In written comments, Ceres’ top oil and gas expert Andrew Logan warned U.S. House lawmakers today that despite company rhetoric, recent emissions reduction commitments from oil and gas majors bp, Chevron, ExxonMobil and Shell are inadequate and fail to meet the urgency of the climate crisis.
“Time is running out to avoid the most catastrophic impacts of climate change,” Logan wrote in a letter for the record submitted to the House Oversight and Reform Committee. “The four oil and gas majors you are examining today are collectively responsible for more than 10% of all greenhouse gases emitted globally between 1965 and 2018. The 2021 Climate Action 100+ Net-Zero Company Benchmark found that none of these four companies have goals aligned with limiting global warming to 1.5 degrees Celsius2, the level necessary, according to the world’s leading scientists, to avoid the worst impacts of global warming.”
The hearing, “Fueling the Climate Crisis: Examining Big Oil’s Climate Pledges,” focused on whether the fossil fuel industry’s climate pledges will truly reduce emissions at the necessary pace and scale or whether they are simply a public relations screen for oil majors that have increasingly faced criticism for attempts to cover up their role in accelerating climate change. Lawmakers heard from scientists and industry experts today and will have the opportunity to directly question board members at the four companies at a second hearing scheduled for March 8.
Read Logan’s full letter for the record here.
In his letter for the record, Logan detailed the flaws of the companies’ purported commitments, none of which reach the level of ambition that the world’s leading scientists say is necessary to avoid the worst impacts of climate change. Logan also spoke to the fact that the companies’ capital investment strategies are out of line with both the energy future forecast by top industry analysts and the desires of their own investors. A record number of shareholder proposals on climate-related measures received majority votes at annual meetings in the past year, despite opposition from company executives.
“Investors have lost patience with the oil and gas industry,” Logan wrote. “The oil and gas industry is putting not only the planet in peril. The industry is standing still, increasingly endangering its own financial viability as the banks funding it and the sectors driving demand for its products move to decarbonize.”
Through Climate Action 100+, which Ceres helped to co-found, investors with more than $65 trillion in assets are engaging the world’s biggest corporate emitters, including bp, Chevron, ExxonMobil and Shell, to set and achieve ambitious climate targets, while holding them to account. In 2021, Ceres launched the Ambition 2030 initiative to build on the work of Climate Action 100+ and deepen engagements with companies in ways that will not only decarbonize the oil and gas sector, but five other highest-emitting sectors that together are responsible for more than 80% of emissions in the United States: electric power, banking, food, steel and transportation.
Logan detailed the shortcomings of the four companies’ commitments, which include:
Targets that in many cases only commit to emission intensity reductions, rather than reductions in absolute emissions. This type of commitment provides no assurance of overall reductions in the short term, and allows companies to meet targets while actually increasing fossil fuel production if balanced with enough added renewable capacity.
Some commitments cover only companies’ upstream assets, those used in extraction, while ignoring the impact of downstream assets involved in refining and distribution.
Despite an outward campaign highlighting decarbonization commitments, companies demonstrate little real business interest in transitioning away from fossil fuel production. Shell’s 2020 capital expenditure on “renewables and energy solutions” amounted to just 5% of the company’s total capital expenditures.
The worst of the four, Exxon’s thin, near-term targets both fail to address the full lifecycle emissions of their only products and only account for upstream assets, which represent just 45% of the company’s current emissions.
“Exxon provides the perfect case study of why it is so important for lawmakers to critically look at these companies’ commitments,” Logan wrote. “Despite its rhetoric, Exxon is planning for climate failure. Indeed, it is counting on it.”
Logan also highlighted the opportunities that would exist for the oil and gas industry in the energy transition should they choose to participate, based on the industry’s technological and financial capacity. The International Energy Agency’s October 2021 World Energy Outlook found that the world is not investing enough in energy in general to meet future needs, setting up a volatile transition period.
“The oil and gas companies you are evaluating today appear content to fight for the scraps of an industry that must fade rapidly if we hope to preserve a liveable planet, rather than meaningfully invest in clean energy opportunities,” Logan wrote. “This mismatch, obscured by company rhetoric that doesn’t reflect financial data, sets the companies, our country, and the world up for an unnecessarily turbulent transition to a clean energy future, if we manage to get there in time at all.”
About Ceres
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.