In an unexpectedly less terrible turn of events, 2020 has seen several oil and gas companies announce more ambitious climate targets. Just last week, ConocoPhillips released a new “net-zero” climate ambition, becoming the first US oil and gas company to do so. While that breakthrough looks impressive at first glance, we’ve found some glaring deficiencies in the company’s recent announcement.
Since we’re not expecting any other U.S. companies (*cough ExxonMobil and Chevron cough*) to make climate-related announcements anytime soon, we thought it was time to examine ConocoPhillips’s new climate claims and compare them with the climate-related positions and actions of other major investor-owned oil and gas companies. (Consider this blog a mini-update to the comprehensive analyses in UCS’s Climate Accountability Scorecard, last published in 2018).
ConocoPhillips’s new climate announcements
- ConocoPhillips is promising to stop routine gas flaring (which can occur in the oil and gas extraction process) by 2025, five years before the target date of the World Bank’s popular Zero Routine Flaring by 2030 initiative (of which ConocoPhillips is one of only two U.S.-based endorsers).
- The company also promised to add continuous methane monitoring devices, expecting monitoring at two-thirds of production sites in the Lower 48 states by 2021.
- Like its U.S.-based competitors, ConocoPhillips still refuses to take responsibility for its Scope 3 emissions, which come from the burning of its oil and gas products and comprise around 85 percent of the total emissions for a fossil fuel company. Read more here about why this is such a glaring omission.
- The target was announced at the same time as ConocoPhillips’s acquisition of Concho Resources with no information as to how it would apply to newly acquired operations. (Working with colleagues at Fossil Free Indexes (FFI), last year I helped Barnard College evaluate the climate science commitments of 30 oil and gas companies, including Concho and ConocoPhillips. Concho’s scores were among the worst—read the details here.)
- The company did not commit to an absolute methane target, update its methane intensity target, or state that it would create or update any targets after the installation of methane monitoring devices.
- ConocoPhillips also released a disappointing comparison of the climate positions of its trade associations with its own climate positions. Rather than a full report, ConocoPhillips just added a table to a webpage, copied the topline climate statements of its trade associations, and claimed full alignment with everyone from the American Petroleum Institute (API) to the National Association of Manufacturers to the US Chamber of Commerce.
Oil and gas majors–where they stand
Since we published our 2018 Climate Accountability Scorecard, there has been a flood of climate pledges by major oil and gas companies. Building on the Oxford Martin Principles, we articulated a core ask grounded in climate science: these companies must commit to achieving net zero absolute carbon dioxide emissions by midcentury—and conduct all activities in ways that are verifiably consistent with this commitment. Then we developed five key metrics to evaluate the extent to which recent pledges by five oil and gas majors—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—are aligned with the Paris Agreement target of keeping global warming to 1.5°C above pre-industrial levels.
Here are the five metrics we’ve focused on, as outlined in a recent blog post by my UCS colleague Peter Frumhoff, and a brief rationale for each of the scores above.
Near-term Emissions Reductions
How do the companies’ short-term and long-term pledges translate into emissions reductions across its full supply chain? How do the company’s total emissions reductions compare with the ~45% below 2010 levels by 2030 that the Intergovernmental Panel on Climate Change says is needed to keep on a path consistent with the net-zero by 2050 target and keeping global temperature rise to 1.5°C? Oil and gas companies, as primary drivers of climate change, must rapidly and aggressively decarbonize to avoid the worst impacts of climate change.
- Shell’s net-zero ambition leaves a lot to be desired, particularly regarding the company’s long-term strategy (aside from a reliance on offsets), but it does appear to be a step in the right direction.
- BP’s net-zero ambition is great on paper, and I would have loved to score it in the “initial steps” category, but the company is planning to increase emissions in the next decade. This increase is fundamentally counter to the actions needed to limit global warming to 1.5°C and avoid the worst impacts of climate change, and thus they stay in the “grossly inconsistent” category.
- ConocoPhillips, for the reasons outlined above, also scores “grossly insufficient.”
- ExxonMobil and Chevron, which have refused to even consider setting net-zero targets, also receive scores of “grossly insufficient.”
Limits on offsets
Does the company acknowledge the need to set tight limits on and high-quality, independently verified standards for the use of any offsets to achieve its short-term and 2050 emissions reductions goals? Does the company avoid unrealistic assumptions about the availability of carbon capture and storage (CCS) and prospective carbon dioxide removal technologies toward achieving net-zero goals? As companies pursue approaches to remove carbon dioxide emissions—either nature-based offsets or carbon capture and storage (CCS) —they must address the permanence of the storage and scalability of the technology rather than expecting us to trust them to wave a magic wand.
