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Big Oil Reality Check Assessing Oil and Gas Company Climate Plans

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Big Oil Reality Check Assessing Oil and Gas Company Climate Plans SEPTEMBER 2020 DISCUSSION PAPER BIG OIL REALITY CHECK ASSESSING OIL AND GAS COMPANY CLIMATE PLANS RUNNING HEAD 1 This briefing was written by David Tong based on research by Kelly Trout with contributions from Hannah McKinnon and Lorne Stockman. All are with Oil Change International. For more information, contact: David Tong at Oil Change International, [email protected]. Design: [email protected] Cover Image: Robbie Grubbs CC BY-NC-ND 2.0. Inside cover: Travis S CC BY-NC 2.0. P4: European Space Agency/ NASA. P8: Samira Zaman CC BY-NC-SA 2.0. P12 Becker CC- BY-2.0. Back cover: Kris Krüg CC BY-SA 2.0. Copyedit: Kaela Bamberger September 2020 Oil Change International is a research, communications, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy. Oil Change International 714 G Street SE Washington, DC 20003 USA www.priceofoil.org THIS BRIEFING IS RELEASED IN COLLABORATION WITH: TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION: BIG OIL CLIMATE PLANS DON’T STACK UP 5 NOTES ON METHODOLOGY 5 ESTABLISHING A BASELINE 6 THE BIG PICTURE AND THE NEED FOR A MANAGED DECLINE 6 TEN BASELINES FOR OIL AND GAS COMPANY CLIMATE COMMITMENTS 7 FAILURE ACROSS THE BOARD: HOW THE OIL MAJORS’ CLIMATE PLANS MEASURE UP 13 APPLYING THE FRAMEWORK 13 RECURRING THEMES 14 CONCLUSION: OIL AND GAS COMPANIES WILL NOT MANAGE THEIR OWN DECLINE 20 EXECUTIVE SUMMARY Increasingly, oil and gas companies claim ESTABLISHING Building any further infrastructure, to be part of the solution to the climate BOTTOM LINES FOR A investing any further capital, or crisis—but the reality is very different. MEANINGFUL CLIMATE employing any further workers to exploit In this discussion paper, we analyze the COMMITMENT additional fossil fuel reserves will only current climate commitments of eight of Past Oil Change International research create even more “carbon lock-in”— the largest integrated oil and fossil gas shows that burning the oil, gas, and making it more difficult, both politically companies—BP, Chevron, Eni, Equinor, coal in existing fields and mines around and economically, to limit production.4 ExxonMobil, Repsol, Shell, and Total (the the world would push average global “oil majors”)—in light of the ambition and temperature rise far beyond 1.5°C, and FAILURE ACROSS THE integrity required to achieve a 1.5 degrees exceed a 2°C carbon budget.1 Even BOARD: THE OIL MAJORS’ Celsius (°C) aligned managed decline of if global coal use were phased out CLIMATE PLANS oil and fossil gas. overnight, developed oil and gas reserves This discussion paper measures oil and would still push the world beyond 1.5°C. gas company climate plans against None of the evaluated oil majors’ ten minimum criteria that they must climate strategies, plans, and pledges If oil and gas companies were serious meet to have the possibility of being come close to alignment with the Paris about the Paris Agreement, they would 1.5°C-aligned. Meeting these criteria alone Agreement. This discussion paper need to end new oil and gas exploration would not guarantee 1.5°C alignment, intends to spark and inform discussion, and extraction now and phase out but they are essential preconditions for as well as encourage careful and critical production from existing developed it. As shown in Table ES-1, the oil and gas analysis of oil and gas climate pledges reserves. This phase out would need to majors’ commitments largely fail this and plans. reflect the principles of a Just Transition.3 baseline test: FIGURE ES-1: CARBON DIOXIDE (CO2) EMISSIONS FROM DEVELOPED GLOBAL FOSSIL FUEL RESERVES, COMPARED TO CARBON BUDGETS WITHIN RANGE OF THE PARIS GOALS 1200 1000 Coal Pa ris 800 goal Developed s 2 reserves 600 Gas CO 2°C Gt Carbon budget 400 Oil 1.5°C Carbon budget 200 Land use change Cement 0 Emissions1.5°C (50% chance)2°C (66% chance) Sources: Oil Change International analysis based on data from Rystad Energy, IEA, World Energy Council, IPCC and Global Carbon Project.2 Remaining carbon budgets shown are as of 1 January 2020. EXECUTIVE SUMMARY 1 TABLE ES-1: ASSESSING THE OIL MAJORS’ CLIMATE PLANS Shell Ambition Only in new Stop exploration No No No No No No No countries Stop approving new extraction No No No No No No No No projects Plateau Decline oil and <30% drop by 2025, gas production No No No No No No by 2030 decline only by 2030 for oil Set long-term production No No No No No No No No phase-out plan aligned with 1.5°C Integrity Set absolute Scope 3 target covering Absolute; Scope 3; Scope 3; Scope 