Big Oil undermines UN climate goals with $50bn of new projects

James Marshall
September 10, 2019

A new report from Carbon Tracker reveals that oil and gas companies have approved US$50 billion (AU$73 billion) of investments for new projects that undermine climate targets and threaten shareholder returns, and no major oil company is now investing to support the Paris Agreement goals of keeping global warming well below 2˚C.

Carbon Tracker found that at least 30 percent of investments made by publicly traded oil majors - including ExxonMobil, Chevron, Shell, BP, Total, Eni and ConocoPhillips - were incompatible with the IEA's most ambitious scenario.

"Every oil major is betting heavily against a 1.5˚C world and investing in projects that are contrary to the Paris goals", said Andrew Grant, Senior Analyst at Carbon Tracker and report author. Shell has a 70% risk, Total 67%, Chevron 60%, BP 57% and Eni 55%.

Carbon Tracker's latest report concludes that, if we are to meet the IEA's 1.6˚C scenario, oil and gas companies must "slash investment" - even projects with "significant Carbon Capture and Storage technology" - and with projects that satisfy demand for oil at below $40 per barrel.

In fact, they are investing billions of dollars in the current environment to develop new oil and gas supplies, not taking into account the low-carbon world we are headed for.

"There's a danger that the fossil fuel companies will misread demand trends and invest in projects that are both bad for the climate and bad for investors", he told AFP.

The Carbon Tracker report says none of the largest listed oil and gas companies are making investment decisions that are in line with global climate goals, and risk wasting $2.2T by 2030 if governments apply stricter cuts to carbon emissions. "As the energy system evolves, so is our business".

Carbon Tracker also singled out projects including Shell's $13 billion liquefied natural gas project in Canada and BP's $4.3 billion deepwater oil project in Azerbaijan as vulnerable to a future economy in which market prices will not justify the costs of development.

Published after engagement with more than 2,500 industry stakeholders, the plan discusses how industry can reduce emissions from production, and support reductions down the supply chain through the development and commercialisation of low-carbon technologies including CCS and hydrogen.

The world's five largest listed oil and gas companies have spent more than $1 billion touting their climate credentials since the Paris Agreement was signed, whilst lobbying to protect and expand their fossil fuel operations, according to new analysis published on Friday (22 March).

The UK's Committee on Climate Change has set a target for oil and gas production to contribute just 500,000 t/y of Carbon dioxide by 2050, meaning operators have to reduce today's emissions intensity per million barrels of oil from 24,000 t of Carbon dioxide to just 4,000 t.

OGUK says that gas turbines used to generate power offshore are the largest source of emissions so present big opportunities for savings, along with flaring and venting of waste gas. Most recently he led the work for the committee's report, Net Zero - The UK's contribution to stopping global warming, setting out how and why the UK should end its impact on global warming within 30 years.

Carbon Tracker says a Paris-compliant world would need a lot less oil and gas, which would make a lot of these projects unviable in such a world.

The report says oil and gas companies are on track to spend $6.5trn (€5.89trn) on new production by 2030.

"While we don't have all the answers to the big challenges we face, we have started work on what we know can be done".

While the report was welcomed by the Government, it came in for harsh criticism elsewhere. It also sets out a range of actions for individuals, communities, organisations and businesses to help work toward these goals. "The industry is putting its own interests ahead of our survival".

Other reports by Click Lancashire

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