Report: Fossil fuel giants still undermining Paris Agreement despite net-zero pledges

Just under half of the financial services firms are actively investing in enhancing the skills of their existing workforce.

The think-tank has this week published a new analysis of these companies’ current emissions footprints and future plans to reduce them.

Factors assessed include whether targets include Scope 3 (indirect) emissions, including those from burning extracted fuels, and whether long-term targets are backed up with verified interim targets. Issues also assessed include whether companies are betting on ‘silver bullets’ like man-made carbon capture or divestment.

Carbon Tracker concluded that none of the firms are aligned with the Paris Agreement – especially its more ambitious trajectory of capping global heating to 1.5C on pre-industrial levels.

Saudi Arabian state-owned firm Aramco was deemed to have the weakest climate plan of the 25. It has stated a 2050 net-zero goal but Carban Tracker found no evidence that this target covers all notable sources of operational emissions, nor any Scope 3 emissions. Aramco is also yet to set out interim targets to reduce absolute emissions.

Also in the bottom five are Chinese firms Sinopec and PetroChina, plus Brazil-based Petrobras and American multinational Exxon.

Only one company, Italy’s Eni, is deemed as having climate plans that are ‘potentially’ compatible with the Paris Agreement’s 1.5C trajectory. Eni has a 2050 net-zero goal covering all scopes and is vying for net-zero operations by 2030. It has set interim goals on both intensity-based and absolute emissions bases.

In general, European players ranked more highly than their counterparts internationally. But Carbon Tracker is warning investors to properly consider the system-wide risks that misalignment with the Paris Agreement – or a disorderly energy transition to achieve it – could bring.

“Our analysis shows that the world’s largest oil and gas companies are continuing to put investors at risk by failing to plan for production cuts in line with the 1.5C Paris goal,” said report co-author Mike Coffin, who leads Carbon Tracker’s work on oil, gas and mining.

“Asset owners, asset managers, banks, insurers and other financial services firms should monitor whether the companies they fund or underwrite are adequately prepared for the inevitable change in the global energy system.”

Coffin added that a different engagement approach would be needed for investors backing majority-state-owned companies. These firms are often not as receptive to requests to rapidly decrease emissions and/or production due to their requirements to deliver national policy commitments.

State investment

State-owned oil and gas firms have faced a swathe of criticism in the run-up to COP28, the UN’s next annual climate conference, which begins in Dubai in November.

The UAE has selected Sultan Ahmed Al Jaber as the President-Designate for COP28. He is the chief executive of the state-owned Abu Dhabi National Oil Corporation (ADNOC), which has raised concerns about whether the process will pander to the fossil fuel sector rather than delivering an agreement aligned with the latest climate science.

Al Jaber is also the UAE’s Special Envoy for Climate Change and its Minister for Industry and Technology. The COP28 team has repeatedly stated that it will remain focused on 1.5C and has accepted the UN’s recommendations on reducing fossil fuels themselves, rather than simply addressing some of the related emissions with carbon capture. This latter rhetoric was on display at COP27, with the UAE and other nations pushing for carbon capture as an alternative to transitioning to clean energy sources.

In Europe, meanwhile, green groups are putting pressure on the UK Government not to let Equinor develop the North Sea’s largest untapped oil and gas field, Rosebank. Equinor is majority state-owned by Norway.