The Reality of Oil and Gas Industry’s Net-Zero Commitments

1008

The Reality of Oil and Gas Industry’s Net-Zero Commitments

There has been an increase in oil and gas firms committing to achieve net-zero by 2050. But with rising CO2 emissions, the current scenario demands immediate action. Several fossil fuel firms are being sued for misrepresentation and fraud. Experts stressed the need to set an interim target with clear timelines.

27 September 2021 – by Ankush Kumar

    With increasing climate catastrophes, the call to achieve net-zero emissions by 2050 is getting louder than ever. Climate activists expect crucial decisions towards this goal in the upcoming UN Climate Summit COP 26 in Glasgow. On the one hand, coal-fired power plants worldwide are under tremendous pressure due to rising protests and shrinking funds. On the other hand, oil and gas companies continue to propagate their future viability to the world.

    Case of Cambo Oil Field

    Is there a rush among the companies to cash in from the fossil fuel reserves before tighter regulations? Maybe yes. The finest example is the recent controversy related to the Cambo oil field, a few hundred miles from the COP 26 venue in the UK North Sea. Greenpeace claimed that the drilling work was about to start without an official permit. The environmental NGO even plans to challenge the British government in court. “Before granting a new drilling permit, the government has a legal duty to consider what harm that drilling would do to the environment,” states Greenpeace. Co-owned by Shell and Siccar Point Energy, the oil field west of the Shetland Islands has an estimated reserve of 800 million barrels.

    No New Oil and Gas Project in Net-Zero Pathway

    The dream of getting even close to net-zero cannot be fulfilled without keeping a tab on oil and gas production. According to McKinsey, the industry accounts for 42% of the global greenhouse gas emissions. With such a significant share, how realistic would it be to reach the emission target without compromising the core business? The International Energy Agency (IEA) has answered in its report “Net Zero by 2050”, published in May. Accordingly, no new oil and natural gas fields were needed on the path to climate neutrality. Furthermore, the focus on energy security would lead to higher renewable energy dependency. Energy security and renewable energy dependency would ultimately diminish the role of oil and gas. The IEA also gives an overview of how to curb carbon emissions to reach net-zero by mid-century.

    Source: McKinsey

    Why the Oil and Gas Industry Criticises IEA’s Net-Zero Report

    The report has triggered various conversations in the energy sector. Fossil fuel lobbyists believe that the IEA’s suggested pathway to net-zero is unrealistic. Chinese energy experts withstand the agency’s focus on improving technological innovation. However, they also point out that rapidly phasing out coal plants, oil and gas fields could destabilise the energy supply. They instead suggest a gradual phase-out. Moreover, they termed natural gas as the cleanest fossil fuel vital to reach net-zero.

    Source: Carbon Tax Center

    The “Context” magazine published by the Canadian Association of Petroleum Producers also criticises the IEA’s vision for net-zero as impractical. The publication states that oil and gas exporting countries would see an average 70% drop in revenues in the agency’s scenario. Such revenue loss would result in “unprecedented social and political upheaval” in the Canadian economy.

    Companies Declaring Net-Zero Commitment

    According to the same IEA report, the number of countries that have pledged to achieve net-zero emissions now covers around 70% of global emissions of CO2. Remarkably, several global fossil fuel companies have also revealed their climate commitments. In February 2020, the British multinational oil and gas company BP announced net-zero carbon emissions by 2050 or sooner. A few months later, Paris-based Total and Netherland’s Royal Dutch Shell declared their plans to reach climate neutrality by mid-century. The same year US multinational energy firms ExxonMobil and Chevron also committed to reducing their carbon intensity. Similarly, the Spanish oil and gas company Repsol and state-held PetroChina have pledged to cut emissions to “near zero.” However, when IEA came up with the roadmap to reach net-zero and limit the rise in global temperature to 1.5 °C, many fossil fuel companies started criticising it.

