Oil and Gas Companies Undermining Efforts to Battle Climate Change

Major oil and gas companies are undermining global efforts to avoid a climate crisis, according to a report.

A total of £40.6bn has been invested by these companies into projects involving fossil fuels since the start of last year. These projects involve extracting oil and gas from tar sands, deepwater fields and the Arctic - all in spite of the risks to shareholder investment, and of course, the climate.

Financial thinktank, Carbon Tracker, found that several companies spent 30% or more of their total investment for 2018 on projects that would be “deep out of the money in a low-carbon world”. These companies include ExxonMobil, Chevron, Shell and BP.

The author of the report, Andrew Grant, said: “Every oil major is betting heavily against a 1.5C world and investing in projects that are contrary to the Paris goals.”

The study is the first of its kind, analysing their financial sustainability in a low-carbon future and whether projects are compliant with a 1.5C world.

According to its findings, the investment decisions of the biggest companies in the oil and gas sector are all contrary to global climate targets. If governments decide to crack down further on carbon emissions, these companies risk wasting £1.8tn by 2030.

Grant said: “Investors should challenge companies’ spending on new fossil fuel production. The best way to both preserve shareholder value in the transition and align with climate change goals will be to focus on low-cost projects that will deliver the highest returns.”

Despite many oil executives voicing support for the Paris goals and pledging to invest in renewable energy, the actions of their companies have been to the contrary.

ExxonMobil invested $2.6bn in the Aspen greenfield oil sands project in Canada - the first project of its kind for five years. Shell also stated its intention to spend $13bn on a liquified natural gas project in Canada.

A Shell spokesperson said: “We agree that the world is not moving fast enough to tackle climate change. As the energy system evolves, so is our business, to provide the mix of products that our customers need.”

A UN Environment Programme report shows that investment in renewable energy projects worldwide is set to hit $2.6tn by the end of 2019.

The executive director of the UN Environment Programme, Inger Andersen, said: “Investing in renewable energy is investing in a sustainable and profitable future, as the last decade of incredible growth in renewables has shown.”

The world’s total renewable energy capacity has quadrupled in the last decade thanks to a large increase in investment. The total capacity is estimated to reach 1650GW by the end of the year, up from 414GW back in 2009.

Solar power has been at the forefront of the rise in renewable energy projects, with about half of total investment over the last ten years going towards solar projects. Solar power capacity is expected to grow to 628GW by the end of 2019, compared to just 25GW a decade ago.