None of the big oil companies currently meet U.N. targets to limit global warming despite the most ambitious targets set by Royal Dutch Shell and Eni, investors managing $19 trillion said on Tuesday, as reported by Reuters.
The Transition Pathway Initiative (TPI), which represents the investors and is co-chaired by the Church of England Pensions Board, called on all oil and gas producers to set both intensity-based and absolute emissions reductions targets so that the industry adheres to a common standard on ‘net zero’ emissions.
Burning of oil and gas accounts for the vast majority of the world’s carbon emissions. TPI, in a study of Europe’s biggest oil producers, singled out Shell and Italy’s Eni for making the broadest commitments to reduce greenhouse gases from all fuel products they sell, also known as Scope 3 emissions.
All European majors have committed to varying degrees of carbon reductions by 2050 to make their companies fit for a transition to a lower carbon economy. In marked contrast, U.S. oil giants lag far behind in terms of climate aims.
Shell has pledged to bring down its overall carbon intensity by 65%, Eni by 55% and BP by 50% by 2050. Intensity targets mean that absolute emissions can rise with increasing production.
Eni has also set itself a target to bring down its absolute emissions by 2050 by 80%.
Graphic - Oil majors' climate ambitions compared by investor group TPI: here
Scope 3 emissions dwarf, typically by a factor of about six, direct emissions from operations and from the electricity a company uses, known as Scope 1 and 2 emissions.
BP and Spain’s Repsol have pledged to bring down their overall emissions to net zero by 2050, but this target does not cover fuel initially acquired from other producers and sold through their marketing businesses.
Most companies use the phrase ‘net zero’ carbon in some way to describe their ambitions, despite the varying pathways.
“We now need a net zero standard for the oil and gas sector,” said Adam Matthews of the Church of England Pensions Board.
None of the companies had done enough to align with plans to keep global warming to below 2 degrees Celsius, TPI said.
“Claims of ‘net zero’ or 1.5 C alignment are not substantiated by TPI’s analysis. Even the most ambitious new goals (Shell and Eni) are not aligned with a 2 C scenario using TPI’s intensity metric,” TPI said in a report.
“Alignment with a Below 2 C scenario requires a 90% cut in emissions intensity (by 2050) while alignment with 1.5 C scenario requires a 100% reduction in net emissions (a genuine ‘net zero’ strategy).”
Graphic - Oil majors' climate ambitions benchmarked by investor group TPI: here
It added that only Eni had provided substantial detail on its use of nature-based offsets - an integral part of every group’s climate targets - to balance out emissions it cannot eliminate.
Austria’s OMV is the laggard with the least ambitious climate targets among big integrated European oil companies, TPI said, adding it expected OMV to issue an update on its transition plans this year.
TPI also urged all groups to provide more detail on their carbon capture and storage renewables investment plans.
A spokesman for BP said it believed its overall transition plan was consistent with the goals of the 2015 Paris climate deal to curb global warming.
“What the world needs to meet the Paris goals are absolute reductions in emissions to net zero ... We do not believe that carbon intensity alone is a reliable single measure of progress towards the Paris goals,” he said.
A Shell spokeswoman said “we need to look at the detail of this report, but we are pleased our ambition is recognised and we are confident our approach is aligned with the 1.5 degrees Celsius goal of the Paris Agreement.”
An OMV spokesman said OMV had already achieved its 2025 targets and that it would set itself more ambitious climate protection goals.
Eni said in an emailed statement that “the best way to cope with the Paris Agreement ambitions is to act on net absolute emissions,” adding its board would submit a new incentive plan at its shareholder meeting on Wednesday linked to performance on the reduction of emissions.
A spokesman for Repsol said its target to reduce emissions from its own barrels by 40% had a 2040 deadline.
Reporting by Shadia Nasralla; Editing by Susan Fenton and Mark Potter