3; “net zero” all oil and gas major Scope No Yes intensity No close to intensity only in extraction (full 3 loophole target only absolute target only Europe equity share) Do not rely on carbon No No No No No No No No sequestration or offsets Be honest about fossil gas as high No No No No No No No No carbon End lobbying and ads that obstruct No No No No No No No No climate solutions Transition Planning Commit to explicit end date No No No No No No No No for oil and gas extraction Commit plans and funding to support workers’ No No No No No No No No transition into new sectors COLOR CODE FOR RATING COMPANY COMMITMENTS AGAINST CRITERIA Grossly insufficient Insufficient Partial alignment Close to alignment Fully aligned For sources and further explanations, see Table 1 at page 13. EXECUTIVE SUMMARY 2 RECURRING THEMES its extraction investments from that these projections because BP has not yet STILL INVESTED IN GROWING commitment. Almost all oil and gas shifted its asset portfolio to match it.) PRODUCTION TO 2030 majors are still on track to increase their Most of the oil majors are still on track overall contribution to the climate crisis There is an alternative pathway, as to significantly increase their oil and gas between now and 2030, as shown in shown in Figure ES-4. By stopping production between now and 2030. This Figures ES-2 and ES-3. investments in new fields, stopping is according to Rystad Energy projections putting new reserves into production, based on the assets they currently hold This trajectory will not meaningfully and accelerating the phase-out of and are planning to sanction. Only one shift until these companies commit some existing production, oil and gas oil major, BP, has committed to cutting to not develop new projects in their production would decline at a pace oil and gas extraction by 2030. However, development pipeline and/or phase out aligned with 1.5°C. it has excluded around 30 percent of some of their existing assets early. (BP’s the carbon pollution associated with recent commitment does not show up in FIGURE ES-2: PROJECTED CHANGE IN OIL PRODUCTION TO 2030 BY COMPANY 4.5 +52% 2019 2030 4.0 3.5 y +8% 3.0 da r +22% 2.5 +11% +12% 2.0 illion barrels pe 1.5 -2% +21% M 1.0 0.5 +22% 0.0 Source: Rystad Energy UCube FIGURE ES-3: PROJECTED CHANGE IN GAS PRODUCTION TO 2030 BY COMPANY 14 +27% 2019 2030 +1% 12 +17% y 10 da r -2% pe -11% 8 et +/-0%-6% 6 illion cubic fe 4 B -17% 2 0 Source: Rystad Energy UCube EXECUTIVE SUMMARY 3 BIG OIL AND GAS REALITY BP ANNOUNCED PLANS TO LAY OFF 10,000 OF ITS WORKERS THIS SPRING—JUST WEEKS AFTER MAINTAINING A USD 2.1 BILLION DIVIDEND PAYOUT TO SHAREHOLDERS.95 FIGURE ES-4: GLOBAL OIL AND GAS EXTRACTION WITH AND WITHOUT NEW DEVELOPMENT, COMPARED TO DEMAND ALIGNED WITH 1.5°C 400 Business as usual 350 J) 300 s (E ga 250 and l oi : 200 Existing fields only gy 1.5ºC pathway (no new development) er 150 y En 100 Primar SR15 P1 pathway 50 Production, all fields Production, producing & under-development fields 0 2010 2020 2030 2040 2050 Sources: IPCC SR15 and Rystad Energy UCube5 CUTTING CORNERS IN absolute level of carbon-dioxide pollution minimum criteria for alignment with the “NET-ZERO” PLEDGES associated with burning the oil and gas Paris Agreement. In order to ensure a Several oil majors’ “net zero” emissions they produce. phase out that reflects the urgency and pledges contain large exclusions. ambition of the Paris temperature limits Examples include ignoring certain CONCLUSION: OIL AND across the entire oil and gas sector, jurisdictions where climate regulations GAS COMPANIES WILL governments must step in to manage don’t already exist, or excluding projects NOT MANAGE THEIR the decline of production and facilitate where companies share ownership with OWN DECLINE a Just Transition. another company. Others provide no No major oil and gas company guarantee that the company will cut has released a climate pledge or what matters most for the climate: the sustainability plan that meets the bare EXECUTIVE SUMMARY 4 INTRODUCTION: BIG OIL CLIMATE PLANS DON’T STACK UP This year, the COVID-19 crisis has put BIG OIL AND GAS REALITY people’s health, jobs, and lives at risk, SINCE RELEASING ITS LATEST CLIMATE PLAN, TOTAL HAS as well as throwing the global energy economy into turmoil. The oil and gas SIGNED DEALS WORTH USD 15 BILLION TO FORGE AHEAD WITH industry had spent the last decade CONSTRUCTION OF A MASSIVE LIQUEFIED NATURAL GAS (LNG) investing in an oversupply of oil and gas. EXPORT FACILITY IN MOZAMBIQUE THAT IS FUELING HUMAN Then, low oil prices and a near-term drop in demand combined to cause immediate RIGHTS VIOLATIONS, CORRUPTION, VIOLENCE, AND INEQUALITY.
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