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Three oil majors align with 1.5°C, finds TPI

Influential asset owner-backed body assesses climate ambitions of the energy sector but does not assess ‘feasibility’ of plans

The climate plans of three of the world’s largest listed oil & gas firms are among 14 now aligned with a 1.5°C scenario, according to analysis published today by asset-owner coalition the Transition Pathway Initiative (TPI).  

In its annual assessment of the energy sector, TPI found that the decarbonisation strategies of Eni, TotalEnergies and Occidental are on track for 1.5°C by 2050.  

The 1.5°C scenario was introduced in September, and sits alongside TPI models based on staying below 2°C, and aligning with current national climate pledges that would take the world to 2.4°C.  

Despite progress at the three oil & gas firms, the climate initiative, which is backed by investors responsible for $39trn in assets, concluded that the sector remains 83% misaligned with all three scenarios – the same percentage as last year.  

Beyond oil & gas 10% of the 140 energy sector firms assessed were found to be aligned with a 1.5°C-in-2050 pathway, including E.ON, RWE, Ørsted, PSEG, Eversource Energy, EDP, Con Edison, CMS Energy, AES, Meridian Energy and Enbw Energie. A further 24% were deemed to be aligned with TPI’s Below 2°C benchmark.  

The assessment is based on the ambition of companies’ emissions reduction targets. Nikolaus Hastreiter, one of the TPI’s research analysts that worked on the report, said emissions pathways were calculated using “historical emissions, current emissions and then future emissions, which we proxy with carbon emissions reduction targets”. 

The feasibility of the climate ambitions “is not something we’re really looking at the moment,” said Hastreiter. “That would require assessing, for example, the capital expenditure plans of companies, and the disclosure of companies is not really advanced enough at this point.”   

Eni, Total and Occidental came out well of TPI’s assessment in large part because of their commitments around Scope 3 emissions, which are generated by using a company’s products and services rather than by in-house activities.  

Although Scope 3 accounts for the greatest proportion of fossil fuel firms’ emissions, many climate pledges don’t include them – something Hastreiter described as a “common limitation” and one which prevented companies from being able to align with TPI’s 1.5°C or below-2°C benchmarks.    

While Eni, Occidental and Total’s climate plans are deemed to be aligned with 1.5°C over the longer 2050 timeframe, none are not on course over the shorter term. Australia’s Origin Energy is the only oil & gas firm whose plan meets the 1.5°C 2030 scenario, according to the report.   

Utility firms, on the other hand, were more likely to fall in line with a 1.5°C by 2030 scenario than a 2050 one. A quarter of those assessed met the former target, compared with just 15% for the latter. 

Overall, TPI found that 25% of the energy sector is aligned with a 2°C-or-less 2050 scenario, compared with just 5% by 2030.   

Adam Matthews, TPI’s Chair and Chief Responsible Investment Officer at Church of England Pensions Board, said that the latest assessment shows that “some companies” are “moving out of first gear and accelerating their transition plans”.  

“Concerningly, for investors there remains significant distance between net zero rhetoric and net zero reality in the case of most fossil fuel majors,” he added.