas reduction projects. Such projects may help reduce impacts from climate change, and facilitate PTT’s business operations towards low-carbon economy. This is in alignment with PTT Group Clean & Green Strategy, with approval from Strategic Investment Management Committee (SIMC) and PTT Management Board. 

Approach in Carbon Pricing Mechanism for PTT’s Investment Considerations is as follows 

  • Integration of carbon pricing mechanisms as part of investment considerations for PTT’s greenhouse gas emission reduction projects, both direct and indirect emission.
  • The form of carbon price mechanisms used is Shadow Price, of which Investment Management Committee may use as part of investment considerations.

Potential Benefits to PTT following Implementation of Carbon Pricing Mechanisms 

  • An approach facilitating PTT towards business operations for low-carbon economy. This helps reduce risks and creates further opportunities relevant to Climate Change in the long run.
  • Enhancement of all stakeholder groups’ trust, particularly for investors. This demonstrates PTT’s business commitment to low-carbon economy transition.