Climate change is a serious challenge facing mankind in the 21st century. It is a major global issue that has a profound impact on economic and social development and ecological environment of all countries. The Company has proactively identified the risks and opportunities related to climate change, developed the low-carbon development strategy, strengthened the management of carbon assets, and promoted energy efficiency and greenhouse gas emissions reduction.
For Sinopec Corp., climate change means more than risks and challenges. The Company will seize the opportunities related to climate change and expand its business and product lines in the fields of clean energy (such as natural gas and hydrogen), renewable energy (such as biofuels, solar power and wind power), new materials (such as eco-friendly staple fibres and nanofiltration/reverse osmosis membranes), and new energy vehicle facilities (such as charging stations and hydrogen stations).
? Management Measures on Carbon Emissions of Sinopec Corp.
? Management Measures on Carbon Emission Trading of Sinopec Corp. (Trial)
? Management Measures on the Disclosure of Carbon Emission Information of Sinopec Corp. (Trial)
? Detailed Rules for the Implementation of Energy and Environmental Performance Assessment of Sinopec Corp.
? The Company further implemented the “Energy Efficiency Improvement Plan” to reduce resources consumption and control greenhouse gas emissions. In 2019, 438 projects were implemented to save energy by 370 thousand tonnes of standard coal per year. The comprehensive energy consumption of RMB 10,000 of output was 0.494 tonnes of standard coal, decreased by 0.4% year-on-year.
? Implemented six major energy-saving projects. Conducted six key energy-saving projects, including energy efficiency improvement through integration of injection, production and transportation, energy system optimisation, comprehensive utilisation of low-temperature heat, energy efficiency improvement in coal-fired power plants, energy conservation monitoring and diagnosis, and energy conservation and consumption reduction in water circulation systems.
? Established the energy management system for refinery enterprises. Completed the construction of the energy management system (Phase II) project and putting the energy management information system into operation in nine refinery enterprises. Applied energy management systems with the thermoelectric production of 18 refinery enterprises optimised online through dynamic optimisation models.
? Adjusted the structure of self-use energy. Implemented electrical transformation. Sinopec Northwest Oilfield and other enterprises promoted the work of replacing oil with electricity. Sinopec Yangzi Petrochemical introduced steam and hydrogen from surrounding enterprises and industrial parks for energy supply. Actively promoting clean energy such as solar energy and geothermal energy. Among them, Sinopec Zhenhai’s fishery-solar hybrid photovoltaics project has an annual power output of 210 million KWHs, saving 59,800 tonnes/year of standard coal. Solar photovoltaics is realised in 140 service stations, generating 2.12 million KWHs/year.
In 2019, the Company continued to conduct greenhouse gas auditing, strengthen special investigation, monitoring and emission source sorting on methane; promoted methane recovery and utilisation, reduced flare burning, and conducted carbon capture and storage; participated in the construction of carbon emissions trading market, and offset some of carbon footprint by purchasing carbon quotas.
(1)Methane recovery and emission
? Target: Recover 200 million cubic metres of methane per year during 2018-2023.
? Conducted a special study on methane venting and escape, sorting out the main methane emission sources in oil and gas production, and developed monitoring techniques, methods and work plans.
? Launched a special initiative to recycle methane and the annual recovery of methane reached about 397 million cubic metres, among which 200 million cubic metres were from oil fields, equivalent to a reduction of greenhouse gas emissions by approximately 3 million tonnes of carbon dioxide equivalent.
? Completed the research project on “Voluntary Emission Reduction Methodology Development and Project Forecast and Implementation Techniques”, developed four methane recovery methods, and created prediction methods and implementing specifications for waste-heat utilisation and methane recovery voluntary emission reduction projects.
? Worked with other domestic oil and gas companies on methane emission control research, including data accounting, target setting, emission reduction technology and measure formulation.
? Target: Capture 500,000 tonnes of CO2 and store 300,000 tonnes of CO2 each year during 2018-2023.
