While achieving our net-zero operational emissions ambition will be driven initially by emissions reductions, offsets may be required to mitigate some of our residual hard-to-abate emissions. Taking advantage of our history in the compliance offset market, we have designed a flexible strategy to develop and invest in voluntary offset projects beginning in 2022. We may make diversified investments in offset projects and funds, as well as potentially developing our own offset projects. Our preference will be in countries/regions in which we operate or have land holdings. While we do not anticipate the need to utilize offsets to achieve our medium-term targets, we plan to begin investing now to secure a lower-cost offset position for the future. 

In early 2022, through our technical advisor, ConocoPhillips sent invitations to propose investments to selected offset projects and developers.  We are looking for a variety of project types that could start creating offsets by 2025, including those that are:

• Nature-based: relating to forestry and land use, wetlands, agricultural improvements, and grasslands or soil enrichment
• Technology-based: relating to energy efficiency, fuel switching, abandoned well management, waste disposal, and fugitive emissions reductions

In the evaluation criteria for all these projects we emphasize the need for durability of the reductions or removals and leakage minimization, as well as community, conservation and biodiversity co-benefits that will create and increase commercial value for the projects beyond our net-zero operational emissions ambition.