Al Jazeera English
Published on Aug 15, 2018
Though oil and gas companies have known about global climate change for decades, they’ve deferred reducing crude and gas production until the second half of this century. But with global climate accords like Paris global weather patterns in flux, activists have been demanding that energy companies set and commit to more rapid action on curbing oil and gas production.
New calls for action come amidst forecasts by the International Energy Agency (IEA) that, by 2014, demand for oil and gas could fall by almost 50% – but only if carbon emissions reduction targets are met.
With this threat to profits, many ask if big oil companies are serious about addressing global climate change
Oil majors like Royal Dutch Shell has acknowledged that climate change will be a major challenge for years to come, but Total and others are still expecting strong demand for fossil fuels over the next few decades – and Exxon Mobil is under investigation over financial disclosures for climate change.
Anthony Hobley, CEO for the financial think tank Carbon Tracker, told Counting the Cost that when it comes to profits and compliance with international carbon reduction agreements, big energy companies are sending mixed messages:
“I think they’ve been a bit schizophrenic. They are looking at climate risk and we’re now being deluged with disclosure and scenario analysis from the companies that are effectively stress testing their business models against a Paris compliant two degrees pathway. But then when they talk to investors they’re still talking up demand.”
The transition to a modified oil and gas market has begun, even as oil and gas companies continue to push production at current levels of demand:
“What we’re seeing is a range of disclosure that tells us that every single oil and gas company is a winner,” Hobley told Counting the Cost’s Hazem Sika, “but that simply can’t be possible. Some of them may well do well in the transition, but not all of them – so there will be winners and losers. And at the moment it’s very difficult to discern who the winners will be and who the losers will be.”
Calls to limit oil and natural gas emissions could force energy companies to keep oil, natural gas and coal reserves in the ground. International asset managers Sarasin & Partners have asked BP, Shell and Total to reveal the risk they face if they meet carbon emission targets. Shareholders are also increasingly concerned about the medium and long-term viability of their investments – especially with the emergence of competing energy sources like wind and solar.
“Fossil fuels is no longer the only game in town, they’re now having to compete with new kids on the block, which is clean energy,” Anthony Hobley said. “And as clean energy goes up the learning curve, and is now essentially part of the ‘s’ curve, we’re seeing dramatic drops in price for solar, wind, batteries and electric vehicles, and that is eating into demand for the incumbent’s product – oil, gas and coal – combined also with dramatic steps forward in energy efficiency which while global energy demand is growing, is being offset dramatically by advances in energy efficiency.”
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