Big Oil undermines UN climate goals with $50 billion of new projects

Rodiano Bonacci
Settembre 10, 2019

On Thursday, the 5th of September 2019, Carbon Tanker, the London-based non-profit think tank engaged on researching the impact of climate change on financial markets, said in a report dated to be published on Friday that world's leading oil majors, assigned to projects worth of more than $50 billion since previous year, would not be able to instrument the projects if governments made a decision to implement the Paris agreement on climate change.

Shell said in a statement that it has set out an "ambition" to halve net carbon emissions by 2050 "in step with society as it moves towards meeting the aims of Paris".

According to a report by Carbon Tracker, those projects would not deliver adequate returns in a low-carbon world and yet they were approved.

"None of the largest oil and gas companies are making investment decisions in line with the global climate goals", tweeted the group End Water Poverty.

The report claims that for oil companies to become "Paris-compliant", projects can break even by meeting demand at $40 per barrel. Oil prices will have to be more than $80 a barrel for ExxonMobil to see a 15% return on its effort, Carbon Tracker said. Shell has a 70% risk, Total 67%, Chevron 60%, BP 57% and Eni 55%.

"The eternal search for growth in the context of finite planetary limits means either the failure of climate targets, exposure of investors to stranded assets - investments that destroy value when industry dynamics change - or both", the report reads.

The projects include Shell's $13 billion liquefied natural gas (LNG) Canada LNG project, a $4.3 billion oilfield expansion project in Azerbaijan owned by BP, Exxon, Chevron CVX.N and Equinor EQNR.OL , and a $1.3 billion deepwater project in Angola operated by BP, Exxon, Chevron, Total TOTF.PA and Equinor.

"Every oil major is betting heavily against a 1.5˚C world and investing in projects that are contrary to the Paris goals", said Andrew Grant, Senior Analyst at Carbon Tracker and report author. "The best way to both preserve shareholder value in the transition and align with climate change goals will be to focus on low-priced projects that will deliver the highest returns". Under a scenario where global warming is arrested at 1.6 degrees Celsius, the energy industry would need an 83-percent lower capex, the think-tank says.

A spokesperson for Shell told the Guardian: "We agree that the world is not moving fast enough to tackle climate change. As the energy system evolves, so is our business, to provide the mix of products that our customers need".

Earlier this week, green groups criticised the UK's offshore oil and gas industry's blueprint to contribute to net-zero emissions by 2035, claiming that the accompanying evidence fails to "leave fossil fuels in the ground". Carbon Capture and Storage (CCS) technologies should also pursued but note exclusively relied on.

The world's five largest listed oil and gas companies have spent more than $1 billion touting their climate credentials since the Paris Agreement was signed, whilst lobbying to protect and expand their fossil fuel operations, according to new analysis published on Friday (22 March).

The CCC is the independent statutory adviser to the UK Government on its climate targets and carbon policy, created under the Climate Change Act.

It acknowledges that savings through the supply chain of emissions produced from the use of its products will require the capturing of emissions.

A major United Nations report a year ago concluded that global Carbon dioxide emissions must reach "net zero" by 2050 to cap temperature rise at 1.5C.

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