Yemisi Izuora
With the exception of Shell and Eni, other major oil companies are currently not meeting United Nations, U.N. targets to limit global warming, investors managing $19 trillion said on Tuesday.
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.
The 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 per cent, Eni by 55 per cent and BP by 50 per cent 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 per cent.
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.
“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 per cent cut in emissions intensity (by 2050) while alignment with 1.5 C scenario requires a 100 per cent reduction in net emissions (a genuine ‘net zero’ strategy).”
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 that 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: “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.
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.