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Greenpeace says Saudi Aramco's IPO shows that world is not meeting climate goals

Image credit: EO Browser, E&T

Data shows how one of the largest emitters became what it is today. A Greenpeace spokesperson expresses doubts its IPO will bring any improvement to the global climate change debate.

Saudi Arabian Oil Company, a Saudi Arabian national petroleum and natural gas company based in Dhahran, has just announced its plans for an IPO (initial public offering), which effectively would make it the world’s largest listing.

In an interview with E&T, John Noël, a senior climate campaigner with Greenpeace USA, the non-governmental environmental organisation, said: "It shows that the kingdom is officially spinning off parts of its oil business because it is an endorsement of a future with declining oil usage and production. And they are spinning off assets that in the future could become liabilities. They want to be first because their plan is linked with production.

"We think any investment in this IPO is essentially the fact that the world will not meet its climate goals and stave off some of the worst impacts of the climate crises. Because if we are to meet our climate goals, governments, including Saudi Arabia, will eventually need to constrain the supply of fossil fuels in the economy. Because all of this oil cannot be burned at the rate projected."

The listing is unlikely to increase transparency. Already, due to it being state-owned and shy in sharing information, little is known to date about how much money the firm spends on lobbying to delay, control or block policies to tackle climate change. 

Edward Collins, project lead, lobbying and corporate influence from Influencer Map, told E&T that Saudi Aramco is restricted due to it being state-owned and his organisation is able to understand its influence primarily as part of the Saudi government – something Collins and his team cannot measure as there is no obligation for disclosure. 

Noël added that "it is often telling that they listed it on the Saudi Arabia exchange. Their whole industry is operated in this black box for many decades. There is not much regulatory transparency. We expect that to continue." 

Listing in other parts of the world increases the pressure on transparency. "For instance, [listing on] the US [exchange]," Noël pointed out, "they would have to report the amounts of reserves to the SEC. 

"We don't think [the IPO] will contribute to a better understanding at all," Noël said. 

Largest emitter since 1965

Image credit: E&T, Ben Heubl, Richard Heede

Saudi Aramco's carbon emissions

According to a recent analysis by Richard Heede at the Climate Accountability Institute, one possible answer to which corporation is the largest corporate producer of carbon emissions is the Saudi state-owned company. It is already the most profitable firm on the planet. 

Heede considered emissions generated throughout the entire supply chain. Among the 20 largest carbon producers in the years 1965 to 2018, Saudi Aramco came out top with a share of 12.3 per cent*.

carbon emissions Saudi Aramco and Gazprom

Image credit: E&T, Ben Heubl, Richard Heede

Beyond its planned IPO, there are other reasons why the development of Saudi Aramco matters. One is that geopolitical clashes are expected to become more likely; E&T found a strong negative correlation between Saudi Aramco’s carbon emissions since 1989 and those of Russia’s Gazprom. Perhaps more fittingly - because Chevron merged and or acquired companies that operated in Saudi Arabia and the Persian Gulf states in the 1960s, according to Richard Heede - there is a negative correlation between Saudi Aramco and Chevron. 

One thing seems ever more certain. Despite global efforts to mitigate climate change, Saudi Aramco will stay in the business as long as possible and will continue to pump oil until its billions in profits cease.

The fact that the company is in Saudi Arabia, one of the most arid places in the world, is ironic. Niall Smith, who analysed climate change vulnerabilities in various regions across the planet for the global risk consulting firm Maplecroft, said that United Arab Emirates faces an extreme risk of water stress. Dealing with the consequences of climate change, places like the UAE will be increasingly challenged to spend a lot more energy on cooling.

One recent analysis by Carbon Tracker, a financial think tank, also urged oil and gas companies to cut production by more than a third by 2040 to help hit climate-change targets.

*Operational and product-related emissions are included

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