Greenhouse Gases

California Resources Corporation (CRC) seeks to increase energy efficiency and reduce emissions of greenhouse gases (GHG) and other compounds, even as we supply more energy to Californians. We actively contribute to the state’s efforts to mitigate or adapt to climate change while maintaining reliable, cost-effective energy supplies for all Californians.

GHG Emissions

The U.S. Environmental Protection Agency (EPA) and the State of California have issued GHG emissions estimating protocols that are used by CRC facilities to report GHG emissions. The EPA requires reporting for certain direct GHG emissions source categories and certain GHG supplier categories, as well as carbon dioxide injection for enhanced oil recovery. CRC provides such data for our oil and gas operations, natural gas-fired power plants and natural gas and natural gas liquids facilities operated by us or joint ventures in which we participate. These data are available on the EPA website. The California Air Resources Board (CARB) has separate regulations for reporting GHG emissions and we report to CARB on our covered operations. The California definitions and methodologies are somewhat different from those specified by the EPA for its GHG reporting program. The data for CRC facilities in California, which are verified by third-party firms certified by the state, are available through the Air Resources Board website. The company also reports voluntarily on our GHG management program and emissions to the Carbon Disclosure Project (CDP). In 2017, we received a “B” grade from CDP, the same grade received by some of the supermajor energy companies and above virtually all of our peer companies.

GHG emissions from CRC’s facilities (Scope 1), reported as metric tons of carbon dioxide (CO2) equivalent, have decreased steadily from 2013 through 2016 by 13 percent on an absolute basis and by 12 percent relative to overall production on a per barrel oil equivalent basis. Importantly, our methane emissions have decreased by nearly 29 percent over the same period.


CRC Funding of State GHG Reduction Investments

CRC accounts for and reports emissions of greenhouse gases (GHG) to the California Air Resources Board (CARB) under California’s pioneering Cap and Trade program. These emission reports undergo third-party verification to ensure accuracy. CRC mitigates our GHG emissions through state-issued allowances and approved offsets. Most allowances are initially sold by CARB at state auctions and offsets are subject to rigorous review by CARB under approved quantification protocols. CARB uses the proceeds raised by these auctions to fund billions of dollars of environmental projects that further the goals of reducing emissions and improving energy efficiency.

Unlike CRC, oil and gas producers in other states and countries do not account for and mitigate their GHG emissions from their operations under California’s Cap and Trade program, and they don’t contribute to California’s GHG mitigation investments. They also don’t apply California’s other leading environmental standards. As a result, replacing oil and gas imports with local California production would help to mitigate GHG emissions and improve global environmental quality.

The state’s GHG reduction fund has received appropriations of more than $6 billion under the Cap and Trade program, and invested nearly $2 billion from GHG auction proceeds to over 38,000 projects in 15 categories listed below from fiscal years 2013 through 2016, according to CARB’s 2018 Annual Report to the Legislature.

As reported in CRC’s securities filings, CRC has incurred approximately $148 million from 2013-2017 to mitigate or offset GHG emissions under the Cap and Trade program.  Approximately $137 million was used to purchase GHG allowances at auction or from third parties, and CRC purchased $11 million in sustainable forestry offsets. The following table illustrates how CRC’s Cap and Trade expenditures advance the state’s GHG mitigation goals. CRC’s Cap and Trade expenditures, if invested by CARB in the manner noted in its Annual Report, would translate into the following GHG reduction investments.

Illustrative CRC Funding of State GHG Reduction Investments through California’s Cap and Trade Program (2013-2017)

Project Investment CARB GHG Reduction Fund Allocation1 CRC GHG Investment Amount2 ($MM)
CRC Direct Sustainable Forestry Offsets 11.0
High-Speed Rail Project 20.9% 28.6
Low Carbon Transportation 20.4% 28.0
Affordable Housing and Sustainable Communities 14.4% 19.7
Transit and Intercity Rail Capital 9.3% 12.7
Sustainable Forests (excluding CRC’s direct offsets) 4.9% 6.7
Community Air Protection 4.1% 5.6
Low Carbon Transit Operations 3.8% 5.2
Low-income Weatherization 3.1% 4.3
Dairy Methane 2.6% 3.6
Transformative Climate Communities 2.4% 3.3
Waste Diversion 1.8% 2.5
Urban Greening 1.7% 2.3
Agricultural Replacement Measures 1.4% 1.9
State Water Efficiency and Enhancement 1.1% 1.5
Others (e.g., wildfire prevention, wetlands restoration, climate adaptation) 8.1% 11.1
Total $148

1California Air Resources Board, Greenhouse Gas Reduction Fund Appropriations by Fiscal Year (as of February 15, 2018), reflecting totals for FY 2013-14 through 2016-17 (

2This column includes the $11 million incurred to purchase sustainable forestry offsets and applies CARB’s investment allocation for statewide GHG mitigation to the $137 million CRC incurred to purchase GHG allowances from 2013 through 2017 to illustrate the types of projects and levels of funding from CRC’s participation in the Cap and Trade program.