{"id":9937,"date":"2022-03-26T20:47:52","date_gmt":"2022-03-26T20:47:52","guid":{"rendered":"https:\/\/googmn.com\/?p=9937"},"modified":"2022-03-26T20:47:52","modified_gmt":"2022-03-26T20:47:52","slug":"on-climate-change-oil-and-gas-companies-have-a-long-way-to-go","status":"publish","type":"post","link":"https:\/\/googmn.com\/?p=9937","title":{"rendered":"On climate change, oil and gas companies have a long way to go"},"content":{"rendered":"

This story is part of <\/em>Covering Climate Now<\/em>, a global journalism collaboration strengthening coverage of the climate story.<\/em><\/p>\n

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The oil and gas industry has found itself under a harsh spotlight as concern over climate change increases across the world. Lately, oil and gas majors have responded to the scrutiny with a series of pledges, plans, and press releases on the subject of global warming. The big five oil giants \u2014 Exxon and Chevron (US), BP (UK), Total (France), and Shell (the Netherlands) \u2014 have all pledged, with varying degrees of ambition, to reduce their emissions. <\/p>\n

The industry has clearly gotten the memo that climate policy is happening. And it wants to be at the table rather than on the menu.<\/p>\n

But do these pledges pass muster? Are they in line with a 1.5\u00b0 Celsius scenario, or even close? The general consensus seems to be no. The International Energy Agency said, upon this year\u2019s release of its \u201cOil and Gas Industry in Energy Transitions\u201d report, \u201cthere are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path.\u201d In other words, show me the money.<\/p>\n

There are other ways of assessing these plans outside of their total dollar amounts. Do they rely on carbon offsets or carbon capture plans of dubious value? Do they signal a change in lobbying, advertising, and political participation? Do they account for climate justice?<\/p>\n

In an attempt to bring some rigor to these assessments, the nonprofit Oil Change International (OCI) has released a report that lays out a set of necessary-but-not-sufficient \u201cminimum criteria\u201d that oil company plans must meet \u201cto have the possibility of being 1.5\u00b0C-aligned.\u201d <\/p>\n

How do the plans measure up? Well, they all fail \u2014 none are aligned with 1.5\u00b0. BP is doing the best, but none are particularly close to clearing the bar.<\/p>\n

Before getting into the criteria OCI uses and what they say about oil company pledges, let\u2019s run through a little background.<\/p>\n

The fossil fuel industry is struggling with low prices, oversupply, and political pressure<\/p>\n

As I wrote in some detail earlier this year, the fossil fuel industry is a mess. It was facing difficult cross-pressures even before the Covid-19 lockdown hit it in the gut.<\/p>\n

Fracking operations have been losing money for years. Overproduction and overinvestment have created a supply glut that was suppressing oil prices even before the virus struck. Renewables are skyrocketing and electric vehicles (EVs) are poised for enormous growth, both of which will cut into future oil demand.<\/p>\n

Oil majors have been writing down assets, financial institutions are turning away from oil investments, and plastics are likely to substantially underperform the industry\u2019s rosy projections. All the while, customers, corporate partners, investors, shareholders, and activists are putting ever-increasing pressure on oil and gas companies to begin planning seriously for climate change. <\/p>\n

This was all going on when the coronavirus hit and cratered demand, which still hasn\u2019t recovered and may never fully recover. Some analysts are speculating that 2019 will turn out to be the global peak in fossil fuel demand. \u201cCould it be peak oil?\u201d speculated BP CEO Bernard Looney. \u201cPossibly. I would not write that off.\u201d <\/p>\n

Meanwhile, the decline continues. This is the context in which these commitments are being released: Oil and gas companies are somewhat desperate, unusually weak, and badly need social capital.<\/p>\n

To limit global temperatures to 1.5\u00b0, most oil and gas must stay in the ground<\/p>\n

Previous OCI research has compared known fossil fuel reserves to the carbon budget permitted by a 1.5\u00b0 scenario. The situation is stark. <\/p>\n

Fossil fuel companies have what are called \u201cproved reserves,\u201d which are fields that can be reasonably expected to produce in current economic conditions, and \u201cdeveloped reserves,\u201d which are fields that are currently producing, through existing mines or wells. <\/p>\n

