Only 2 of 52 top oil and gas companies have science-based climate targets

If we want to meet the goals of the Paris Agreement, which looks to limit global warming to well below 2 (ideally 1.5) degrees Celsius, then we have to stop extracting and burning fossil fuels. That reality is a threat to oil and gas companies, which—in the face of increased pressures—have set emissions targets that they claim are in line with the Paris Agreement. But those targets are largely vague and unambitious, says a new report, explaining that the industry as a whole is not on track to meet global climate goals.

In an analysis published in the journal Science, researchers at the Grantham Research Institute on Climate Change and the Environment, part of the London School of Economics and Political Science (LES), looked at both emissions disclosures and emissions reduction goals of the world’s top 52 public oil and gas companies, including Exxon Mobil, BP, and Suncor Energy. Of those 52, only 1 company, Occidental Petroleum, has announced plans to reduce emissions below the 1.5 degrees Celsius benchmark (the equivalent of about 2.7 degrees Fahrenheit) by 2050. Only one additional company, Royal Dutch Shell, has plans to bring its emissions intensity in line with the 2 degree warming limit. “No other company has set a target ambitious enough to beat the 2 degrees Celsius benchmark by 2050,” the authors write (though three others did come close).

Ultimately, this isn’t all that surprising, lead author Simon Dietz, a professor of environmental policy at LES, said via email. It’s in line with other research detailing how the world plans to keep burning oil and gas at rates incompatible with the Paris Agreement goals. This week, a United Nations Environment Programme report revealed that governments are on track to increase their oil and gas production to “more than double the amount of fossil fuels in 2030 than what would be consistent with limiting global warming to 1.5 degrees Celsius.”

“However,” he added, “given that an increasing number of [oil and gas] companies are announcing climate targets and presenting them as being compatible with the transition to a low-carbon economy, it is still disappointing to see that most fall short.”

Dietz and his team measured the current emissions intensities of oil and gas companies, including not only their operational (i.e. Scope 1 and Scope 2 emissions), but also their Scope 3 emissions, which include the emissions from the use of their products once sold, like for energy in buildings or to fill a car’s gas tank. Just 23 companies disclose an estimate of their Scope 3 emissions, though; the researchers calculated them for themselves, based on a company’s energy sales and production data.

Scope 3 is where the “vast majority” of lifecycle emissions for oil and gas companies comes from, Dietz says; a company’s operational emissions make up less than 10% of their lifecycle emissions. That means companies need to consider Scope 3 emissions in their climate goals, “otherwise if they continue with business as usual and just focus on cleaning up their operations, then they are vulnerable to be totally out of line with the transition [to a low-carbon economy],” he says.

The researchers also calculated the future emissions intensity of the companies, using their current emissions data and their emissions targets. As of January 1, 2021, only 28 out of the 52 companies had disclosed a “quantitative” emissions target and enough emissions data for the researchers to project their future emissions pathways. The other companies with public goals were all too vague to assess.

Even the quantifiable goals were, according to the researchers, “unambitious,” with the median target of just a 6.4% reduction in greenhouse gas intensity by the end of target year (which also varied among the goals; the average was 2037). Researchers also calculated an unweighted average of a 16.6% emissions reduction, though they note that finding was “heavily skewed” by the most ambitious targets from just six companies. (Those targets included Occidental’s goal of 100% emissions intensity reduction by 2050 and Royal Dutch Shell’s goal of a 65% reduction by 2050; BP, the least ambitious of the best six, says it will reduce its emissions intensity 20% by 2050).

Most companies failing to make emissions targets were incompatible with a 2 degree Celsius future for two reasons: either the targeted reduction was insufficient, or it didn’t cover all company emissions. Most targets only covered Scope 1 and 2 emissions, the analysis found—even ones deemed “net zero.” “Put another way,” the authors write, “these companies plan to decrease the [greenhouse gas] intensity of their operations, but not to change their core business model and diversify into low-carbon forms of energy.”

And in the end, these goals are still just goals. “How companies actually reduce their emissions, i.e., how they deliver on their targets, is a different matter,” Dietz says. Some goals hinge on shifting a company’s business away from oil and gas to renewable energy. In Occidental’s case, their ambitious net zero goal relies on direct air capture to pull CO2 out of the atmosphere and pump it underground—a solution that is not yet currently ready to perform at that level.