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Oil and gas company net-zero targets face scrutiny, skepticism from researchers

Net-zero emissions targets put forward by oil and gas companies offer a chance to hold major emitters to account but continue to face skepticism from researchers examining the robustness of the mounting pledges by countries, states, cities and companies around the world.

Authors of a report titled “Taking Stock: A Global Assessment of Net Zero Targets” discussed their findings May 26 at an American University Institute for Carbon Removal Law and Policy forum. Overall, their report found that 19% of 4,000 major emitting entities globally have net-zero pledges in place, covering 61% of global greenhouse gas emissions and 68% of global GDP, but that quality of the commitments was still inadequate.

The report looked at pledges of countries, states, cities, regions and the companies on the Forbes Global 2000 list.

Breaking down the data for the US during the May 26 webinar, Kate Cullen, net-zero policy researcher at Oxford University, said only 11% of the US population was under a net-zero target currently equipped to deliver emissions reductions needed to align near the Paris goal of reaching net-zero carbon emissions by 2050. For companies, she said, the robustness figure was even lower, at about 0.3% of total US annual sales coverage.

Credibility issue

Richard Black, senior associate at the UK nonprofit Energy and Climate Intelligence Unit, addressed oil and gas company targets directly.

“One thing that’s remarkable about them is how many of them have done it in such a short time frame,” an indication oil and gas companies face a growing awareness that they need to act, he said.

But, he added, “a lot of the targets don’t have much credibility, frankly, because they tend to ignore methane,” a potent, short-lived greenhouse gas. “They make assumptions about how much carbon removal they’re going to have, and some of them don’t deal with Scope 3 emissions,” he added, referencing emissions indirectly associated with an activity.

“Let’s say you’re a gun company, and you say you have a pro-pacifism policy [and] we don’t actually include the use of guns. It’s not particularly credible policy,” he said. Nonetheless, once a company has made a commitment, there is something against which to hold it to account, particularly for shareholders and investors, he added.

Robustness criteria

In assessing the robustness and scope of targets among varying entities, the researchers looked for evidence they had components of a credible plan in place, such as interim targets, a reporting mechanism and clarity on use of the offsets.

“I think we need to strike that balance of recognizing that net-zero is an important concept for stabilizing the climate, and it’s good that people are latching onto this, with the fact that there’s a lot of work to do to actually tighten these up and see through that they deliver,” said Stephen Smith, executive director of the Oxford Net Zero initiative.

Their report highlighted the fact that some oil majors made a splash in 2020 by announcing net-zero targets but also noted that the Transition Pathway Initiative, a global initiative led by asset owners, found that none of the majors’ targets aligned with a 1.5 degree Celsius future.

Shell, which has set among the most ambitious targets of the majors, was ordered by a district court in the Netherlands May 26 to accelerate emissions reductions and cut its carbon footprint by 45% globally by 2030.

‘Pragmatic’ strategies

The panel discussion comes as five countries representing 40% of global oil and gas production in April announced a cooperative forum to “develop pragmatic net-zero emissions strategies.”

The countries are Canada, Norway, Qatar, Saudi Arabia and the US, and the strategies included methane abatement, a circular carbon economy approach, deployment of clean energy and carbon capture and storage technologies, and diversification from reliance on hydrocarbon revenues.

Reflecting fierce debate about efficacy of a net-zero approach, the Oil Change International, Greenpeace, Friends of the Earth and other groups in a report released May 26 raised the question of whether that forum could become a “greenwashing tool” in service of oil and gas interests. Instead, they laid out what they called an imperative for the countries to “begin winding down their oil and gas production.”

“The only climate-compatible long-term strategy for oil and gas producers is managed decline,” they asserted.
Source: Platts

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