CLIMATE-RELATED RISKS Potential Short- and Medium-term Risks These are risks that may impact financial results. They include any that may materialize over the current annual reporting cycle and up to a five-year time frame. REGULATORY — EMISSIONS Our industry is highly regulated, and we comply with the many local, state and federal laws that affect our operations, including those on air emissions. Our Health, Safety and Environment Management System (HSEMS) facilitates HSE performance and compliance with standards, procedures and guidelines that often exceed regulatory requirements and are consistently applied by all business units. We have made significant investments in environmental projects, including efforts to reduce emissions that focus on efficiency, resilience, adaptation and renewable fuels. For more details, see the Risk Management section of this report. Although it is not possible to predict how future GHG emissions legislation would impact the company’s business, legislation or regulation that emerges over the medium- to long-term that imposes reporting obligations on, or limits emissions of GHGs from, the company's equipment and operations could require the company to incur costs. PHYSICAL RISK — BUSINESS CONTINUITY The company is prepared for the possibility of extreme weather events that might impact our operations. We have developed an Emergency Response Management System and Crisis Management Plan based on risk evaluations and business impact analyses. Each facility has a written emergency response plan to ensure continuous availability, or prompt recovery, of critical business processes, resources and facility operations. Potential Long-term Risks These risks may fundamentally impact the viability of our long-term strategy and business model. They include risks that may materialize over a five- to 10- year time frame. MARKET — OIL AND NATURAL GAS PRICES The deployment of disruptive new technologies at mass scale within government policy environments that strongly incentivize investment and innovation would have long-term impacts on oil and natural gas demand and prices. To mitigate this risk, Phillips 66 remains committed to ongoing scenario analysis, responsible risk management, and transparency about our financial and portfolio resilience and how we are preparing to adapt for the longer term. PLANS FOR OUR FUTURE PERFORMANCE ARE SUBJECT TO SOCIETAL AND POLITICAL PRESSURES Plans to expand or construct assets and plans for future performance, including our joint ventures, are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of carbon-based fuels. Such risks could adversely impact our results of operations. CLIMATE-RELATED OPPORTUNITIES Providing Lower-carbon Alternatives By 2030, our Emerging Energy organization is targeting $2 billion of EBITDA (earnings before interest, taxes, depreciation and amortization) contributions through investments that are consistent with our disciplined approach to capital and emphasis on returns. We're evaluating our assets and increasing our supply of renewable fuels. We continue to assess new opportunities within our portfolios and with third parties. While doing so, we remain focused on operating reliability. We commercialize premium coke for the world's lithium-ion battery anode market using petroleum coke, a byproduct of our refining process. The company is also assessing longer-term technologies, including carbon capture, lower-carbon hydrogen production for multiple applications and the development of hydrogen fueling networks. Investing in Technology Development We enhance our business programs and initiatives with research to improve our operations and provide a science-based approach. We invest in the development of lower-carbon technologies such as OPVs, SOFCs and next-generation batteries . 47 GOVERNANCE 47