Climate Change

Only 13 of 132 largest energy cos committed to net zero emissions: Study

The research reveals that the global energy sector has hardly achieved any progress in achieving the goals of the 2015 Paris Agreement, four years after it was signed

 
By Tarun Gopalakrishnan
Published: Wednesday 13 November 2019
An offshore oil rig. Photo: Getty Images

Four years after the Paris Climate Change Agreement was signed, the global energy sector is yet to make significant headway in achieving its goals, a new study has revealed.

Researchers from the London School of Economics, Oxford University and the Transition Pathway Initiative found in a survey that just 13 of the 132 largest publicly listed coal, electricity, oil and gas companies have committed to net zero carbon dioxide (CO2) emissions.

They surveyed management at 132  electricity, coal, oil and natural gas companies on the following:

  1. Does the company acknowledge Article 2 of the Paris Agreement on climate change as the objective of international climate action?
  2. Does the company state its support for Article 2 of the Paris Agreement?
  3. Does the company explicitly acknowledge the need for net global CO2 emissions to reach zero?
  4. Does the company commit to a year (for instance 2050), or a temperature rise (for instance 1.5 degrees Celsius), by which point its emissions should be net zero?
  5. Does the company plan to offset emissions in reaching net zero, or thereafter?
  6. Does the company explain what the offset mechanism will be and who will pay for it?

Article 2 of the Paris Agreement commits countries to “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change.”

Energy supply and use accounts for around 70 per cent of global greenhouse emissions.

A slim majority of those surveyed acknowledged that the Paris goals exist, which is a reassuring confirmation of reality, if one is not convinced by black and white text.

It gets progressively worse from there, with a majority refusing support for the goals, and an even larger majority rejecting the need to zero out emissions by the year 2050.

 

The Intergovernmental Panel on Climate Change (IPCC) was quite clear last year about the need to reach net zero emissions by 2050, in its special report on 1.5°C.

The share of renewables in the electricity mix needs to be between 70 and 85 per cent by 2050, with the share of coal needing to drop to 0-2 per cent.

The fact that there were any positive responses to the latter questions in the survey can be explained by four factors.

Firstly, the researchers surveyed quite a number of electricity (rather than fossil fuel extraction) companies — 62 out of the 132 surveyed in total.

Electricity businesses tend to be more agnostic to the source of supply, especially when discussing a wholesale energy transition which will affect the whole sector roughly similarly, and where costs are likely to be passed on to consumers (or taxpayers).

Second, while fossil fuel producers are more opposed to climate targets in general, there are some differences within them. Rapid decarbonisation implies coal use needs to drop much faster than oil and natural gas use. There is an ongoing effort to position natural gas, particularly, as a ‘bridge fuel’ to ease the transition to renewables. 

The IPCC’s 1.5C Report, for example, projects an increase in the share of oil and gas in electricity generation, albeit with carbon capture and storage (CCS) technology. Natural gas with CCS is projected at around 8 per cent of electricity generation in 2050.

Third, there has been an increasing amount of shareholder activism pushing some companies to think about their role in climate change. Shell PLC, for example, has responded to such activism by publishing projections for its business taking into account the Agreement’s 2C goal. Other companies, like Exxon Mobil Corp, are far more hostile.

Fourth, fossil companies prefer to talk about reducing their emissions footprint in terms of their operations, not the use of their products. By that standard, there are some companies with internal net zero targets.

Emissions from extraction processes is part of the story, but the Paris Agreement is concerned with reducing fossil fuel use. The cooperation of major fossil fuel companies is likely to remain limited on this larger challenge.

 

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