On December 14, 2020, Darren Woods appeared in front of the press and announced that his company would align itself with the goals of the Paris Climate Agreement and reduce its CO₂ emissions accordingly. “We respect and support society’s drive to achieve net zero emissions by 2050,” he said.
The remarkable thing about it: Woods is the head of Exxonmobil, a US oil company that has done everything for decades to discredit climate science with disinformation campaigns in order to prevent ambitious climate plans and thus preserve its own business model. The time when energy companies can ignore climate change seems to be over: Companies are coming under increasing pressure from investors, governments and courts who are calling for plans for a transition to a world without fossil fuels. The result: More and more oil and gas companies shy away from major investments in new, expensive subsidy projects and commit to climate protection in a publicly effective manner.
Economists working with Simon Dietz from the London School of Economics and Political Science have examined what is really involved. “The sector is not on target,” they write in the specialist journal Science. Of the 52 oil and gas companies examined, almost half had not yet submitted or clearly stated any CO₂ targets. The other half of the companies had adopted goals, but in most cases these were only weak or too narrowly defined.
What happens to the oil they sell? The corporations do not feel responsible for this
The economists compared the climate targets of the companies with targets in the Paris climate treaty, i.e. limiting global warming to 1.5 degrees, below two degrees or two degrees. Only two corporations were therefore on target: The US company Occidental Petroleum wants to reduce its CO₂ intensity to zero by the middle of the century by filtering carbon dioxide from the air. These plans would even be in line with the 1.5 degree target. The Dutch oil company Shell, on the other hand, wants to reduce its CO₂ intensity by 65 percent by the middle of the century by gradually converting its business to green energy. That would at least be on a course below two degrees. Eni, Repsol and Total would easily target over two degrees.
The vast majority of energy companies are far from aiming for climate neutrality by the middle of the century. Either because their plans are insufficient or because they only relate to the company’s own production, processing and transport of oil and gas, but not to the burning of fossil fuels. “They are still oil and gas producers,” says Dietz. “They just want to be cleaner producers.”
Exxonmobil & Co’s calculation: What happens to the natural gas or oil that they sell in the end – others are responsible for that: those who drive cars, heat their own houses or operate industrial plants. “But that is only a very small part of the total footprint,” says Dietz. “It’s hard to find believable.”
The authors also noticed that the companies’ short-term goals by no means provide for a rapid reduction in CO₂ emissions. That may also be because many countries continue to support the oil and gas industry, as well the latest Production Gap Report from the UN Environment Program shows. According to this, the 15 most important industrialized and emerging countries are planning to produce less coal by 2040, but more oil and gas – even though many of them have promised climate neutrality by 2050. This would mean that governments would produce twice as much fossil energy in 2030 as is compatible with the 1.5-degree target, and still 45 percent more than is compatible with the two-degree target. In 2040 the gap would widen again significantly.
The current price surge shows how dependent the world is still on fossil fuels
“Governments must ensure that their stance on fossil fuel production is in line with their long-term climate goals,” says Dietz. “Many of these companies are private, but governments can set the framework and cut subsidies, for example.” Currently, however, the trend is going in the other direction: since the beginning of the pandemic, the group of the 20 most important industrial and emerging countries alone has invested almost 300 billion euros in fossil fuels – and thus more than in clean energies.
The current shortage of natural gas and the high prices for oil and gas also show how dependent the world is still on fossil energy sources. In view of the current situation, however, there does not necessarily have to be a long-term boost for fossil energy sources. “Before the energy companies actually push large investments, an even higher oil price would be needed, which would last longer,” says economist Claudia Kemfert from the German Institute for Economic Research (DIW). “And because the costs for oil and gas are high, it is even possible that more consumers are switching to e-cars, heat pumps and pellet heating systems.”