? In 2019, CO2 capture and recycling continued in oil fields and refinery enterprises. Among them, refinery enterprises captured 1.26 CO2 emillion tonnes of CO2 and accumulated 3.71 million tonnes of CO2. Oil field enterprises injected 230,000 tonnes of CO2 for oil displacement, with a cumulative total of 3.67 million tonnes injected underground for oil displacement.
(3)Emission reduction and recovery of flare gas
? Flare system is an important safety guarantee to the production process, but it also causes energy waste and environmental pollution. The Company actively adopted modern production technology to reduce and recycle flare gas.
? In the oil and gas exploration segment, technologies and measures, such as the flare gas throttle mouth, prior gas test for production, remote scattered wells and casing gas recovery, were fully promoted with a total of 124 million cubic metres of flare gas recovered throughout the year.
? In the refining segment, continuously strengthening flare system management: balanced the fuel gas pipeline network to prevent fuel gas from venting to the flare system; ensured smooth operation of oil refining units and reduce flare emissions under abnormalities from the source; checked the operation of the flare system in production units, reduced the flare gas emission and recycled the gasometer.
? In the chemicals segment, the goal of eliminating conventional flares was basically achieved. Flare gas in existing facilities was basically recycled. Newly-built units were constructed according to the scheme of maximum recovery of flare gas. Flare is only used as an incineration unit that cannot recover exhaust gas and as a safety guarantee system in case of emergency.
(4)Enhance carbon asset management
? Conducting system-wide carbon inventory audit: Greenhouse gas audit is conducted in accordance with the ISO14064 standard, covering more than 100 oil field joint stations, more than 2,000 refining units and more than 30,000 sales station warehouses of subsidiaries. All the data are subject to internal verification.
? Conducting carbon footprint research: Prepared the “Carbon Footprint Accounting and Evaluation Method for Petrochemical Products” for aviation coal, asphalt, lubricating oil and other products, and incorporated carbon footprint evaluation and improvement into the Green Enterprise standards.
? Optimising the carbon asset management information system, improving the efficiency of enterprise data filing, and developing information solutions for carbon emission management.
? The Company participated in the domestic carbon emission trading market pilot project. By the end of 2019, a total of 14 subsidiaries had been included in the pilot project and fulfilled the carbon quota compliance tasks according to the requirements.
? Encouraged carbon trading pilot project-involved enterprises to formulate reasonable compliance schemes and trading plans. In 2019, the Company’s carbon trading volume reached 2.02 million tonnes and the turnover reached RMB49.57 million, accounting for 3% of the national market.
? In the self-owned power plant enterprises, national carbon emission right registration, account application for the trading system and quota trial calculation were conducted to prepare for carbon trading.
? Cooperated with Beijing Environmental Exchange and Shanghai Environmental Energy Exchange to promote the development of China’s carbon market.
(6)Greening carbon sinks
? The Company urged its subsidiaries to improve their greening system, and to take environmental protection actions such as afforestation so as to neutralise greenhouse gas emitted in the form of carbon sinks.
? The greening rate of administrative offices, research institutes and other courtyards should be no less than 20%, that of petrochemical plants be no less than 12% and of other industrial plants (stations) be no less than 20%.
? Continued afforestation and the voluntary tree planting campaign, growing an equivalent of 1.46 million trees throughout the year.
Under the pressure of climate change and the increasing energy demand, the global energy landscape as well as supply-demand relationship are undergoing far-reaching changes. China is driving ahead reforms in energy production and energy consumption to build an energy system featuring cleanliness, low carbon emission, safety and high efficiency. To seize opportunities soared in the crucial period of energy transformation, by sticking to the development approach of ensuring steady oil supply, Sinopec Corp. seeks to stabilise crude oil development, explore more natural gas resources, reduce costs, and develop renewable energy resources, to optimise its energy portfolio.
Sinopec Corp. has included natural gas development and low-carbon transformation in the Company’s strategic planning and action plan, and focuses on continuously raising the percentage of natural gas and new energy.