If fossil fuel companies develop all their proved reserves, the 2\u00b0 carbon budget would be blown many times over. In fact, as the graph below shows, developed reserves alone would blow the 2\u00b0 budget. In fact, if every coal mine in the world vanished overnight, the developed reserves of oil and gas would still push past the 1.5\u00b0 budget. <\/p>\n

Developed reserves are what analysts call \u201ccarbon lock-in\u201d \u2014 the carbon hasn\u2019t been emitted yet, but investments in infrastructure, equipment, and labor make it extremely difficult, politically and economically, to prevent it from happening.<\/p>\n

Every bit of new fossil fuel exploration and development, every new mine or well, is an increment of carbon lock-in. And since there\u2019s no carbon budget left over, the only way to truly get on a 1.5\u00b0 path is to cease exploring or developing new reserves entirely. <\/p>\n

That is the baseline: The growth of fossil fuels is incompatible with solving global warming. Acknowledging that basic fact is the beginning of any serious plan for oil and gas companies. <\/p>\n

With that in mind, let\u2019s take a look at OCI\u2019s assessment.<\/p>\n

Oil companies are doing a fraction of what they need to do to get in line with 1.5\u00b0<\/p>\n

OCI lays out 10 minimal conditions that must be met for a plan to be aligned with 1.5\u00b0, which it applies to eight of the biggest integrated oil and gas companies in the world: BP, Chevron, Eni, Equinor, ExxonMobil, Repsol, Shell, and Total.<\/p>\n

The conditions fall under the headings Ambition (1-5), Integrity (6-8), and Transition Planning (9-10). We\u2019ll walk through them and cite companies (if any) that are meeting them. <\/p>\n

    \n
  1. \nStop exploration: no more finding new fields. BP is the only company that has agreed to this, and only in new countries.<\/li>\n
  2. \nStop approving new extraction projects. No company has pledged this.<\/li>\n
  3. \nDecline oil and gas production by 2030. BP has said it will reduce production 30 percent by 2030; Eni has said it will plateau in 2025, but only oil will decline. Other companies have said nothing.<\/li>\n
  4. \nSet long-term phase-out plan aligned with 1.5\u00b0C. BP, Eni, and Repsol have plans OCI deems insufficient; the rest have none.<\/li>\n
  5. \nSet absolute target covering all oil and gas extraction, including scope 3 emissions. Where scope 1 and 2 emissions are direct energy use by a company, scope 3 emissions encompass the entire supply chain through which the company\u2019s products are produced and used \u2014 in this case, the carbon emitted by burning fossil fuels. Eni and Repsol are good on this. Equinor, Shell, and Total cover scope 3 emissions, but only through carbon intensity targets rather than absolute reductions. BP is good on the surface, except it contains some pretty big loopholes. Its pledge \u201cexcludes more than 40 percent of its oil production and 15 percent of the gas that come from its stake in the Russian energy giant, Rosneft,\u201d Nicholas Kusnetz reports for Inside Climate News. \u201cIt also excludes all the oil and gas that BP\u2019s refineries and service stations buy from other producers before selling it to customers.\u201d Plus, BP recently announced that it\u2019s selling a large chunk of oil and gas assets, which will get them off BP\u2019s books, but will not shut them down.<\/li>\n
  6. \nDo not rely on carbon sequestration or offsets. They all do, though.<\/li>\n
  7. \nBe honest about fossil (\u201cnatural\u201d) gas as high carbon. None of them are, though. Lots of them are still passing it off as a \u201clow-carbon\u201d shift.<\/li>\n
  8. \nEnd lobbying and ads that obstruct climate solutions. Here, BP, Eni, Equinor, Repsol, Shell, and Total have all made vaguely positive noises that OCI deems insufficient.<\/li>\n
  9. \nCommit to explicit end date for oil and gas extraction. None of them have.<\/li>\n
  10. \nCommit plans and funding to support workers\u2019 transition into new sectors. None of them have.<\/li>\n<\/ol>\n

    Here\u2019s the visual \u2014 if you can\u2019t read it, just note all the red, which means \u201cgrossly insufficient.\u201d <\/p>\n

    One thing worth noting: The only two companies with solid red all the way down are Exxon and Chevron, the US companies. They, like the country they call home, are laggards on climate. <\/p>\n

    While almost all the companies are planning increases in oil production, Exxon and Chevron are planning the most:<\/p>\n

