Big Oil undermines UN climate goals with $50bn of new projects: report

Report found that 18 newly approved oil and gas projects worth $50 billion could be left “deep out of the money” in a lower carbon world. (Reuters)
Updated 07 September 2019

Big Oil undermines UN climate goals with $50bn of new projects: report

  • Carbon Tracker says 18 new projects “deep out of the money”
  • Companies risk “wasting” $2.2 trillion by 2030

LONDON: Major oil companies have approved $50 billion of projects since last year that will not be economically viable if governments implement the Paris Agreement on climate change, think-tank Carbon Tracker said in a report published on Friday.
The analysis found that investment plans by Royal Dutch Shell, BP and ExxonMobil among other companies will not be compatible with the 2015 Paris Agreement, which aims to limit global warming to 1.5 degrees Celsius.
“Every oil major is betting heavily against a 1.5 degree Celsius world and investing in projects that are contrary to the Paris goals,” said report co-author Andrew Grant, a former natural resources analyst at Barclays.
Big oil and gas companies have welcomed the UN-backed Paris Agreement, in which governments agreed to curb greenhouse gas emissions enough to limit global warming to 1.5 degrees Celsius, or “well below” 2 degrees Celsius by the end of the century.
Scientists view 1.5 degrees Celsius as a tipping point where climate impacts such as sea-level rise, natural disasters, forced migration, failed harvests and deadly heatwaves will rapidly start to intensify if it is breached.
Carbon Tracker’s analysis, co-authored by Mike Coffin, a former geologist at BP, found that 18 newly approved oil and gas projects worth $50 billion could be left “deep out of the money” in a lower carbon world.
The projects include Shell’s $13 billion liquefied natural gas (LNG) Canada LNG project, a $4.3 billion oilfield expansion project in Azerbaijan owned by BP, Exxon, Chevron and Equinor, and a $1.3 billion deepwater project in Angola operated by BP, Exxon, Chevron, Total and Equinor.
The report also concluded that oil and gas companies risk “wasting” $2.2 trillion by 2030 on new projects if governments apply stricter curbs on greenhouse gas emissions.
Previous reports on the implications of climate change for oil and gas companies by Carbon Tracker and other researchers have contributed to a wave of investor pressure on majors to show that their investments are aligned with the Paris goals.
While some companies including Shell, BP, Total and Equinor have increased spending on renewable energy and introduced carbon reduction targets, the sector says it needs to continue investing in new projects to meet future demand for oil and gas as Asian economies expand.
Shell said in a statement that it has set out an “ambition” to halve net carbon emissions by 2050 “in step with society as it moves toward meeting the aims of Paris.”
“As the energy system evolves, so is our business, to provide the mix of products that our customers need,” Shell said.
BP said its strategy to produce low cost and low carbon oil and gas was in line with the International Energy Agency (IEA)forecasts and the Paris agreement.
“All of this is aimed at evolving BP from an oil and gas focused company to a much broader energy company so that we are best equipped to help the world get to net zero while meeting rising energy demand,” the company said in a statement.
Exxon, Chevron, Equinor and Total did not reply to requests for comment.
Nevertheless, the latest Carbon Tracker report said the big oil and gas companies spent at least 30% of their investment last year on projects that are inconsistent with the path to limit global warming to even 1.6 degrees Celsius.
“These projects represent an imminent challenge for investors and companies looking to align with climate goals,” the report warned.
Carbon Tracker’s calculations were based on three scenarios produced by the Paris-based IEA models of oil and gas supply under different warming pathways.
With fossil fuel supply on course to outstrip demand if the world is to limit warming at 1.5 degrees Celsius, the report assumed that the projects with the lowest production costs would be the most competitive.
“Demand for oil can be satisfied with projects that break even at below $40 per barrel and pursuing higher-cost projects risks creating stranded assets that will never deliver adequate returns,” the report said.
Benchmark crude futures were trading at around $62 per barrel on Thursday.


Abu Dhabi carrier Etihad launches more fuel-efficient Boeing 787 Dreamliner

Updated 19 min ago

Abu Dhabi carrier Etihad launches more fuel-efficient Boeing 787 Dreamliner

  • Etihad’s CEO Tony Douglas described the aircraft as a flying laboratory for testing that could benefit the entire industry
  • This year, Etihad flew the world’s first passenger flight using sustainable biofuel made from a plant that grows in saltwater

DUBAI: Abu Dhabi’s flagship carrier Etihad Airways announced on Monday it is launching one of the world’s most fuel-efficient long-haul airplanes as the company seeks to save costs on fuel and position itself as a more environmentally-conscious choice for travelers.
Etihad’s “Greenliner” is a Boeing 787 Dreamliner that will depart on its first route from Abu Dhabi to Brussels in January 2020. Etihad’s CEO Tony Douglas described the aircraft as a flying laboratory for testing that could benefit the entire industry.
With fuel costs eating up around a quarter of airline spending, Douglas said the goal of the Greenliner is to be 20 percent more fuel efficient than other aircraft in Etihad’s fleet.
“This is not just a box-ticking exercise,” he told reporters at the unveiling of the initiative at the Dubai Airshow alongside executives from Boeing.
Douglas said the aircraft “not only makes sense economically from a profit and loss account point of view, but because it also directly impacts the CO2 because of the fuel burn.”
Etihad has reported losses of $4.75 billion since 2016 as its strategy of aggressively buying stakes in airlines from Europe to Australia exposed the company to major risks.
Despite its financials, the airline continues to be among the most innovative.
This year, Etihad flew the world’s first passenger flight using sustainable biofuel made from a plant that grows in saltwater. It also became the first in the Middle East to operate a flight without any single-use plastics on board to raise awareness of the effects of plastic pollution.
Aviation accounts for a small but rapidly growing share of greenhouse-gas emissions — about 2.5 percent worldwide. But forecasters expect air travel to grow rapidly in the coming years.
Etihad says it plans to make the Greenliner a “social media star” to bring under sharper focus its developments and achievements worldwide. Douglas said anything that Eithad learns with Boeing from this aircraft’s operations will be open domain knowledge “because it’s about moving the industry forward in a responsible fashion.”
“We’re like a millennial and like all good millennials, they’re really focused on the environment and the sustainability agenda,” Douglas said, referring to Etihad’s 16 years in operation.
The Greenliner will be the only aircraft of its kind in Etihad’s fleet of Dreamliners. The company currently has 36 of the 787s in its fleet with plans to operate 50.
“This is a small step today, but in a very, very long journey,” Douglas said.