Oil giants face vast cuts to hit climate targets
The world’s major oil and gas suppliers must cut combined production 35 per cent by 2040 to keep emissions within international climate targets.
According to a new report released this morning from think tank Carbon Tracker, none of the majors are currently on track to be in line with the Paris agreement by 2040, despite public statements to the contrary.
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US companies ConocoPhillips and ExxonMobil, the world’s largest oil company, need the largest cuts, of 85 per cent and 55 per cent respectively.
Shell has the most aligned portfolio but would still require cuts of 10 per cent to meet demand.
Report author Mike Coffin said: “If companies and governments attempt to develop all their oil and gas reserves, either the world will miss its climate targets or assets will become “stranded” in the energy transition, or both.
“The industry is trying to have its cake and eat it – reassuring shareholders and appearing supportive of Paris, while still producing more fossil fuels.”
The data, which analyses current and future oil projects to identify those that would still be economically viable in a 1.6 degree warmer world, showed that there is very little headroom for new fossil fuel projects.
At a time when stakeholders are increasingly concerned with ensuring their investments are ethically sound, the report focuses in on the financial risk investors face from companies continuing to put money into fossil fuel assets.
Carbon Tracker’s analysis to date has argued that it is in shareholders’ best interests for oil companies to restrict investment in new production to only the most competitive projects.
Instead, companies should focus on investing in low-cost, low-carbon projects that minimise risks to investors.
Mark Campanale, the think tank’s founder and executive director, said: “It is now more urgent than ever that shareholders promote, then support, plans for the oil and gas sector to manage rapid decline in production.”
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The report comes at the end of a week in which three of the world’s largest oil companies have posted major losses in their third quarter results.
BP, Shell and Total have all been victims of consistently low oil prices throughout the year. BP’s profits fell 41 per cent on Tuesday, whilst Shell and Total’s profits fell 15 per cent and 24 per cent respectively.
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