Big Oil net-zero commitments have ‘significant shortcomings’
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Climate and finance think-tank Carbon Tracker has found that the world’s biggest oil companies are trailing behind where they need to be on their decarbonisation commitments, with many being unhelpfully selective in how they define 'net zero'.
According to the report by Carbon Tracker, seven of the top 10 biggest oil and gas companies do not have climate goals which involve cutting carbon emissions overall. In fact, their emissions targets vary from a full spectrum of company activities to just a select fraction of emissions.
The climate ambitions of companies including Shell say that they will reduce the emissions intensity of the energy they produce; this could allow them to continue ramping up fossil fuel production if they simultaneously produce more energy from renewable sources.
Other oil and gas companies are taking a creative approach to their emissions calculations. BP has committed to reducing its carbon emissions, but excludes contributions from Rosneft: the Kremlin-controlled energy giant in which it owns a 19.75 per cent share. France’s Total will exclude emissions on sales outside Europe. The only company which has committed to absolute reductions with no exclusions is Italy’s Eni.
All of the companies are relying on unproven technology such as carbon capture and storage, which has not yet been demonstrated to work at scale after decades of development, despite being frequently cited as a key part of decarbonisation efforts by governments and businesses.
Around the world, governments are seeking to contain average global temperature rises to below 1.5°C above pre-industrial levels in line with the Paris Agreement; this could allow the most devastating environmental changes to be avoided. The “hallmarks of Paris compliance” analysis identified the three worst-performing companies with regards to climate ambitions as all US based: ConocoPhillips, Chevron, and ExxonMobil; ExxonMobil’s climate goals cover only Upstream operational emissions, with a 15-20 per cent reduction to 2050. The top-rated companies – Eni, Total, and BP – still have shortcomings to their goals.
“Net zero is not enough – it’s the pathway that matters. To align with the Paris Agreement, companies must commit to absolute reductions in carbon emissions from their oil and gas products, with strong interim targets and a credible implementation plan,” said Mike Coffin, author of the Carbon Tracker report.
Carbon Tracker is calling for an industry-standard approach to reporting decarbonisation progress, which focuses on absolute emissions rather than intensity reductions; this could benefit companies by giving investors confidence that the businesses are fully aligned with the Paris Agreement. It also recommends interim goals to create incentives to reduce emissions immediately.
“The implication for investors is simple. The most effective way for oil and gas companies to reduce both emissions and transition risk is to cut the production of fossil fuel products; those companies with climate goals reliant on the widespread deployment of [carbon capture and reduction technologies] are placing at best a risky bet,” the report said.
This week, the World Meteorological Organisation warned that there is a 40 per cent chance that global temperatures could temporarily exceed 1.5°C increases in the next five years: a doubling on last year’s predictions.
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