For a sector that is frequently chided for merely trying to burnish its green credentials, it appears some players are willing to put their money where their mouths are--by going for a ‘clean energy overkill’.
In February, Italian multinational oil and gas company ENI shocked the world when it unveiled what has been hailed as the most ambitious climate pledge yet by an oil supermajor.
Eni has now set out a plan to lower its greenhouse gas emissions by 80% by 2050.
Sounds good enough, but not exactly earth-shattering. What’s so different about ENI’s new plan that has the environmentalists swooning? After all, last year, the $40 billion oil giant unveiled what--on face value--appears to be an even more impressive target to cut its net carbon emissions to zero by 2030.
This time, we’re getting a bit more realistic. And in this case, it takes more oil to reduce our carbon footprint in much the same way that it takes money to make money.
Scope 3 Emissions
Hidden in the fine print of the carbon-reduction plan by the Italian major is a pledge to rein in Scope 3 emissions--or emissions generated by ENI’s supply chain partners and end-users.
In the 2019 pledge, the state-controlled company announced that it planned to expand its green business by investing in planting forests to capture more than 20 million tonnes of CO2 by 2030 and installing 10 gigawatts (GW) of new renewable capacity by 2030, up from 0.2 GW that year.
In other words, ENI was only concerned with its own direct carbon footprint.
In the new plan, ENI says it will work to lower emissions from its own operations as well as those from the fossil fuel products it sells. Related: Russia Fires Back: Could Boost Oil Production By 500,000 Bpd
This way, it beats previous its previous pledge as well as those by the likes of Repsol and BP, both of which have 2050 as their deadline for net-zero carbon emissions but have mostly been vague about their Scope 3 strategies. For instance, in February, new BP chief executive Bernard Looney pledged to meet the demands of the Paris climate change agreement, but provided few details on how his company planned to make this a reality.
But even ENI’s ‘wonder-plan’ is not as gilt-edged as it seems.
The Natural Gas Bridge
There’s a bridge to cross here, otherwise everyone would simply sink.
Like most oil and gas majors, ENI has no plans to ramp down its fossil fuel production--at least not yet.
Indeed, the company says it actually intends to ramp up oil production by 3.5% per year through 2025, at which point in time it will begin to shift to natural gas, ramping up its production by 85% through 2050.
Like many fossil fuel companies, advocates, and apologists, ENI views natural gas as a necessary bridge as the world tries to wean itself off fossil fuels. Natural gas does produce about 28% less CO2 emissions than heating oil and 50% less than coal for the same amount of energy when burned. Further, natural gas can be used to keep the power grid stable as solar and wind power fluctuate.
So at first glance that does not sound like a terrible idea, until you consider that a cross-section of climate experts have warned that we only have a ten-year window in which to take decisive action to prevent irreversible damage to our climate and ecosystems. During the first five years of that timeframe, ENI plans to take a detour to first ramp-up oil production before beginning a ramp-down at an unspecified future date.
In other words, it’s business as usual for ENI and other oil and gas supermajors--for now.
Kicking the Can Down the Road
While ENI’s plan is laudable due to a dearth of serious carbon commitments from its contemporaries, it will still look to some like another plan to continue kicking the can down the road until either government policies or catastrophic climate change forces its hand. Related: Saudi Arabia's Archenemy Is Taking Advantage Of The Oil War
Maybe, maybe not. Change is a process, and the ethical squeeze is already on. Everyone’s on board with the change because environmental investing is already a mega-trend and big money is shifting here; but we have to be realistic.
ENI’s plan to continue growing oil production for the next half-decade is, perhaps, informed by new projections that oil demand is likely to continue growing over the next decade or so. It’s not exactly a climate change activist’s dream come true--but it is still miles ahead of what its peers.
With ExxonMobil touting algal biofuels investments in TV ads, and Chevron appearing to think that offering electric car charging at gas stations is the answer, you can forgive ENI for sending mixed messages about where its climate change loyalties lie.
But at the very least, America’s supermajors ought to borrow a leaf from the Italian oil giant.
By Alex Kimani for Oilprice.com
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