Fossil fuel giants grapple with climate issues
Published November 12, 2020
Equinor (formerly Statoil), the Norwegian energy company, announced last week that it aims to achieve net zero emissions by 2050. It joins just a few other oil and gas companies in making such a commitment, in a time when the climate crisis is regularly front-page news and when fossil fuel producers are under heavy scrutiny by the public.
As Ben Cook, a portfolio manager at BP Capital Fund Advisors, puts it, “Sentiment towards oil companies is as bad as it’s been in a long, long time.”
Equinor’s net zero target includes not just Scope 1 and 2, but Scope 3 as well through what it’s calling “indirect emissions from customers’ use of Equinor’s equity production volumes”. The company also looks to reduce emissions from oil and gas, increase renewable energy (4-6 GW by 2026 and 12-16 by 2035), and reduce net carbon intensity to zero by 2050.
Earlier this year, the company had announced its plans to achieve carbon neutral global operations by 2030 and to reduce absolute greenhouse gas (GHG) emissions in Norway to near zero by 2050. At the same time, Equinor outlined a value-driven strategy for significant growth within renewables, as well as a new net carbon intensity ambition. Continuing to deliver on the short and mid-term ambitions will be key to achieving net-zero emissions.
“Equinor has for years demonstrated an ability to deliver on climate ambitions and has a strong track record on lowering emissions from oil and gas. Now, we are ready to further strengthen our climate ambitions, aiming to reach net zero by 2050,” said Anders Opedal, CEO and president of Equinor, who joined the company at the beginning of November 2020.
Reuters reports that Opedal “reiterated an ambition of increasing oil and gas output by 3% a year over 2019-2026 but declined to say if Equinor will persevere with its loss-making onshore U.S. shale oil and gas operations.” Opedal went on to say that the decision to get involved in shale was made at a different time and that the company will review whether they will continue on with the venture.
“Equinor’s targets seem the most ambitious in the industry, but its plans to produce more oil and gas this decade contradict the goals of the Paris climate agreement,” said Mark van Baal, head of Dutch activist group Follow This, in a comment to Reuters.
As Jeremy Nicholson, Corporate Affairs Officer at Alfa Energy Group puts it, “You’re going to be held to account if you parade your credentials, so you’d better be sure what you commit to if you make a public commitment.”
In 2018, The Independent reported on a study by the Carbon Disclosure Project, which showed that over the last three decades, just 100 companies were responsible for over 70% of global greenhouse gas emissions, with ExxonMobil and Shell at the top of the list and Statoil (predecessor of Equinor) not much further down.
As nations and businesses across the world are committing to net zero targets, all eyes are on these large emitters and other fossil fuel companies.
Unfortunately, they’re in a difficult position, to put it lightly, as they’ve not been able to extricate themselves from what has been their livelihood for such a long time, unsustainable fuels that are damaging to the environment and climate. Massive change needs to happen within these companies, not just on an operational level (completely revamping their business models) but also when it comes to public perception.
Take Shell for example, who on November 3 posted a poll on its Twitter account that drew a lot of criticism and ridicule from Twitter users:
Within minutes of Shell’s posts, high-profile Twitter users such as US congresswoman Alexandria Ocasio-Cortez, climate activist Greta Thunberg, climate scientists, and even comedians jumped on to call out Shell for the irony in its question, some even calling it a form of gaslighting.
“While competitors commit to reducing oil production, Shell is lagging behind and putting the onus on individuals. Shell must drastically cut its own oil production, and build a renewables business otherwise it remains one of the world’s biggest obstacles to climate action,” said Mel Evans, senior climate campaigner for Greenpeace UK, in a comment for The Independent.
According to a Guardian exclusive from 2017, Shell had been aware of the impact of climate change as early as 1986, even going so far as to release a film about it in 1991. Yet despite this knowledge, the company had continued to invest in environmentally damaging operations.
Also in 2017, the Guardian reported that Shell had told its investors that it was planning to spend up to $6bn on green investment, starting from that year up until the end of 2020. However, as of January 2020, it was on track to meet only a third. In that time, it had invested over $120bn developing fossil fuel projects, with plans to increase total spending to $30bn a year in the early 2020s.
Just this year, in January, Time magazine did a feature on fossil fuel companies and the challenges of climate change. Shell’s CEO, Ben van Beurden, was quoted as saying that Shell knew of the negative impact fossil fuels would have on the planet, but everyone chose to ignore it. However, van Beurden is aware that the company must evolve, and he’s creating a pathway to diversify into electrical power.
This is where Shell is making its push to be environmentally friendly, as it hopes to become the world’s largest power company by the 2030s. The company has also ended various drilling efforts and has pledged to reduce its emissions by 50% by 2050, but it will still carry on with some of its oil and gas operations.
“We’re going to get as much out of [oil and gas] for as long as we can,” said Steven Fries, Shell’s chief economist, in a piece in New York Magazine’s Intelligencer published in March.
In the meantime, according to a leaked report obtained by Bloomberg, another oil giant, Exxon, is sticking to its guns and is even looking to increase its carbon emissions by 17% between 2017 and 2025, with five major projects planned. This is not including Scope 3 emissions, which are four times higher than the company’s operational ones.
In the Time fossil fuels article, Justin Worland writes, “Some firms, like ExxonMobil, are positioning themselves to squeeze the last lucrative years from the oil economy while arguing to shareholders that they will be able to sell all their oil.”
Exxon was quick to act on Bloomberg’s story, releasing a statement on 5 October saying that the projections were preliminary and did not include mitigation and abatement measures. In their 2020 Energy and Carbon Summary, Exxon reported that the company is taking steps towards minimising climate impacts and that it has reduced GHG operations in its operations by 20% since 2009, as a well as helped eliminate or avoid more than 400 million tonnes of CO2 emissions through investments in emission reduction technology. Yet, it has still not made any commitments to either lower oil and gas output or to become net zero.
Should Exxon cave in to public pressure eventually, it will have a lot of work ahead to both repair its image and to reduce its impact on the environment.
Negative sentiment toward oil and gas companies has been building up over decades. Whatever moves they make towards helping to combat and mitigate the climate crisis will be met with intense scrutiny.
Fossil fuel producers are under the magnifying glass even when they make positive moves toward a net zero future. However, given that a large chunk of global greenhouse gas emissions can be attributed to their operations, the future of our planet’s climate rests on what moves they’ll make next..