Oil companies across the globe have vowed to meet the goals set out by the historic Paris climate accord, but a new research report shows they aren't doing more for the cause than providing lip service.
In fact, they are investing billions of dollars in the current environment to develop new oil and gas supplies, not taking into account the low-carbon world we are headed for.
A new study by Carbon Tracker, the non-profit financial think tank, found the billions of dollars the oil and gas industry is spending on new projects don't align with efforts to prevent the planet from rising under 2 degrees Celsius.
Oil and gas companies not operating in a low-carbon world
"Every oil major is betting heavily against a 1.5˚C world and investing in projects that are contrary to the Paris goals," wrote Andrew Grant, senior oil & gas analyst and author of the report. "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.”
According to Carbon Tracker since 2018, oil and gas companies have approved $50 billion of investment, with most undermining the climate targets. None of the major oil and gas companies are investing to support the goals laid out in the Paris accord.
Those projects include ExxonMobil's $2.6 billion Aspen project in Canada, which the group said is the first greenfield oil sands projects in five years. Oil prices will have to be more than $80 a barrel for ExxonMobil to see a 15% return on its effort, Carbon Tracker said.
The group also pointed to Shell's $13 billion liquefied natural gas project also in Canada, BP, Chevron, ExxonMobil and Equinor's $4.3 billion ACG deepwater oil project located in Azerbaijan and BP, ExxonMobil, Total and Equinor’s $1.3 billion Zinia 2 deepwater oil project in Angola.
Investors are at risk too
"ExxonMobil, Chevron, Shell, BP, Total, Eni and ConocoPhillips, with Equinor, each spent at least 30% of their investment in 2018 on projects that are inconsistent with a 1.6˚C world," wrote Carbon Tracker. "The report found projects already sanctioned by the oil and gas industry will take the world beyond a 1.5˚C warming pathway."
Outside of the environmental impact, these projects will put its investors at risk. Carbon Tracker projects the oil and gas companies risk wasting $2.2 trillion by 2030 based on the investment decisions that rely on current emissions policies, not on low-carbon ones.
The group said ExxonMobil has the greatest risk of stranded assets with more than 90% of its potential spending from 2019 through 2030 on new projects outside a 1.6 Celsius pathway. At Shell, Carbon Tracker said 70% of its assets are at risk while 67% of Total's assets could be stranded. Chevron is at a 60% risk, while BP's risk stands at 57% and ENI has a 55% risk.