Big Oil investments bet on failure to meet climate goals: report

Yahoo – AFP, Marlowe HOOD, September 6, 2019

Many projects will only be profitable if climate goals are missed (AFP Photo/
JONATHAN NACKSTRAND)

Paris (AFP) - Oil and gas projects approved by major fossil fuel companies over the last 20 months threaten both shareholder value and efforts to keep Earth from overheating, according to an analysis released Friday.

Eighteen major investments totalling $50 billion would only become profitable if the world exceeds the Paris climate treaty targets for capping global warming, Carbon Tracker, a non-profit financial think tank, concluded.

Similar infrastructure projects worth $21 billion dollars are waiting for a greenlight in the rest of 2019, the report noted.

Across all business sectors, global companies responding to pressure from society and shareholders are scrambling to lay out low-emissions pathways that are "Paris-compliant".

The Paris Agreement calls for blocking the rise in Earth's temperature to "well below" two degrees Celsius compared to preindustrial levels, and 1.5C if possible.

On current trends, the planet will warm about 4C by century's end.

For fossil fuel majors, that transition is especially fraught because the main driver by far of global warming has been the burning of their products: oil, gas and coal.

Even under the less ambitious Paris target, the more costly projects highlighted could become economically unviable, the new report found.

ExxonMobil's $2.6 billion Aspen oil sands project in Canada, for example, would require an oil price of over $80 a barrel to deliver a 15 percent return.

"Investors may or may not be concerned about stopping climate change, but they are worried about the risk to their investment," said Carbon Tracker's Andrew Grant, a senior analyst and co-author of the report.

World electricity production by energy type (2000 and 2018)
(AFP Photo/Jonathan WALTER)

"There's a danger that the fossil fuel companies will misread demand trends and invest in projects that are both bad for the climate and bad for investors," he told AFP.

Some oil and gas giants -- notably Shell, BP, Equinor (formerly Statoil) and Total -- have sought to reassure investors that new investments fit within a low-carbon future, both in terms of profitability and greenhouse gas emissions.

"BP has supported the aim of the Paris Agreement, with its call to rapidly reduce greenhouse gas emissions in the context of sustainable development and eradicating poverty," BP said in a statement, responding to the report.

Stranded assets

The company aims to become "a much broader energy company so that we are best equipped to help the world get to net zero while meeting rising energy demand."

A major UN report last year concluded that global CO2 emissions must reach "net zero" by 2050 to cap temperature rise at 1.5C.

Allowing the planet to warm beyond that threshold would at the same time extend the net zero deadline.

The new investments show that fossil fuel companies -- effectively betting against the Paris targets being achieved -- have plotted a course that assumes higher temperature increases and that their products will continue to dominate energy needs for many decades to come.

The new report is the first to assess individual projects undertaken by the global oil and gas industry for compatibility with the Paris Agreement.

Chart showing the annual growth in global energy demand (AFP 

Photo/Laurence CHU)

The researchers measured their climate impact against two possible futures outlined by the International Energy Agency (IEA), an intergovernmental organisation with 30 members.

The most ambitious, known as "beyond 2 degrees", or B2DS, would cap global warming at 1.6C -- close to the Paris 1.5C goal.

The Sustainable Development Scenario would result in a 1.7C to 1.8C world, equivalent to "well below" 2C.

The IEA has also laid out a third pathway consistent with current national carbon-cutting pledges that would see temperatures rise 2.7C above preindustrial levels.

Carbon Tracker found that at least 30 percent of investments made by publicly traded oil majors -- including ExxonMobil, Chevron, Shell, BP, Total, Eni and ConocoPhillips -- were incompatible with the IEA's most ambitious scenario.

ExxonMobil showed the greatest risk of "stranded assets" in a low-carbon world, with more than 90 percent of potential spending over the next 12 years positioned outside a 1.6 C future.

For Shell, the figure was 70 percent, followed by Total (67 percent), Chevron (60 percent), BP (57 percent) and Italy's Eni (55 percent).

"The oil and gas companies are certainly not aligned with Paris, and they are investing in projects that -- if we are successful with the Paris goals -- will not deliver value," Grant said.

Carbon Tracker also singled out projects including Shell's $13 billion liquefied natural gas project in Canada and BP's $4.3 billion deepwater oil project in Azerbaijan as vulnerable to a future economy in which market prices will not justify the costs of development.

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"Recalibration of Free Choice"– Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth, 4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical) 8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

“… 4 - Energy (again)

The natural resources of the planet are finite and will not support the continuation of what you've been doing. We've been saying this for a decade. Watch for increased science and increased funding for alternate ways of creating electricity (finally). Watch for the very companies who have the most to lose being the ones who fund it. It is the beginning of a full realization that a change of thinking is at hand. You can take things from Gaia that are energy, instead of physical resources. We speak yet; again about geothermal, about tidal, about wind. Again, we plead with you not to over-engineer this. For one of the things that Human Beings do in a technological age is to over-engineer simple things. Look at nuclear - the most over-engineered and expensive steam engine in existence!

Your current ideas of capturing energy from tidal and wave motion don't have to be technical marvels. Think paddle wheel on a pier with waves, which will create energy in both directions [waves coming and going] tied to a generator that can power dozens of neighborhoods, not full cities. Think simple and decentralize the idea of utilities. The same goes for wind and geothermal. Think of utilities for groups of homes in a cluster. You won't have a grid failure if there is no grid. This is the way of the future, and you'll be more inclined to have it sooner than later if you do this, and it won't cost as much…

Water

We've told you that one of the greatest natural resources of the planet, which is going to shift and change and be mysterious to you, is fresh water. It's going to be the next gold, dear ones. So, we have also given you some hints and examples and again we plead: Even before the potentials of running out of it, learn how to desalinate water in real time without heat. It's there, it's doable, and some already have it in the lab. This will create inexpensive fresh water for the planet. 

There is a change of attitude that is starting to occur. Slowly you're starting to see it and the only thing getting in the way of it are those companies with the big money who currently have the old system. That's starting to change as well. For the big money always wants to invest in what it knows is coming next, but it wants to create what is coming next within the framework of what it has "on the shelf." What is on the shelf is oil, coal, dams, and non-renewable resource usage. It hasn't changed much in the last 100 years, has it? Now you will see a change of free choice. You're going to see decisions made in the boardrooms that would have curled the toes of those two generations ago. Now "the worst thing they could do" might become "the best thing they could do." That, dear ones, is a change of free choice concept. When the thinkers of tomorrow see options that were never options before, that is a shift. That was number four.”