Report: The Global Oil And Gas Industry Has Insufficient Efforts To Reduce Emissions, And Carbon Offsets Are Controversial

On November 27, the international environmental protection organization Greenpeace released the report "The Phantom of Emission Reduction: Risks and Case Studies of the Use of Forestry Carbon Sink in the Global Oil and Gas Industry" (hereinafter referred to as the "Report"), pointing out that the emission reduction efforts of the global oil and gas industry are in line with the Paris Agreement 》There is a huge gap between the 1.5°C global warming target set. Some oil and gas companies purchase carbon offset products in the form of forestry carbon sinks, such as "carbon-neutral liquefied natural gas" and "carbon-neutral driving" to achieve publicity purposes.

The 2021 Global Carbon Market Watch (Carbon Market Watch) analyzed ten energy companies around the world, including Shell, BP, Total Energy, etc., for 18 years between 2020 and September 2021. An investigation and analysis of "carbon neutral" claims was conducted and found that no company met the most basic requirements to call its products "carbon neutral".

The "Report" shows that among the top 10 oil companies in the world by revenue, although some companies have set short- to long-term emission reduction targets, none of them have short- to medium-term emission reduction targets that are consistent with controlling global temperature rise below 1.5°C. goals are consistent.

At an investor event in June this year, Shell stated that production would remain stable until 2030 and that it would invest US$40 billion in oil and natural gas production between 2023 and 2035; BP and Total announced reductions in Climate targets to reduce targeted emissions reductions in upstream oil and gas production from 35% to 40% to 20% to 30% by 2030.

The Science-Based Targets Initiative (SBTi), a United Nations-backed body that assesses companies' net-zero emissions targets, recommends that companies offset no more than 10% of their emissions, and only after all other possible emissions reduction measures have been taken.

According to statistics compiled by BloombergNEF, as of June 2023, 20% of the carbon credits for afforestation and deforestation avoidance projects that have been written off globally are used by oil and gas companies. Among them, Shell has written off more than 10 million tons of carbon dioxide equivalent carbon credits from projects to avoid deforestation, while real investments in low-carbon fields, including photovoltaics and wind power, geothermal power generation, and hydrogen energy, only account for capital expenditures. 9%.

Percentage of global oil majors' fossil energy expenditures and expenditures in low-carbon areas. Picture from "Report"

In August this year, news leaked that Shell CEO Wael Sawan had terminated its investment plan of US$100 million per year in its carbon offset business. It is understood that a senior employee who has worked at Shell for 17 years told Bloomberg that first avoiding emissions, then reducing emissions, and finally offsetting emissions is Shell's long-term policy. The "Report" also suggests that purchasing high-quality carbon credits should only be regarded as a supplementary means on the basis of deep emission reductions.

The "Report" also sorted out the limitations of the forestry carbon sequestration project in the trading methodology: the demonstration of project additionality and the setting of the baseline are particularly important, and the emission reductions issued by the project can only be included in the commitment to mitigate climate change once. , cannot be counted twice; the project must ensure that environmental protection results are achieved through specific intervention measures of the project.

"Additionality" in carbon trading is the core concept for evaluating the effects of environmental projects. The difference in emissions between the baseline scenario and the emission reduction project can be counted as a qualified carbon credit. In other words, without the involvement of carbon credit projects, emission reductions achieved by policy pressure, investment and technological levels do not meet the additionality in carbon credit standards.

In addition, some forestry carbon sink projects invested by fossil energy companies are controversial. In 2021, Total Energy launched a carbon offset project in partnership with Forest Neutral Congo (FNC) in the Republic of Congo's Butek Plateau, primarily within the Lefini Reserve. After the project was launched, some Aboriginal people were no longer allowed to plant or take care of crops on the original land. It was not until 2021 that some families received compensation of 1/16 of the historical lease price of the land in the area, but they needed to give up their land ownership. The project has drawn widespread criticism for its unfair treatment of indigenous peoples.

The report shows that there are still insufficient effectiveness of forestry carbon sequestration projects. For example, the Glengarry reforestation project invested by Shell in Scotland faced the problem of reusing carbon credits with the Scottish government; the Colville Indian Reservation Improvement Forest Management Project area in Washington State, purchased by BP, suffered severe fires, and the project Already sold more than 90% of its carbon credits to BP.

The "Report" points out that companies' reliance on carbon offset strategies will ultimately hinder real climate action and technological progress. Li Jiatong, climate and energy program director of Greenpeace East Asia, said: "Climate action in the global oil and gas industry is obviously lagging behind, and there are problems such as missing goals and greenwashing. Oil and gas companies should regard emission reduction and energy transformation as long-term strategies, and take proactive actions as a priority Solve our own emissions problems rather than relying on external means such as carbon offsets."