(1)Natural gas transition strategy
By grasping strategic opportunities, improving infrastructure, effectively expanding the operation scale and prolonging the value chain of natural gas, the natural gas business will be cultivated into a strategic, sustainable and valuable part for the Company’s transformative growth.
(2)Low-carbon transition strategy
Develop new energy by the asset-light approach and cultivate new energy supply systems, such as solar energy and wind energy that are highly compatible with traditional oil and gas exploration and development business, so as to effectively increase the proportion of non-fossil energy business. Carry out carbon asset management and implement the CO2 capture and storage project in stages to comprehensively strengthen the Company’s capacity of green and low-carbon development.
For the overall benefits of gas-related industries, Sinopec Corp. has been ramping up efforts in conventional gas and shale gas exploration, optimizing the mechanism on imported LNG procurement, and building a production, supply, storage and marketing system with optimal resource allocation, strong gas supply and great anti-risk ability, so as to ensure the quality and sustainability of its gas business. The Company is striving to forge the gas business into a pillar in the upstream segment by 2035.
? Embracing the “green revolution” and “electric revolution”, Sinopec Corp. seeks breakthrough of energy transformation and business transformation with new energy. In 2019, the Company focused on the development of renewable energy such as solar energy and hydrogen, and facilitated the establishment of supporting facilities such as charging and changing stations, in response to the policy of developing new energy vehicles.
Built distributed photovoltaic power stations in marketing subsidiaries, and constructed photovoltaic power generation projects in the Sinopec Zhenhai Refinery. In 2019, solar contributed 6.92 million KWHs of power.
Built infrastructure for hydrogen production, purification, storage and transportation, and demonstration stations for hydrogen processing. In 2019, four oil-hydrogen refuel construction stations were built in Guangdong, Zhejiang and Shanghai, realizing the comprehensive supply of fuel, hydrogen and electric energy, and mainly serving public transit vehicles and logistic vehicles that use hydrogen fuel. Produced over 3 million tonnes of hydrogen.
Promoted the use of B5 biodiesel processed from kitchen waste grease, with an annual sale of 352,000 tonnes; supplying self-developed bio-jet fuel for commercial passenger jets, becoming the first Chinese enterprise with such technology.
(4)Supporting facilities for new energy vehicles
Built charging and changing stations in support of the national strategy for developing new energy vehicles; carried out R&D and production of materials related to new energy vehicles. Built 12 battery charging and changing stations, providing over 6.2 million KWHs of power for new energy vehicles.
In November 2019, Sinopec Corp. signed a memorandum of cooperation with French-based Air Liquide. Under the memorandum, Sinopec Corp. will set up a company committed to the R&D on hydrogen energy technology and infrastructure networking construction. Concerted efforts will be made to promote and apply hydrogen energy and fuel cell vehicle overall solutions in China, and build an industrial chain and community of hydrogen energy.
? With Sinopec Capital, the joint venture in which Sinopec Corp. holds a stake of 49%, Sinopec Corp. will operate in a range of emerging green industries through strategic and financial investments.
? New energy fields:Taking tentative measures to engage in all hydrogen-related industries, covering hydrogen production, storage and transportation in the upstream segment, the fuel-cell system area in the midstream segment as well as different application areas in the downstream segment. In 2019, Sinopec Capital made an investment in a hydrogen fuel cell system supplier in Shanghai.
? New material fields:Entering the area of lubricant additives that exert a synergistic effect on the Company’s business and concluded a strategic investment in 2019. While supporting the domestic additive industry, Sinopec Corp. is upgrading its product lines and further strengthening its technology and research capacity in lubricant additive area.
? Sinopec Capital integrates ESG issues into investment decision-making and portfolio management. In implementing investments and international cooperation projects, Sinopec Capital has oriented itself to both the “Economic and Social Green Sustainable Development” and the “Sustainable Growth of the Company”. Positive and negative screenings of investee enterprises, especially ESG factors such as corporate governance, social impact and environmental impact, are carried out to ensure good economic, environmental and social impact.