Oil majors are cooking their books on climate emissions
Oil majors are cooking their books on climate emissions
New research teases apart the tricks Big Oil uses to fudge emissions accounting in their climate plans.
Emily Sanders is the Center for Climate Integrity’s editorial lead. Catch up with her on Twitter here.
Good afternoon. Last week, the U.N. Intergovernmental Panel on Climate Change told us, in no uncertain terms, that we need to transition away from fossil fuels by the end of the decade — or else. Oil companies are still hoping for “or else.”
In fact, the fossil fuel industry is — and always has been — more keenly aware than most that climate change poses substantial risks not only to the planet, but to their ability to keep burning oil and gas with impunity. And as usual, they’ve stayed one step ahead of the game, taking every opportunity to assure the public that they’re part of the solution — even as they continue to expand fossil fuel operations.
But as scrutiny over oil companies’ climate commitments grows, their lies could come back to bite them. This week, a report from nonprofit Earthworks is shining new light on the deceptive tactics oil giants use in their emissions reduction plans to shield themselves from accountability.
Earthworks’ “Tricks of the Trade - Oil and Gas Accountability Report,” published on Tuesday, takes a magnifying glass to the climate pledges of eight oil and gas majors — Shell, BP, ExxonMobil, Chevron, ConocoPhillips, Equinor, Occidental and TotalEnergies — comparing their promises to reduce emissions to their actions.
What they found: despite their public commitments, the companies aren’t close to being on track to meet the Paris Agreement goal of keeping global warming within 1.5 degrees Celsius, after which damages to the climate become far more severe, and irreversible. None of their plans will result in cutting emissions in half by 2030, which the IPCC says is necessary if we are to keep warming within that threshold.
Yet a series of tricks in oil majors’ pledges make it impossible to parse out, let alone hold them accountable to, their stated emissions targets. Earthworks’ report shows that Big Oil companies are keeping substantial portions of their emissions off the books, selling polluting assets to other companies, and using confusing language to make it seem like they’re making progress on their climate goals — when in reality, the industry is polluting more than ever.
The new analysis reveals, perhaps not surprisingly, that the companies are using pledge targets as the goal, not actual reductions in emissions. In 2021, 40-60% of Shell, BP, Total, and ConocoPhillips’ claimed emissions reductions were from divestiture of polluting assets — in other words, from selling assets to companies that are often smaller and not required to report, or even reduce, their pollution. While oil majors profit from the sale of not-yet-extracted oil and gas, they get to take the eventual emissions off their books and walk away scot-free.
Raquel Dominguez, who co-authored the report, said divestiture stood out to her as a particularly effective greenwashing tactic for the industry. “If you're the average consumer who is concerned about their carbon footprint, for all the baggage that term has, I think it would be really understandable if you looked at these fancy reports and saw ‘we decrease our emissions by divesting’ — and if you didn't know anything about that, you might say, that's great,” she said.
The report says companies are also drastically underrepresenting their methane emissions, thanks to an EPA greenhouse gas reporting system that only requires half of methane emissions to be reported. And in many cases, companies use intensity-based metrics in their targets — meaning they can continue to pollute more, as long as they’re emitting less per barrel of oil.
As we’ve discussed before, oil companies are benefiting from the nebulousness baked into emissions reporting as a whole. So in order to ensure that investors actually have the data necessary to hold fossil fuel companies to their word, one of Earthworks’ major recommendations is that the U.S. government set a common standard for emissions disclosures.
Last month, the U.S. Securities and Exchange Commission proposed a new rule that would do just that: set a standard by which publicly traded companies must inform investors of their greenhouse gas emissions and the risks climate change poses to their business.
But the oil and gas industry is fighting to keep the process ambiguous.
Because transparency would force Big Oil to show its cards, the industry wants none of it. Setting itself apart from other trade associations that support the rule, the Chamber of Commerce (whose board members include representatives from Chevron, ConocoPhillips, and Shell), along with and the world’s largest oil and gas trade association, the American Petroleum Institute, have already complained to the SEC about its proposal.
“API encourages the SEC to view the oil and natural gas sector’s pre-existing voluntary disclosures and reporting as evidence that the industry seeks to be a partner that, in some cases, has already tackled key areas raised in the request for information,” wrote Frank Macchiarola, API’s senior vice president of Policy, Economics and Regulatory Affairs.
Dominguez says it’s “entirely predictable” that the industry would want to avoid regulation under the pretense that it’s already regulating itself. “That's what they've done effectively for their entire existence,” she said. “And I think the concern they're showing about this rule really suggests that they know that if the government actually did have a holistic climate strategy, they would no longer exist.”
Bottom line: Big Oil isn’t going to stop polluting voluntarily.
In February, the House Oversight committee held a hearing that exposed oil and gas majors’ “net zero” plans as completely insufficient to meet the goals of the Paris Agreement. A peer reviewed study on Chevron, Exxon, BP and Shell’s climate pledges, published later that month, concluded that “until actions and investment behavior are brought into alignment with discourse, accusations of greenwashing appear well-founded.”
Earthworks’ report provides even further evidence that fossil fuel majors’ pledges are nothing but an elaborate PR mechanism, designed to avoid true accountability for driving us down a path towards climate chaos.
“The fact that companies, but particularly oil and gas companies, have used these pledges to justify increased production and more emissions is outrageous,” Dominguez said. “The tide is clearly very much against them. They're just trying to maintain their social license to operate for as long as they possibly can, to eke out as much money as they can for their executives.”
The fossil fuel industry is very sophisticated. By keeping us sloshing around in the slippery and ever-elusive world of net zero pledges, they deflect attention from the fact that oil and gas companies will never voluntarily move away from the products that deliver them record-breaking profits. In light of the latest IPCC findings, this steady stream of meaningless net zero campaigns should be a wake-up call for elected officials that without real government intervention, we will never accomplish the rapid transition to clean energy we so desperately need.
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