Report Finds Oil And Gas Companies Are Hindering Global Climate Targets

Investment of $50bn (£40.6bn) in fossil fuel projects by biggest oil and gas companies have weakened the global efforts to avoid the climate crisis go out of control, as per a report.

Notwithstanding the risks to the climate and shareholder returns, fossil fuel companies have spent billions on high-cost projects for the extraction of oil and gas from deepwater fields, tar sands, and the Arctic since the beginning of the last year.

According to a financial thinktank, Carbon Tracker, BP, Chevron, ExxonMobil, and Shell each has spent minimum 30% of their investment in 2018 on projects, at odds with climate targets, and would be “deep out of the money in a low-carbon world”.

Andrew Grant, the author of the report, said: “Every oil major is betting heavily against a 1.5C world and investing in projects that are contrary to the Paris goals.”

The study is the first to test whether individual projects comply with a 1.5C world and their financial sustainability in a low-carbon world. 

None of the largest listed oil and gas companies is found making investment decisions in line with global climate targets, and in case governments take a more robust stand on carbon emissions, they risk wasting $2.2tn (£1.8tn) by 2030.

Last year Shell announced to spend $13bn on a liquefied natural gas project in Canada and ExxonMobil agreed on investing $2.6bn in the Aspen project, the first greenfield oil sands project in Canada in five years.

“Investors should challenge companies’ spending on new fossil fuel production. The best way to both preserve shareholder value in the transition and align with climate change goals will be to focus on low-cost projects that will deliver the highest returns,” Grant said.

The report challenges the public rhetoric of several oil company executives who have claimed to go with the Paris goals and pledged to invest in renewable energy projects.

A spokesperson for Shell said: “We agree that the world is not moving fast enough to tackle climate change. As the energy system evolves, so is our business, to provide the mix of products that our customers need.”

A UN Environment Programme report has revealed that over the last decade, global investment in renewable energy projects is on course to hit $2.6tn by this year-end.

World’s total renewable energy capacity has almost quadrupled from 414GW at the 2009 end to an expected total of 1,650GW by this year-end because of this investment boom.

Inger Andersen, the executive director of the UN Environment Programme, said: “Investing in renewable energy is investing in a sustainable and profitable future, as the last decade of incredible growth in renewables has shown.”

The report which was co-authored by BloombergNEF disclosed that solar power projects led the rise in renewables. Over the last decade, around half of the total investment in renewables attracted towards the Solar power and at the beginning of 2010, it has grown from 25GW to an expected 638GW by the end of 2019.

As per Jon Moore, the chief executive of BloombergNEF, the sharp decline in the cost of wind and solar-powered electricity over current years has “transformed the choice facing policymakers”.

“These technologies were always low carbon and relatively quick to build. Now, in many countries around the world, either wind or solar is the cheapest option for electricity generation,” Jon said.

However, to meet the UN’s climate targets, governments should not be complacent about the growth of renewable energy, Andersen warned.

“Global power sector emissions have risen about 10% over this period. It is clear that we need to rapidly step up the pace of the global switch to renewables if we are to meet international climate and development goals,” Andersen said.

Renewable energy made up 12.9% of the world’s total electricity consumption last year, up from 11.6% the previous year.

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About Arindom Ghosh

A professional writer, editor, blogger, copywriter, and a member of the International Association of Professional Writers and Editors, New York. He has been part of many reputed domestic and global online magazines and publications. An avid reader and a nature lover by heart, when he is not working, he is probably exploring the secrets of life.