Europe’s top oil companies are not yet aligned with U.N.-backed targets to combat climate change. This issue is ongoing despite their plans to slash carbon emissions and pivot to renewable energy. This is according to a report from major investors.
The study by the Transition Pathway Initiative (TPI), unites investors with $22 trillion in holdings. Moreover, this study comes as shares of European energy companies including BP and Royal Dutch Shell have struggled. It is amid concerns over their ability to successfully shift away from oil and gas.
TPI has conducted an analysis of 59 major oil, gas and coal companies. It said that seven European firms have set out plans to align with long-term pledges made by some governments. More specifically, the seven firms were Glencore, Anglo American, Shell, Repsol, Total, Eni and Equinor, to cut greenhouse gas emissions.
But those targets compares to global temperatures rising by 3.2 degrees, they are widely regarded as insufficient to avert dangerous climate change, the report said on Wednesday.
The Paris Agreement is backed by the United Nations. No company was going to meet the agreement’s long-term goal of limiting global warming. Reducing carbon emissions to net zero, should be limit temperatures to well below 2 degrees Celsius above pre-industrial levels.
Furthermore, emissions strategies of oil firms in European countries vary in scope, pace and calculation methods.
Several said they disagreed with the way TPI calculates the alignment, which is based on the carbon intensity of fuels.
Paris Agreement Alignment and Goals
BP is the least compliant among the European companies. in fact, it does not even meet the government pledges level, according to the report. Its CEO Bernard Looney is planning to grow the company’s renewables business twenty-fold by the end of the decade.
In response to that, BP said it disagreed with TPI’s focus on carbon intensity. Specifically, on its own, carbon intensity is not a reliable measure of progress towards the Paris Agreement goals.
The main cause for the release of heat-capturing greenhouse gas emissions are Fossil fuels.
Investors like Aberdeen are regularly talking to companies about their Paris Agreement alignment. Issues include emissions from fuels sold, known as Scope 3 emissions. This also includes their memberships in energy associations globally.
This is according to Bill Hartnett, stewardship director of ESG Investment at Aberdeen Standard Investments, a TPI member.
It’s an ongoing engagement and there is pretty good momentum on getting towards Paris alignment, Hartnett added.
Shell continues to engage with TPI over their methodology, showing they are compliant with society’s move towards the Paris goals.
For Anglo American, achieving these targets isn’t all within their control. Therefore, they work with governments, industry peers and civil society.
Repsol said they will continue to engage with TPI to demonstrate their progress in this respect.
Eni said they consider the best way for companies to align with such goals is to set absolute emissions targets.
Total aims to be carbon neutral in Europe by 2050. It said that the rhythm of the transition will depend on energy demand and policies put in place.