New Research Shows That Only Two Large Petroleum Companies Have Meaningful Emission Reduction Targets
By Kyle Field
The transition from generating electricity from finite fuels to a world powered by distributed renewable generation and is disrupting the entire energy generating sector, utilities and the global petroleum industry. The transition is being driven by simple economics and is supported by the global imperative to reduce emissions produced by electricity generation.
New research from the Transition Pathway Initiative dug into the world’s ten largest public oil and gas companies to develop a bottom-up picture of their long term emissions glide paths and came back with some not-so-surprising conclusions. The research found that only two of the ten companies have publicly committed to reducing emissions as required to achieve the Paris climate agreement.
Absent a public commitment to reducing emissions, these companies have made it clear that the people of the world will have to rely on regulators to mandate emission reductions. Pulling back the curtain on the business implications of the missing targets reveals businesses that see little incentive and little risk to proactively complying with the global imperative to reduce emissions or the risk of future regulations that have the potential to have a financial impact on the company.
The paper spent some quality time digging into the ‘Scope 3’ emissions of the industry, which assesses the emissions generated from the use of each company’s products in electricity generation, industry and transport. In the oil and gas industry, these emissions represent the bulk of the emissions from the company, typically accounting for more than 80% of the carbon footprint of a company.
Shell and Total have set emission reduction targets that comply with the targets required to achieve the Paris climate agreement. Both companies pledged to reduce not only their operational emissions, but the emissions stemming from the usage of their products to levels that would achieve the Nationally Determined Contribution pledges made by governments in support of the 2015 Paris climate agreement, though scientists believe the stated targets would not keep the world below 2.0C of warming, let alone the aspirational 1.5C warming target discussed in Paris.
BP, ConocoPhillips and Eni have set emission reduction targets that reduce the carbon emission intensity of their internal operations without acknowledging the emissions of downstream consumers of their products. These companies leave the majority of the emissions on the table and leave it in the hands of the customers to drive meaningful reductions in emissions.
“The most significant finding is the emerging status of companies’ future ambitions. It is encouraging to see two major oil and gas companies, Shell and Total, setting out long-term ambitions to reduce carbon emissions intensity in a way that is compatible with the government pledges made at the Paris climate agreement,” Professor Simon Dietz, leading TPI’s Research at the Grantham Institute, London School of Economics said. “However, there is a long way to go. None of the ten largest global oil & gas firms currently set a path that would align them with limiting global warming to 2°C or below before 2050. To reduce the carbon footprint of the sector these companies need to set more stretching low carbon targets.”
The most awkward of the findings from the research was that half of the companies – Chevron, EOG Resources, ExxonMobil, Occidental and Reliance – have no quantified targets to reduce internal or external emissions … at all. This, my friends, is the failure of the system and speaks loudly to the fact that the oil and gas majors of the world might be talking a good game when it comes to climate change, emissions and the energy transition, but in reality, are doing nothing about it.
The TPI paper entitled ‘Carbon Performance Assessment in Oil and Gas’ highlights not only their ambivalence towards the imperative that is climate change, but a high tolerance for financial risk as exposure to the implications of looming regulations increases.
“Forward looking lifecycle emission targets that take account of all the impact of a company’s carbon footprint are essential if we, as investors, are going to have confidence in the strategy of companies we invest in,” Adam Matthews, Co-Chair of the Transition Pathway Initiative and Director of Ethics & Engagement, at Church of England Pensions Board said. “We want to see evidence of a company’s commitment to the transition to a low carbon economy, and this latest research from TPI is not comfortable reading. We welcome Shell and Total’s leadership in setting out their ambitions. We note that while they are moving in the right direction, and are ahead of their peers, this study suggests they are not yet ambitious enough to align with a pathway to below 2 degrees of warming by 2050.”
This new paper from TPI highlights what we all knew was happening and should reignite the latent flames of passion to fight for this one home we all share by taking meaningful action. Install solar panels this year. Buy an electric car. Convert the appliances in your home and move beyond just considering change by taking action for the climate today.
This article was supported by ESG Communications
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