The $22tr investment group claims oil and gas firms moving closer to aligning with 2C global warning, but that additional climate measures are needed
Despite a series of eye-catching pledges and statements about the need to prepare for a net zero world, not a single oil and gas firm worldwide has yet credibly aligned its emissions within a 2C global warming pathway, according to the investor-led Transition Pathway Initiative (TPI).
The $22tr investor group's latest assessment today suggests the global oil and gas sector has a long way to go to develop credible climate strategies, despite a string of high-profile net zero pledges by fossil fuel firms over the past year, including Shell, BP and Total.
Assessing 59 of the largest publicly listed oil & gas and coal energy companies on their carbon performance, the TPI found that just five oil and gas companies and two coal firms are on track to align with the emissions pledges made by countries as part of the Paris Agreement. These firms are Glencore, Anglo American, Shell, Repsol, Total, Eni and Equinor.
However, as the study points out, existing Paris pledges made by signatories to the climate treaty currently put the world on track for 3.2C of warming - far above the higher threshold of set out in the Paris Agreement - demonstrating that oil and gas firms are still not on track to delivering credible net zero emissions targets in line with the actual Paris goals.
Nevertheless, three firms - Shell, Total and Eni - are noted in the report for their more recent climate efforts, which it suggests are putting them closer to a credible 2C pathway. It also warns, however, that all three companies still need additional measures to brigng them fully in line with the benchmark.
"Investors have witnessed a flurry of significant climate announcements by fossil fuel majors this year, so it is striking this independent research still shows those commitments do not yet align with limiting climate change to 2C," noted Transition Pathway Initiative co-chair Adam Matthews.
Matthews also highlighted the gulf separating the approaches of US firms and their European counterparts. "US fossil fuel giants have yet to take meaningful action to reduce their emissions and the gap with their European peers is stark," he added.
Supported by more than 67 investors together representing almost $22tr in assets under management, the TPI's work is aimed at helping to inform asset owners and managers on the actions needed to encourage high-emitting companies towards more ambitious decarbonisation efforts.
Today's TPI study also highights the contrast with the electric utility sector, where the study finds that a third of companies are aligned with a 2C pathway. It assessed 66 utilities and found that 39 are aligned with the Paris pledges, while 22 are aligned with the most ambitious 'below 2C' benchmark.
"The electricity sector is heavily regulated with regards to its emissions in some regions such as the EU and this likely explains some of the results we see," said Professor Simon Dietz, reflecting on the divergence between the two sectors.
"The technologies needed for decarbonising electricity production are already there and often competitive on cost with fossil fuels, so the core business model is not under threat. For oil & gas companies, the route to Paris alignment is much more of a challenge to their basic reason for being," Dietz added. "Some companies have started grappling with this challenge, but none have met it yet."
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