Rhetoric v Reality: oil and gas sector “far from” on track to meet Paris goals - LSE analysis in Science
The emissions reductions targets so far set by the oil and gas sector are well off track to keep global temperatures below 1.5 degrees, new analysis from the London School of Economics and Political Science (LSE), published today Friday 22 October 2021 in the journal Science, has shown.
The report tested the increasing number of company claims to be “Paris-aligned” and targeting “net zero”, by benchmarking their targets against international climate goals. Based on emissions targets announced by the beginning of this year, it finds that only one company (Occidental Petroleum) would have an emissions intensity below a 1.5 degrees scenario in 2050, and only one further company (Royal Dutch Shell) would have emissions intensity below a 2 degrees scenario. The rest of the top 50 publicly listed oil and gas companies would not align with keeping global temperatures below 2 degrees.
Nearly half the companies assessed have yet to set emissions targets or provide sufficient clarity on them. Of those that have set targets, many are limited to companies’ operational emissions from exploration, production, refining and distribution, and do not include emissions from burning the oil and gas in buildings, electricity, industry, and transport, even though this is by far the largest part of companies’ lifecycle emissions.
Prof Simon Dietz, an author of the study from the Grantham Research Institute on Climate Change and the Environment at LSE, said:
“The oil and gas industry faces an existential threat from the transition to a low-carbon economy. Companies are increasingly responding by setting greenhouse gas emissions targets, which are presented as being compatible with this transition. Our analysis benchmarks these companies’ intentions. While a minority show genuine ambition, in most cases all is not quite as it seems. Most companies we analysed are failing to include the emissions from the burning of their fuel in their climate targets, and are choosing to focus only on the emissions caused by the production of the fuels.”
The study included companies’ Scope 1 and 2 emissions, and Scope 3 emissions from use of sold product. The latter were estimated using companies’ disclosed sales of energy products.
The study was produced with the support of the Transition Pathway Initiative which assesses companies’ preparedness for the transition to a low-carbon economy, supporting efforts to address climate change.
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Notes to editors
- Emissions intensity refers to the ratio of carbon emissions to activity/production. This enables companies of different sizes to be compared. The report measures oil and gas company activity in terms of the energy embodied in their sales of different oil and gas products.
- The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. The Institute brings together international expertise on economics, as well as finance, geography, the environment, international development and political economy to establish a world-leading centre for policy-relevant research, teaching and training in climate change and the environment. It is funded by the Grantham Foundation for the Protection of the Environment, which also funds the Grantham Institute – Climate Change and the Environment at Imperial College London. www.lse.ac.uk/grantham/
- The Transition Pathway Initiative (TPI) is a global initiative led by asset owners and supported by asset managers. Aimed at investors and free to use, it assesses companies’ preparedness for the transition to a low-carbon economy, supporting efforts to address climate change. Launched in 2017, it is rapidly becoming the ‘go-to’ corporate climate action benchmark.