- BP has announced that it will not use offsets to achieve its short-term 2030 goals and therefore was acknowledged for taking “initial steps.”
- Shell is doing the opposite and depending heavily on nature-based offsets to reach its net-zero ambition, so it rates “grossly insufficient.”
- Chevron, ConocoPhillips, and ExxonMobil have not ruled out significant dependence on offsets to reach any current or future climate targets and also score “grossly insufficient.”
What forms of accountability does the company propose it be held to for achieving its short-term emissions reductions goals? Will, for example, executive compensation be tied to specific and ambitious metrics of success? What would be the consequences for corporate leaders of failure to achieve these metrics? Tying emission reduction goals to executive compensation and creating accountability mechanisms has been a successful way to reduce emissions at corporations like Unilever and GM.
- BP and Shell have both announced that the CEO is responsible for climate risk and have explicitly integrated their emissions reduction goals in their executive pay package, and thus earn an “initial steps” score.
- ExxonMobil and ConocoPhillips have all included a vague “Health, Safety, & Environment” target into executive compensation packages, but do not explicitly reference their climate goals or state that the CEO holds responsibility for climate risks, and therefore score “grossly insufficient.”
- Chevron includes its climate goals as targets in its upper-level pay packages, but the targets themselves are incredibly lackluster and easily reached. Additionally, the company fails to explicitly state that the CEO holds responsibility for climate risks and is thus scored “grossly insufficient.”
Does the company acknowledge the need to make reductions for emissions from methane across its supply chain (not merely reductions in the intensity of methane emissions) and set specific and ambitious targets and timelines for methane emissions reductions? Methane is a common product of natural gas and oil extraction and 86 times more efficient in trapping heat on a 20-year time scale than carbon dioxide. By relying on calculations rather than consistent measurement and monitoring, the oil and gas industry is responsible for at least 60 percent more methane emissions than previously estimated.
- None of the companies examined here scored above “grossly insufficient,” as none has a comprehensive and ambitious plan to address methane emissions throughout its supply chain.
- BP’s plan to actively monitor and measure its methane emissions by 2023, along with a subsequent 50 percent intensity reduction, would fill key information gaps (and highlights how much the oil and gas industry’s methane pledges still depend on guesswork). But BP’s lack of an absolute methane emissions reduction target does not reflect the urgency of drastically reducing methane emissions.
Will the company consistently lobby for climate and energy policies to bring about deep emissions reductions across the industry? Will it forcefully distance itself from actions to undermine strong policy by API and other trade associations and lobbying groups? We’ve called on oil and gas companies to publicly audit the climate policy advocacy of their trade associations and break from groups whose positions are not aligned with their own. Oil and gas companies should be transparent in their lobbying activities, rather than hide behind the outsized influence of trade associations.
- Shell and BP have both scored in the “initial steps” category as they both published trade association audits, left at least one trade association due to climate change policy misalignment, and broke with API over opposition for the administration’s rollback of federal methane emissions regulation.
- The rest of the companies scored “grossly insufficient”.
- ExxonMobil also broke publicly with API regarding the methane rollback but has consistently refused to publish a trade association audit.
- ConocoPhillips has stayed in line with API and its recent facsimile of a trade association audit, detailed above, failed to adequately examine climate policy differences.
- Chevron has staunchly supported the API position, but a shareholder vote calling for improved disclosure of climate lobbying received majority support in 2020, and the company is expected to publish a trade group audit in response.
As everyone can see, no companies in this analysis received a score of fully aligned on any metric. Even the initial steps scoring category is sparse and only BP and Shell achieved this score on some of the metrics, highlighting the growing gap between EU and US-based companies on climate action and policy.
It’s clear that none of the oil and gas majors analyzed here is making enough progress on climate change.
Oil and gas companies need to commit to reach net-zero carbon dioxide emissions from their operations and the use of their products by 2050, with quantitative mid-term milestones, disclosure of absolute emissions and emissions intensity, and limited reliance on offsets. They need to clearly state that the CEO holds responsibility for managing climate risks and create financial incentives and disincentives to hold the CEO accountable for action or inaction on climate. Companies need to address methane emissions reductions, along with reductions of other global warming pollutants, as a priority rather than an afterthought. And finally, companies need to examine where the climate priorities of their trade associations differ from their stated priorities, and publicly pressure those trade associations to advocate for science-based climate policy aligned with the Paris agreement.
Where that pressure fails, companies need to leave those trade groups over climate policy misalignment. While the media, investors, and financial institutions may give unwarranted airtime or weight to each new announcement, the reality is that each of the companies examined here is more invested in continuing the status quo of oil and gas extraction and production than committing to the direct, aggressive climate action we need to limit the worst impacts of climate change.
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