Energy firms failing on emissions, says Transition Pathway Initiative

22 May 2020

PA

Climate protesters demonstrate outside of the Hague, on Tuesday, whiles the annual Shell shareholders meeting takes place

Climate protesters demonstrate outside of the Hague, on Tuesday, whiles the annual Shell shareholders meeting takes place

LARGE European energy firms have made increasingly ambitious plans to slash emissions in recent months, but none is yet aligned with a truly net-zero world, the Transition Pathway Initiative (TPI) has said.

Its new report, part-funded by the Church of England Pensions Board, states that, while there has been significant and encouraging progress, even the firms with the most stretching pledges on emissions still fall short of an effective commitment to stopping the release of greenhouse gases into the atmosphere by 2050.

The TPI was established in 2017 by a coalition of the C of E’s national investing bodies and other ethically minded funds, to help investors to assess how effectively a firm is addressing the challenges of climate change (News, 13 January 2017).

Its latest report acknowledges the steps taken by European oil and gas companies in recent years: “Less than three years ago no company had set targets to reduce the carbon intensity of the energy it supplied. Today all six companies assessed by TPI have set such targets.”

Four of these multinationals — Shell, Total, Eni, and Repsol — have now committed themselves to cutting emissions in line with pledges made by countries in the 2015 Paris agreement (News, 18 December 2015).

This envisages limiting the global-temperature increases to a maximum of 2ºC from pre-industrial levels. BP and OMV are now the only large European energy companies that have not set targets in line with Paris and 2ºC warming.

Many of the companies, however, have said that their targets align with 1.5ºC warming, or even a net-zero scenario, which, TPI argues, is overblown. “The claims of ‘net zero’ or 1.5°C alignment that have been made by these companies are not substantiated by TPI’s analysis,” the report says.

The director of ethics and engagement at the Pensions Board, Adam Matthews, co-chairs the TPI. “The European integrated oil and gas sector is changing rapidly,” he said. “We have seen significant progress in the past months, with companies engaging with the concept of net zero, adopting longer-term perspectives, and setting more ambitious goals to accelerate the low-carbon transition.”

Investors must continue the pressure on energy firms so that momentum towards net zero was sustained, Mr Matthews said.

In January, the Pensions Board announced that it would no longer invest in BP, or the American giants ExxonMobil and Chevron, until they set emissions targets in line with the Paris Agreement (News, 31 January).

“A critical mass of European companies have evolved their position, and, as a result, this presents an opportunity for investors to now establish a net-zero standard for the oil and gas sector.”

These companies must include energy bought from third parties and not generated by themselves, and consider the environmental impact of not just the oil and gas that they sell, but also those whom they sell to.

Shell is praised by the report for having the most demanding target — reducing its carbon footprint by 65 per cent by 2050 — “But to address the remaining 35 per cent it must help its customers decarbonise by working with coalitions of businesses, governments, and other parties to identify and enable decarbonisation pathways for each sector.”

Outside Europe, out of 42 companies assessed by the TPI and with headquarters elsewhere in the world, none had made emissions commitments in line with the Paris agreement.

A separate report by the TPI on the mining sector states that only two of the ten largest companies are on track to hit the Paris 2ºC target by 2050.

The ten firms emit about 1.5 billion tonnes of carbon into the atmosphere each year, either directly through their mining or indirectly through the products that they sell, the TPI has estimated.

Mr Matthews said that, while it was encouraging that mining companies were starting to set targets, most did not go far enough, and also often covered only operational emissions rather than all the carbon emitted “downstream” as a result of their products.

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