Many oil majors are keeping their options open to increase fossil fuel production despite outwardly adopting more ambitious climate targets, the achievement of which is also questionable, a new report from London-based Carbon Tracker on Thursday reveals.
The report says 10 of the largest oil companies have all strengthened their climate policies over the last 12 months, yet none have made plans to promote investor confidence in their ability to ensure their business is fully aligned with the Paris Agreement.
Eight of the ten have different "net zero" targets along with significant shortcomings, the Carbon Tracker's report - Absolute Impact 2021: Why Oil and Gas ‘Net Zero’ Ambitions Are Not Enough shows.
"Net zero is not enough, it is 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," Mike Coffin, a senior analyst at Carbon Tracker and author of the report was quoted as saying.
Oil and gas majors are under intense pressure from investors to align their businesses with the targets of the Paris Agreement in limiting global temperature rise within 1.5°C. As expressed by the International Energy Agency last week, this requires a huge decline in fossil fuels and no new investments in this field.
Investors in these companies are also concerned about the impacts of climate change and the risk of being left with stranded assets if they fail to plan for falling demand, Carbon Tracker said.
The think tank cited the recent shareholder revolt in Chevron on May 26 with calls to cut emissions and also the rebellions during the annual meetings of Shell and BP last month.
On Wednesday, Royal Dutch Shell was ordered by a court in the Hague to cut its global carbon emissions by 45% by the end of 2030 compared with 2019 levels, in a landmark case brought by Friends of the Earth and over 17,000 co-plaintiffs.
According to the report, most of the companies resist the absolute emission cuts that are crucial to stabilizing global temperature rise.
The report also found that the majority of implementation plans of these companies rely upon carbon capture, utilization and storage and negative emission technologies to mitigate continued oil and gas production. Moreover, the report said most technical solutions are unproven at scale while so-called nature-based solutions like tree planting have huge land-use implications.
The report finds that Eni has the strongest policy as the only company committing to absolute cuts in emissions across all of its activities by 2030 to reach net zero in 2050.
Total has a strengthened policy but fails to cut emissions from sales outside Europe, while BP's policy excludes its stake in Rosneft, which accounts for a third of its global production and product sales from its downstream business, Carbon Tracker finds.
- US companies rank bottom of the list
Shells, Equinor, Repsol and Occidental have 2050 net-zero targets that cover emissions from their operations and the use of their oil and gas.
"However, instead of pledging absolute cuts in emissions they only commit to reducing the emissions intensity of their energy products, leaving open the possibility that they could actually increase fossil fuel production if balanced with enough renewable capacity. Unlike the others, Occidental has no interim targets, even on an intensity basis," the report said.
US companies ExxonMobil, Chevron and ConocoPhillips have the weakest policies by pledging only to reduce operational emissions intensity.
ExxonMobil, ranked bottom, commits to just a 15-20% cut in operational emissions by 2025, ignoring carbon released when its products are burned.
Investors can use the companies’ emissions goals to understand not just how closely aligned they are with the Paris target but also to assess the pace at which they plan to adapt their businesses to the energy transition, and the level of risk they face as a result, Carbon Tracker said.
"It is critical that companies demonstrate how their investment decisions are also aligned with the Paris goals and do not sanction assets that could become stranded through the energy transition," the report said, warning that if companies pursue business as usual they "are effectively betting on society’s failure to address climate change."
Carbon Tracker said the companies must set absolute emissions reductions with interim targets before 2050, cover full lifecycle emissions including carbon released when oil and gas are burned, and cover worldwide emissions from all projects they have a stake in.
By Nuran Erkul Kaya