    Source: Carbon Tracker

    NGOs Demand Clarity on Climate Pledges

    Consequently, activists and NGOs are questioning the climate commitments of these companies. Top oil and gas firms have adopted climate policies, but many keep options to increase fossil fuel production, states Carbon Tracker in its report. Most companies claim to balance out emissions by investing in renewable energies, planting more trees, or using carbon capture technologies. The authors, therefore, call investors to scrutinise these net-zero plans. They should check whether land required for climate solutions was acquired and whether other emission reduction technologies have been proven at scale.

    Some climate campaigners have gone way ahead in demanding justice for the planet. For example, the Australasian Centre for Corporate Responsibility (ACCR) plans to challenge Australian oil and gas major Santos Ltd in court. The group questions Santos’ claim that “natural gas provides clean energy.” The firm further stated in its Annual Report 2020 that its “2040 target is supported by a transition roadmap which is clear and credible.” Activists equally challenged this.

    Greenwashing by Oil and Gas Firms

    ACCR termed it a case of greenwashing with the potential to mislead shareholders and pose risks to investors. “More than 80% of Santos’ net-zero plan relies on Carbon Capture and Storage (CCS)”, said Dan Gocher. The group’s climate and environment director added that the fossil fuel sector used the CCS technology “to justify business as usual” and termed it “expensive and unreliable”.

    This year in April, the NGO ClientEarth launched the Greenwashing Files. They highlight how the world’s biggest fossil fuel companies are using advertising to influence public opinion. The experts compared the public claims of nine leading fossil fuel firms, including Aramco, Chevron, Drax, Exxon, Equinor, Ineos, RWE, Shell, and Total.

     Their publicity “routinely misrepresented the sustainability of their activities,” the ClientEarth report states. “It avoided the full scale of their greenhouse gas emissions, overrepresented clean energy investments and promoted commercially unproven ‘solutions.’”

    Experts believe that apart from declaring to achieve net-zero by 2050, the oil and gas industry must also set an interim target. Over 4,500 non-state actors from around 92 countries have committed to halving their emissions by 2030.  These include companies, cities, regions, financial, educational, and healthcare institutions. Fossil fuel companies still have a long way to go.

    by Ankush Kumar

    Ankush Kumar is a Berlin-based freelance journalist who writes on energy transition, human rights, and enterprise technologies. He was formerly associated with India’s largest media conglomerate The Times Group, covering power utilities, coal, and renewable energy. Kumar was part of the Clean Energy Wire media study tour in 2018 to cover Germany’s coal phase-out.

    As a journalist, Kumar was also involved in a cross-border story on lead-acid poisoning caused by battery recycling. The story won the prestigious “Ernst-Schneider-Preis” of the German Chamber of Commerce and Trade as well as the “Deutscher Journalistenpreis – djp” of The Early Editors Club in 2019. On April 22nd, 2021, at the Second Annual Fetisov Journalism Awards his co-authored story won the 2nd prize in the category of “Contribution to Civil Rights.” Over the years he has written articles for The Caravan, Financial Express, The Economic Times, Der Spiegel, Frankfurter Rundschau, and other reputed publications.

    Read more

    Related Articles

    See all
    The Risks of the Continued Reliance on Oil and Gas in South Korea
    Net-Zero Pledges – Who’s Walking the Talk?
    Oil and Gas Sector: The Prospects of a Transition Fuel
    Cheap Green Hydrogen and its Impacts on Asia’s Oil and Gas Industry

    Most Popular

    See all
    The Growth of Renewable Energy in Indonesia – Current State, Opportunities and Challenges
    Renewable Energy in Bangladesh – Current Trends and Future Opportunities
    Hydrogen Oil: Green vs Blue, What’s the Difference?
    Asia’s Race to Net-Zero by 2030

    Energy Tracker Asia Newsletter

    Become a subscriber of our newsletter and get the latest news on investments in coal, gas, and renewable energy in the region.
    • By clicking Sign Up, you consent to receive emails from Energy Tracker Asia. We won’t distribute your email address to any third party at any time. If you are under 16 years of age, please get consent from your parents or guardian first. You can unsubscribe any time. View our Privacy Policy.

    • This field is for validation purposes and should be left unchanged.