ImpactAlpha, Nov. 1 – The writing’s on the wall, but the fossil fuel industry doesn’t want to read it.
Former Exxon CEO (and Secretary of State) Rex Tillerson testified this week in Exxon’s trial for allegedly misleading investors and the public about the financial risks of climate change. Coal baron Robert (“Last Man Standing”) Murray’s Murray Energy in Ohio declared bankruptcy.
The oil and gas industry continues to move ahead with new production, even though current reserves exceed the level that can safely be burned. A new Carbon Tracker report, to be released today, concludes the only solution is to shrink production.
“If companies and governments attempt to develop all their oil and gas reserves, either the world will miss its climate targets or assets will become ‘stranded’ in the energy transition, or both,” says Carbon Tracker’s Mike Coffin.
Top oil and gas producers need to slash combined production by 35% over the next decade to stay within climate targets set by the Paris Accord, the analysis found. “The industry is trying to have its cake and eat it – reassuring shareholders and appearing supportive of Paris, while still producing more fossil fuels,” adds Coffin.
ConocoPhillips is the most carbon-intensive oil major and must cut production by 85%; ExxonMobil needs to shed 55%, the report calculates. On the lower end, BP faces cuts of 25% and Shell 10%. None of the major producers are compliant with the Paris accord, and their stated emission targets typically do not account for the full impact of their emissions.
Oil and gas giants are all the more vulnerable as renewable energy costs continue to tumble. New-build solar and wind is now cheaper than gas-fired and coal. “As the economics play out, it’s going to be increasingly harder for fossil fuels to compete and raise money and, eventually, to operate,” Carbon Tracker’s Mark Campanale told ImpactAlpha.
Instead of cutting back, companies including Exxon and BP are looking to increase production by 20%, says Campanale. That’s in opposition to demands by global investors such as the Climate Action 100+, who are calling for net-zero carbon in the next decade or two. “There’s a complete clash between what companies want to do and their shareholders want them to do.”