Reports: Oil and gas majors continue to slow energy transition and undermine Paris Agreement

Pictured: The Eldfisk field in the North Sea, in Norwegian waters. Image: ConocoPhillips

Conducted by Carbon Tracker, the analysis assessed 25 of the world’s largest listed oil and gas majors to ascertain whether their recent project sanctions and future strategic plans are aligned with the energy transition needed to limit global heating in line with the international Paris Agreement on climate.

Analysts looked at current and future investment options, future production plans, emissions targets and recently-approved projects to give businesses an overall alignment grade.

None of the firms are aligned with the Paris Agreement’s goals in any of these respects. However, the businesses that are the furthest away from alignment are ConocoPhillips, Pioneer, Saudi Aramco, Petrobras and ExxonMobil.

ConocoPhillips, the lowest scorer, is notably targeting a 47% increase in oil and gas production by the end of the decade.  Chevron ranks higher overall but is still targeting a 33% production increase over 2022 levels by 2027.

The International Energy Agency’s (IEA) 1.5C-aligned pathway to a net-zero global energy system by 2050, in contrast, includes the immediate cessation of all new upstream oil and gas projects with long lead times and a 25% decrease in global fossil fuel demand by 2030.Less than one-fifth of the companies assessed by Carbon Tracker are not planning to increase production volumes in the long-term – namely Repsol, Equinor, Shell and BP.

Carbon Tracker’s oil and gas analyst Maeve O’Connor hopes the report will inspire investors to hold energy businesses to account at upcoming Annual General Meetings (AGMs).

O’Connor said: “Companies worldwide are publicly stating they are supportive of the goals of the Paris-Agreement, and claim to be part of the solution in accelerating the energy transition. Unfortunately, however, we see that none are currently aligned with the goals of the Paris Agreement, albeit there are clear differences between companies. This report gives evidence for investors and other stakeholders to hold companies to account.”

Carbon Tracker also looked at executive pay in this analysis, looking at whether governance structures would encourage decision-makers to accelerate – or stall – the transition to lower-carbon energy systems.

All but one of the 25 firms – Occidental Petroleum, based in Texas – incentivise executives to expand fossil fuel production.

A recent, separate survey of 600 executives including those in oil and gas, conducted by Bain & Company, found that most (62%) are planning for the world to meet net-zero by 2060 or later rather than 2050.

Financiers in hot water over Rosebank support

In related news, campaign group BankTrack is urging a dozen of Europe and North America’s largest banks and investment firms to stop providing finance to Ithica Energy – a pure-play oil and gas company and owner of a minority stake in the controversial Rosebank oil field project in the North Sea.

It believes that Bank of America, BNP Paribas, Deutsche Bank, Goldman Sachs, HSBC, ING, JP Morgan, Lloyds of London, Morgan Stanley, Natwest, DNB and Wells Fargo have provided finance to Ithaca Energy either directly or indirectly between 2016 and 2022.

JP Morgan Chase is reportedly the firm’s largest financier, having provided more than $249m during this period.

Letters sent to each of these banks, signed by more than 80 people from BankTrack and beyond, highlight how investment in Ithaca could undermine their climate commitments. Ten of the banks are members of the Net-Zero Banking Alliance, which convenes the sector in reducing financed emissions in line with 1.5C.

BankTrack climate campaigner and researcher Henrieke Butijn said: “Ithaca is a company that is purely focused on North Sea oil and gas and its expansion, with no interest in renewables. Banks that finance companies like this are making a mockery of their climate commitments.

“But worse than that, their finance is shattering our chances of staying below 1.5 degrees Celsius, and aggravating the impacts of climate chaos that especially communities of colour and those in the Global South already have to deal with every single day.”

Ithaca Energy claims that it is working towards net-zero by 2040. However, its emissions targets do not cover emissions resulting from the burning of the oil and the gas extracted at its projects.

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