Wed, May 29 2024 29 May, 2024

Oil and gas majors’ climate plans under scrutiny

Even burning just the oil, gas, and coal in existing fields and mines would far exceed the carbon budget for a 50% chance of staying below 1.5°C warming, a new report has found.

Silhouette of oil pump jack pumping on the oil field (Photo credit: Adobe Stock/anatoliy_gleb)

OPINION – The decarbonisation plans of western oil and gas majors are woefully inadequate and will not be enough to keep global warming at or below 1.5c, according to a new report published on Tuesday. It also labels their spending on low carbon solutions as greenwash, while avoiding placing any responsibility for scope 3 emissions on government or consumers – resulting in only a partial picture of blame, and little in the way of solutions.

Nevertheless, the report’s findings are indeed damning, at a point where the evidence for man-made global warming has become very clear. There is now little doubt that hydrocarbon expansion plans endanger the planet’s future, and so to persist is less forgivable – even if demand is rising.

Entitled Big Oil Reality Check — Updated Assessment of Oil and Gas Company Climate Plans, the report measures company approaches in relation to what’s needed to achieve the IPCC Sixth Assessment Report, which highlighted in 2021 the need to keep warming below 1.5c, along with the IEA’s first 1.5c-aligned scenario that said there was no room for new fossil fuel expansion beyond fields and mines already under development. It also refers to the Tyndall Centre’s findings published in March which concluded that “immediate and deep cuts in the production of all fossil fuels,” are needed now to meet the 1.5c target.

This previous research led the new report’s authors, Oil Change International  – a research and advocacy group that first reviewed majors’ decarbonization plans in September 2020 – to toughen its baselines. It now says that even burning just the oil, gas, and coal in existing fields and mines would far exceed the carbon budget for a 50% chance of staying below 1.5°C warming; and even if global coal use ended overnight, already-developed oil and gas reserves would still push the world beyond 1.5°C warming – tough criteria for the oil and gas industry to contend with.

Falling short

Indeed, the report finds that not one of the big oil companies it reviewed is fully aligned with this 1.5c warming target in any area of corporate policy and strategy, which it splits into “ambition” and “integrity.” ExxonMobil and Chevron are “grossly insufficient” in all areas. Only BP has a concrete plan to reduce output (by 30% by 2030), and only Eni has a target to reduce absolute emissions. BP is also the only company with any plans to abandon exploration (in new countries only), and none of the companies have fully pledged to end lobbying that can obstruct climate action. The report dismisses company intensity targets – the most frequently used – because they are only measured relative to productivity or output, and do not guarantee overall reductions in emissions.

The report also omits to reflect the sums being invested into renewable and low carbon assets and technologies by these companies, and the added ability they have to do that given current high oil and gas prices. It could be argued that this money is key to laying the foundations of the low carbon system that will replace the hydrocarbon one. But the report dismisses both intensity and green spending as “factors that oil and gas companies can use to hide increasing carbon pollution.”

The report also shows that some companies are heavily focused on lower income countries where there is a higher dependence on oil and gas. Consumers in these countries are rapidly increasing energy consumption and providing for that rise in demand remains the top government priority. Eni is best positioned in this respect, with only 13% of production in high income countries, compared to 51% for TotalEnergies.

TotalEnergies fails on forthcoming production plans

Perhaps surprisingly, the report shows that TotalEnergies, which arguably enjoys a relatively favourable green reputation as one of the more progressive European majors, is set to release more global emissions from projects sanctioned over the next three years (over two thirds of which are oil) than any of the other O&G companies reviewed, just at the time that serious climate action has been seen to be critical. Worryingly, the company’s shares have been performing well relative to peers.

The report finds that, altogether, the oil and gas production that would be enabled by the 200 projects these companies plan to sanction by 2025 could cause an additional 8.6 gigatonnes (Gt) of carbon pollution – “equivalent to more than one quarter of the world’s total energy sector emissions in 2020.”

Not the whole story

Many observers do note, however, that not all the emissions are strictly the companies’ responsibility – consumers and governments also have a role to play when it comes to scope 3 emissions, which represent the vast majority of the emissions the report reviews (about 90%). Consumers and governments need to contribute by choosing low carbon options and designing policies that generate sufficient investor returns for green investors, while making it more unattractive to invest in hydrocarbons.

As concerning, perhaps, as the report’s findings is that the companies it is assessing, particularly those in Europe, are leading the pack in their approach to climate change. National oil companies, many coal companies, and other large privately traded oil and gas companies are well behind, and it is these companies that now sanction, produce, and process the majority of the world’s hydrocarbons. That share is expected to grow further if western majors pull back, so it essential to change consumer behaviour and investment conditions, otherwise any demand will simply switch to NOCs and others, which have little focus on emissions.

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