Oil & gas industry’s patchy pledges on methane heighten climate crisis
Commitments to reducing overall greenhouse emissions stall for second year running
Absolute Impact 2024: Oil and gas companies’ emissions targets are not Paris-aligned – with methane a major blind spot
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Analysis of oil and gas corporate emissions targets reveals whether targets may be potentially aligned with the goals of the Paris Agreement, providing a signal of compatibility between corporate plans and a rapid energy transition in the process.
Investigating the emissions targets of 30 of the world's largest oil and gas companies, this note provides decision-useful analysis to portfolio managers, analysts, policymakers, standard-setters, and regulators. Beyond untangling the climate impact of companies for stakeholders with a mandate or other reason to act on emissions, the analysis paints a stark picture of corporates' ongoing exposure to energy transition risk – and the risk this presents to all investors and banks with oil and gas portfolio companies, in turn:
- We assess corporate targets against our four Hallmarks of Paris-Aligned Emissions Targets to determine whether they can potentially be viewed as Paris-aligned.
- We additionally rank against peers.
- We build upon last year's analysis in our coverage of both targets and companies:
- We move beyond solely examining overarching greenhouse gas targets to investigate methane-specific targets as well, reflecting the urgency of tackling methane emissions in the near term.
- We evaluate an additional five national oil companies, addressing investor demand for analysis of these large, high-emitting companies.
- We further assess the planned emissions reduction actions of each company in our universe, generating granular insights into whether planned actions can be deemed credible and shining a light on the say-do gap within the sector.
- Address misalignment with the Paris Agreement
- Mitigate risk generated by the incompatibility of corporate plans with a rapid energy transition
Quotes
Olivia Bisel, lead author and Associate Analyst, Oil & Gas, said: “Oil and gas companies are paying lip service to climate action while emissions from their products are fuelling increasingly severe storms, droughts, floods and heatwaves around the world. Greenhouse gas emissions must fall rapidly to avert even more devastating impacts and so it is essential that companies incorporate within their targets the huge volume of emissions that result from the use of the products they sell.”
Richard Collett-White, co-author and an Analyst, Oil & Gas, said: “Oil and gas producers are not setting targets to cut methane emissions from all their activities, despite this being one of the most feasible and high-impact climate solutions available. They also continue to rely on doubtful estimates rather than measure emissions directly, and their targets should be viewed with scepticism until they do so.”
Mike Coffin, Head of Oil, Gas and Mining, said: “This analysis enables a range of stakeholders to assess whether corporate plans are compatible – or not – with the rapid transition away from fossil-fuel based energy required to meet Paris goals. The slower the transition, the greater the physical impacts and thus financial costs of adaption felt by all.”