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Climate Change Oil Companies Align with 2015 Paris Agreement Pledges

Climate Change Oil Companies are signing up to the 2015 Paris Agreement Pledges and joining the fight to reduce global warming in decarbonization renewable energy production. For climate change avoidance to work, it was always going to need the major oil companies to themselves commit to the Paris Agreement pledges made by the world’s nations in 2015. We are delighted to be able to republish the following article from the [RE]fuel Report published by EnergyCensus.com which explains how they are at last promising to do just that.

We are more than ever now optimistic that what we consider to be tentative pledges will be carried through. The reason for this lies in the other news this week on the lower price of renewable fuels compared with, for example coal.

On June 3, 2020 it was reported that renewable power is increasingly cheaper than any new electricity capacity based on fossil fuels, in a new report by the International Renewable Energy Agency (IRENA) published this week. The report Renewable Power Generation Costs in 2019 shows that more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants. We also believe that where electricity costs are the subject of the report, other renewable energy source costs are also falling.

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Be optimistic than climate change action is and will much more rapidly now take place, driven by simple economics. Read on to find out more about the source of our optimism:

Oil majors ‘must make carbon cuts more transparent’ amid moves to use more biofuels

Claims that oil majors with significant biofuel production capacity are on course to meet ‘net zero’ emissions reductions targets are “overstated”, an analysis published by an investor group has found, although the group agrees that the sector has made “significant progress” in the past year to set out long-term strategies to reduce their carbon footprint.

The Transition Pathway Initiative, an investor initiative backed by $19 trillion of investor capital, said Royal Dutch Shell and Italy’s Eni have the two most ambitious targets of the six EU-based energy majors surveyed.

“They [Eni and Shell] have introduced a new concept of not selling energy to customers that are not also aligned to net-zero pathways in key sectors such as aviation, shipping, and freight. This warrants further analysis to quantify the emissions reductions of such an approach,” TPI said.

Although all the energy majors contend that fuels such as petrol and diesel will have a major share of fuel demand in the decades to come, the use of advanced biofuels, electric vehicle infrastructure, and hydrogen is expected to increase their share as companies attempt to deliver on absolute or carbon intensity targets.

Last month Shell committed to using more biofuels and hydrogen to meet its commitment to reduce the carbon intensity of the fuels it sells by 65% by mid-century, a metric known in carbon accounting as ‘Scope 3’.

The investor group’s analysis showed that four oil and gas majors – Shell, Eni, Total, Repsol – are now aligned with the emissions reductions pledged by the signatories to the 2015 Paris Agreement, with BP and Austria’s OMV now the only European companies who have failed to align with the Paris pledges.

The analysis comes after a flurry of announcements from oil and gas companies on their climate plans.

Last week French energy major Total committed to cut carbon emissions with the aim of reaching net-zero by 2050 from its operations and a 60% reduction in the carbon intensity of its
products over the same timescale.

Total also committed to allocate 30% of its capital expenditure to meet the climate-neutral target by the end of this decade, but that particular undertaking is viewed as more likely to harness
renewables at refining operations rather than a determinant of spending on alternative fuels.

TPI’s analysis came to the following conclusions on targets announced this year by four European super major oil companies.

Royal Dutch Shell – the UK-Dutch energy company in April committed to a 65% reduction in the carbon intensity of its energy products by 2050, partly through greater emphasis on biofuels and
hydrogen, and in the same timeframe intends to make the manufacture of its products carbon neutral.

The company’s target drew flak from some environmentalists because it is an intensity, rather than an absolute target, but TPI notes that Shell’s aims are the most “ambitious in the sector”.
The investor group did add, however, that further details will be needed to quantify how Shell will work with the supply chain in hard-to-decarbonise sectors such as aviation and heavy-duty freight transport.

Eni – the Italian supermajor is the only company to have set an absolute target, aiming to reduce emissions (including Scope 3) by 80% by 2050. TPI said Eni’s ambition to cut emissions intensity by 55% across all energy products “is particularly strong,” given its carbon intensity is already only 65.3 tCO2/TJ, 10% lower than its peers.

Total – the French company’s target to cut carbon intensity 60% comes against the backdrop of the company making progress on this metric between 2014 and 2018, from 75.6 tCO2e/TJ in 2014 to 71.4 tCO2e/TJ, partly through the use of biofuels. Yet the company’s absolute emissions rose 8% over the same period, TPI estimates.

BP – the London-headquartered oil and gas major has a target to cut emissions intensity of sold products, including Scope 3, by 50% by 2050. But because the carbon intensity target excludes both trading/supply and crude oil sales, BP’s targets are less ambitious than those from Shell, Total and Eni, TPI said.

The investor group made a list of recommendations for energy companies in formulating and reporting their emissions targets, such as standardised and comparable disclosures, broadening the
scope of commitments to include all energy products, the setting of both intensity and absolute emissions targets, and better disclosure on the contribution low carbon energy sources will make to overall corporate goals.


Will the Worst Offending Climate Change Oil Companies Really Change?

We think it is entirely likely that they will. There are many reasons why they will need to become, if not champions of global decarbonization, at the very least “active participants”.
The first factor which the IRENA “Renewable Power Generation Costs in 2019” report makes clear is that with the cost of renewable power dropping rapidly, they will need to start selling it or simply not survive any longer as key energy suppliers. Simple, economic reality will clearly be the strongest factor for these companies, but other factors will also speed the process.
In the US a number of groups have begun actions suing oil companies for climate change damage. Oil company executives will wish to avoid any involvement of themselves personally in such lawsuits, almost at any cost.
Long term investors such as pension funds are already turning away from oil company investments as having doubtful long-term value for their fund investors.
The fact is that the oil industry contributes massively to climate change. That they cannot ignore. For them, from now on in a political sense, they either tackle the climate change impact on oil and gas industry majors, or their companies will die.

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