COP28 Update: Oil and Gas Charter Lacks Key Elements

    Stockholm (NordSIP) – As the COP28 climate conference enters its second week in Dubai, UAE, the organisers have announced the achievement of a series of pledges and declarations across a range of themes.  Among these is the Oil and Gas Decarbonisation Charter (OGDC), which was signed on Saturday 2 December and launched under the auspices of COP28 President Dr Sultan Al Jaber and the Kingdom of Saudi Arabia.  Based on initial official statements, the OGDC does not appear to meet many of the net-zero standards specified by the United Nations, International Energy Agency (IEA), and environmental non-governmental organsations (NGOs).

    50 oil and gas companies have signed the OGDC, with Al Jaber seeking to highlight the fact that 60% of them were National Oil Companies (NOC) that have typically shied away from declaring net-zero commitments: “The launch of the OGDC is a great first step – and whilst many national oil companies have adopted net-zero 2050 targets for the first time, I know that they and others can and need to do more.  We need the entire industry to keep 1.5C within reach and set even stronger ambitions for decarbonisation.”

    Scope 3 emissions conspicuous by their absence

    The OGDC includes commitments to net-zero operations by 2050 at the latest and ending routine flaring by 2030, and near-zero upstream methane emissions.  There are also positive statements regarding increased transparency, with improved reporting of emissions and independent verification.  While the greater willingness of NOCs to engage with climate action is to be welcomed, all references to net-zero within the official statements are limited to Scope 1 and 2 emissions.  The presence of terms such as “net-zero operations,” “upstream emissions,” and “decarbonisation of operations” in all references to net-zero within the official communications appears to absolve the OGDC signatories of any obligation to reduce the Scope 3 emissions resulting from the end use of their oil and gas output.

    The OGDC also encourages signatories to invest in renewables, low-carbon fuel, and negative emissions technologies.  The latter is likely to refer to Carbon Capture, Usage and Storage (CCUS), which the IEA’s November 2023 report on the Oil and Gas Industry in Net Zero Transitions declared could only play a strictly limited role in the low-carbon transition of hard-to-abate sectors.  The IEA’s Chief Executive Fatih Birol stated that the current rate of investment into CCUS would have to increase a thousand-fold for the technology to have any signification impact on global 2050 net-zero pathways.

    The same IEA report also casts doubt on the fossil fuel industry’s commitment to investing in renewables, with oil and gas producers accounting for only 1% of total global investment in clean energy despite recent record profits.  The OGDC announcement does not specify any minimum investment levels or other quantifiable obligations.  Abu Dhabi and Saudi Arabia, along with most of the charter’s signatories also have large scale fossil fuel exploration and production plans that are incompatible with the IEA and the Intergovernmental Panel on Climate Change’s (IPCC) recommended 2050 net-zero carbon scenarios.

    Image courtesy of Olga Ozik from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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