On a collision course with the Paris Agreement – E24

Rising oil and gas prices led to an impressive second quarter for the world’s largest oil companies.

But at the same time the money is pouring in, the industry is also under pressure to do more to meet climate goals. The pressure will not abate after heat waves, wildfires and floods in recent years.

The risks associated with dangerous climate change are underlined in an exciting report from the United Nations Climate Panel Ask the two.

Several oil giants have set zero-emissions targets by 2050, but that is not enough, according to the leader of the Dutch group Follow This, Mark van Pal, which is working to transform oil companies in a more climate-friendly direction.

“None of the major oil companies are in line with the Paris Agreement,” Van Baal told E24.

According to the United Nations Climate Committee, the Paris Agreement assumes the need to cut emissions by 25 percent to 45 percent in 2030, preferably the latter. He says the oil companies’ plans are not in line with such a development.

– so frustrated

At this year’s public meetings, Follow This convinced investors in Chevron and ConocoPhillips to set stricter corporate climate requirements.

Fan is disappointed that the chief executives of the major oil companies have not followed through with more ambitious plans to cut.

Companies like Equinor, BP, Shell and Chevron still plan oil and gas production – and therefore emissions as well – to stay or even increase in the years to 2030.

The response after this year’s public meetings has been very disappointing. BP says there is no need to cut emissions. Shell said there was no point in reviewing the strategy, and Chevron said the company had no plans to scale back its oil and gas operations, he said.

“Equinor is no different from the others, despite shareholder uprisings (including 39% of Equinor’s non-governmental vote) calling on oil majors to cut emissions immediately in line with the Paris Agreement,” Van Paal said.

On a collision course

Equinor’s plans increase production Until 2026, what do you think of that?

– It’s on a collision course with the Paris climate agreement. To meet climate goals, emissions must fall dramatically this decade, says van Paal.

– But can others cut more instead?

Yes, but everyone has a responsibility to reduce their emissions, otherwise the targets will be difficult to achieve. These companies have a global responsibility. Van Paal says it was an important part of the Dutch lawsuit against Shell, as the company took responsibility for reducing emissions after it had been responsible for significant emissions.

I understand that the boards of directors of these companies, which have made good profits from oil and gas for many decades, find it difficult to imagine another world with less demand for oil and gas. But then they should hire people who can, says Van Baal.

Pressure may increase

However, the major oil companies are divided. Demand for oil and gas is rising, oil and gas prices are high and there is money to be made.

At the same time, they are under pressure from shareholders and politicians to cut emissions further and invest more in renewable energy.

Political pressure to do more is likely to increase, Anders Torgrim Holt, a Kepler Chevreau analyst, tells E24.

He doesn’t think Monday’s report from the UN Climate Panel will change this significantly, but he doesn’t rule out that there could be new policy signals from the important COP26 climate meeting in Glasgow this fall.

Groups like Follow This want oil companies to set ambitious reduction targets to 2030, not just 2050. But it could have disastrous consequences if they cut production before alternatives are implemented, Holt believes.

– It is difficult for oil companies as long as demand is still very high. He says the only thing it achieves by restricting production is to ensure a very high price of oil, and that could threaten the growth of the global economy.

Demands for the oil industry to reduce emissions are likely to continue to grow. But this train goes a bit from the wrong station. It’s first and foremost the requirement you have to make about it, Holt says.

– increasingly clear

MP Espin Barth Eide (Labour) also believes that climate pressure on the oil majors will continue.

With stricter climate policy in place around the world, the outlook for oil companies’ business is likely to become increasingly clear in the coming years, Eddy tells E24.

– The direction that Equinor has taken, for example, shows that they are taking this more and more seriously, with Eldar Sætre who started this and Anders Opedal who followed him. I think more is to come, among other things that more and more oil companies will push to test their strategies up to the 1.5-degree target, he says.

But Eddy also does not believe in demanding unilateral production cuts from oil and gas producers in the short term. Instead, he believes, it is alternative energy solutions that must be in place, so that the demand for oil and gas decreases.

– First of all, countries that buy petroleum from us must reduce the use of petrol and diesel, and they do, with increasingly clear restructuring measures, as we see in the European Union, the United States of America and the United Kingdom for example, Edy.

– Needs tougher guidance

On the other hand, Parliament Representative Lars Haltbriken (SV) wants the state to be tougher with Equinor.

Equinor still plans to increase production through 2026, thus increasing emissions from customers’ consumption of oil and gas. The company also announced that it plans to develop 28 new fields in 2020.

This is why we need more stringent management of Equinor than the current government is willing to do. We should get plans from Equinor to bring it in line with the 1.5-degree target, Haltbrekken tells E24.

So they have to make absolute cuts too until 2030 and not just 2050?

– Yes, they should, and they should prepare for the fact that they can no longer search for oil and gas. Equinor’s plans are in no way in line with the climate crisis we’re facing, Haltbrekken says.