Even the most ambitious climate commitments by European oil majors are not aligned with a below 2ºC warming scenario, despite claims, according to new research by the Transition Pathway Initiative (TPI), the asset-owner led initiative assessing the transition-readiness of high emitting sectors.
Shell’s net-zero commitment, which was unveiled last month, is deemed to be the “most ambitious” of the six European oil majors assessed, but TPI found that the company’s claim that its plan is aligned with a 1.5°C climate scenario was “not consistent” with its analysis.
Shell announced its “ambition” to reduce its emissions intensity by 65% by 2050 in April.
TPI, however, calculates that the average European oil & gas company would need to cut its emissions intensity by over 70% by 2050 to align with a 2°C climate scenario and a “genuine net-zero strategy” would require a 100% cut in absolute emissions.
TPI was launched in 2017 with influential pension fund backing including the Environment Agency Pension fund, RPMI Railpen and the Church of England Pensions Board. Investors representing $19trn in assets currently use its tools.
Its latest report compares the most recent climate change announcements by six European oil & gas firms.
The report found that Total, Shell, BP, Repsol and Eni all have “strengthened markedly” their climate ambitions over the last six months.
As a result all but BP are now “aligned” with the initial emissions reductions pledged by the signatories to the Paris Agreement – the so-called Nationally Determined Contributions (NDCs) agreed in 2015, which are not synonymous with the overall goal of the Paris climate agreement to restrict global temperature rise to well below 2ºC.
BP and OMV are now the only European companies who fail to align with the Paris pledges.
TPI’s analysis also makes a number of recommendations to companies including using standardised disclosures and setting both absolute and intensity emissions reduction targets.
On the latter, the TPI states that there “is a concern that oil and gas companies intend to meet decarbonisation goals by growing low-carbon sources, without cutting oil and gas production”.
It highlights the example of Total, which is “successfully reducing intensity in line with its long-term trajectory whilst growing absolute emissions.”
TPI announced in the analysis that it is looking to develop a complementary absolute emissions methodology in the next few months.
Eni was found to be the only company to have set an absolute target, aiming to reduce emissions (including Scope 3) by 80% by 2050.
Both Total and Shell will face a proposal this month calling on them to set and disclose concrete emission targets aligned with the Paris climate agreement, covering Scope 1,2 and 3.
Last week, the Church of England Pension Board revealed that it would not support the proposal at Shell in acknowledgement of the recent commitments by the company.
“TPI’s analysis underlines that these commitments are not all equal in ambition or in scope and deeper decarbonisation is needed to align with a 1.5°C or even a 2°C scenario”, said Adam Matthews, Co-Chair of TPI, and Director of Ethics and Engagement for the Church of England Pensions Board.
“Investor engagement, through initiatives such as CA100+, will be critical in ensuring current momentum toward net zero is sustained.”