    Exxon and BP are planning the biggest increases in gas production: <\/p>\n

    In general, the European oil and gas majors are farther ahead on climate change, likely because the political context in which they operate takes climate change more seriously. But none of the majors are even beginning to make the enormous near-term shifts in investment that will be required to hit their long-term targets.<\/p>\n

    The oil majors have a long journey ahead<\/p>\n

    OCI\u2019s criteria are quite strict and no oil and gas major is anywhere close to meeting them. There is an entire section of the report on the various loopholes the majors are using to diminish or minimize accountability, from ignoring scope 3 emissions (side-eye at Exxon) to making unreasonably big bets on unproven carbon capture technologies to measuring carbon intensity rather than absolute emissions. <\/p>\n

    And of course, the fossil fuel companies, despite their rhetoric, continue to put their lobbying power behind campaigns and trade groups that oppose climate action.<\/p>\n

    \u201cIn 2018, for example, BP played a central role in blocking the adoption of a carbon tax in Washington State, spending $13 million to help defeat the effort,\u201d Kusnetz writes. \u201cBP, Chevron and [the American Petroleum Institute, an industry trade group] all supported the Trump administration\u2019s weakening of regulations limiting methane emissions from oil and gas operations. The institute has also pressed lawmakers and governors to eliminate incentives for electric vehicles, policies that are among the few in the United States that encourage a shift away from oil.\u201d<\/p>\n

    During the pandemic, the industry has lobbied furiously for special breaks and favors to boost production and prices. And it has largely received them, especially from Trump. A recent Morning Consult analysis found that the US \u201chas committed more to fossil fuel companies through federal and state policies than any other Group of 20 member has directed to all energy types \u2014 fossil and renewable combined \u2014 since the start of the pandemic, both through relief packages and other, ostensibly unrelated, policy changes.\u201d<\/p>\n

    By and large, fossil fuel companies are fighting for their narrow interests within the system they find themselves, which is pretty much what you\u2019d expect them to do.<\/p>\n

    A few of the European majors are beginning to budge. Here\u2019s Kusnetz again:<\/p>\n

    \n

    BP and Shell insist they are now aligning their lobbying with their net-zero goals. Shell, at least, has begun to back this up: The company opposed the Trump administration\u2019s methane regulation roll-back and the loosening of fuel efficiency standards for cars. Shell and BP also have announced they will leave the American Fuel and Petrochemical Manufacturers, a trade group, because of its opposition to carbon taxes and its failure to support the Paris Agreement. In February, BP said it would end its \u201ccorporate reputation\u201d advertising, and that any future campaigns would \u201cpush for progressive climate policy; communicate our net zero ambition; invite ideas; or build collaboration.\u201d<\/p>\n<\/blockquote>\n

    That\u2019s a good start, but there\u2019s a long way to go and a lot of companies that aren\u2019t yet on board.<\/p>\n

    OCI\u2019s criteria, if met, would effectively amount to the rapid managed phase-out of enormous assets by the industry that controls the assets, a transition not every company, or even most of them, would survive. That is not something that typically happens. A moment\u2019s consideration leads to the conclusion that headlines the final section of the report: \u201cOil and gas companies will not manage their own decline.\u201d<\/p>\n

    In that sense, the report is something of a thought experiment, meant to reveal what ought to be obvious, as OCI says: \u201cGovernments must step in to manage the decline in fossil fuel production and secure a just transition.\u201d<\/p>\n

    Ultimately this is a matter for public policy. The system in which oil and gas companies operate must be changed, to channel investment away from fossil fuels into alternatives and affected communities. That will happen, if at all, through organization, democratic pressure, and changes in legislation and regulation \u2014 not through voluntary pledges. <\/p>\n

    \n

    Click Here: <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    This story is part of Covering Climate Now, a global journalism collaboration strengthening coverage of the climate story. The oil and gas industry has found itself under a harsh spotlight as concern over climate change increases across the world. Lately, oil and gas majors have responded to the scrutiny with a series of pledges, plans,…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-9937","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/googmn.com\/index.php?rest_route=\/wp\/v2\/posts\/9937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/googmn.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/googmn.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/googmn.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/googmn.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9937"}],"version-history":[{"count":0,"href":"https:\/\/googmn.com\/index.php?rest_route=\/wp\/v2\/posts\/9937\/revisions"}],"wp:attachment":[{"href":"https:\/\/googmn.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/googmn.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9937"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/googmn.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}