Fossil Fuel Giants Still Missing 2°C Goal

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Stockholm (NordSIP) – According to the latest report from the Transition Pathways Initiative (TPI), every single major fossil fuel energy company remains off the path necessary to meet their 2°C emissions targets. Despite recent headline-grabbing climate announcements, the report suggests the industry is still falling short of what the world needs to manage climate change.

Oil and Gas Failing Climate

Of the 59 oil, gas and coal mining companies that the TPI assessed on carbon performance, only Glencore, Anglo American, Shell, Repsol, Total, Eni and Equinor have set emissions targets aligned with the Paris Agreement in 2015. The seven European companies represent a meagre 12% of the sample reviewed by the TPI, and the report argues their pledges are insufficient to avert dangerous climate change, being aligned with a 3.2°C warming according to UNEP. Nevertheless, there were some bright spots. Although they are not there, Shell, Total and Eni appear to be approaching a 2°C pathway “but still need further measures to be assessed to align with this benchmark”.

- Promotion -

“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 2°C,” said Adam Matthews, co-Chair of the TPI. “There has been some movement, with seven European companies now aligned with the Paris pledges, and Shell, Total and Eni getting close to meeting the 2°C benchmark. But US fossil fuel giants have yet to take meaningful action to reduce their emissions and the gap with their European peers is stark.”

From a corporate governance perspective, the TPI’s assessment of energy companies’ ‘Management Quality’ was only very marginally above its score for 2019. Although 94% of energy companies have made climate change commitments, only 9% of companies have made an effort to ensure that climate change policies and their lobbying efforts are consistent with one another. Twenty companies have improved their score since 2019, including CMS Energy and Dominion Energy, but 13 companies have moved down a level, such as Eneos, Neste and Suncor Energy.

Electric Companies Fare Better

The initiative also reviewed 66 electricity companies. According to its assessment, 39 of them (59%) were aligned with the Paris pledges, while 22 firms (33%) were aligned with the most ambitious ‘below 2°C’ benchmark.

Professor Simon Dietz, the report’s author, explained that regulation standards drive the divergent performance in the two sectors.“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,” Dietz said. “More broadly, 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. Some companies have started grappling with this challenge, but none have met it yet.”

“Aberdeen Standard Investments is proud to be a research funding partner for the Transition Pathway Initiative (TPI) as it continues its ground-breaking research mapping the companies’ preparedness and progress in the transition to a low carbon economy,” Bill Hartnett, Stewardship Director, ESG Investment, Aberdeen Standard Investments, said. “TPI’s latest report on global energy companies shows some encouraging signs of progress, particularly with more electric utilities and European oil and gas companies making ‘net zero’ commitments to align their strategies with the goals of the Paris Agreement. The key challenge is to turn these net-zero pledges into actions and reflect ambitions in investment plans.

Image by Keri Jackson from Pixabay

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