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Big Oil Promises $1 Billion In Climate Change Fight

XOM

A host of oil supermajors announced on Friday that they would allocate US$1 billion for fighting climate change over the next ten years. The effort, called the Oil and Gas Climate Initiative, involves BP, Shell, Aramco, Total, Eni, Statoil, Repsol, CNPC, Pemex, and Reliance Industries.

Among the priorities of the initiative are cutting methane emissions from oil and gas pipeline leaks, and accelerating the development of carbon capture, use and storage technology.

The money that the ten companies pledged will be collected in a fund, OGCI Climate Investments, which will partner with businesses from the transport and other energy-intensive industries in a bid to improve energy efficiency in these sectors.

Reuters notes that the OGCI announcement coincides with the official entry into force of the Paris Agreement on climate change, which seeks to mitigate the adverse effects of the changing climate.

The agreement was signed this spring by 171 countries, and its central goal is to keep global temperature increases below 1.5-2 degrees Celsius. It required ratification by at least 55 signatories to come into force.

According to the latest report from the international Panel on Climate Change, in order for the 2-degree target to be achieved, the signatories of the agreement would have to cut emissions by 40-70 percent by 2050. For the more ambitious target of reducing temperature rises to 1.5 degrees, emissions would have to be cut by 70 or even 95 percent.

Related: Surging M&A Activity Suggests The Worst Is Over For Oil

Of course, a lot of these emissions come from the use of fossil fuels, which has led to the rise of a lot of hostility towards energy companies. It was only a matter of time before supermajors began taking notice of these developments and joined the effort in some way.

The amount pledged, however, pales by comparison to the funds that the governments of developed countries have vouched to contribute to the common effort until 2025: US$125 billion.

By Irina Slav for Oilprice.com

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  • Herman Goodfellow on November 05 2016 said:
    When investors realize that we can't burn all the know fossil fuel reserves without driving the earth's climate permanently out of control, the value of oil company stocks will follow the trajectory of Peabody Coal. Some will protest like the old guy down the street who said GM, Lucent, and AIG "would come back." He lost his savings, sold his house and moved in with his kids. It's so sad when good people lose all their money by trusting in old companies that paid high dividends twenty years ago and then went bankrupt when things change.
  • Herman Goodfellow on November 05 2016 said:
    Why are the vast majority of new electrical generating plants using wind or solar energy? Could it be that it's cheaper than natural gas? Could it be that the fuel costs are free - free forever? We don't need all this investment in oil. Remember the buggy whip companies of 1900? Big oil will get there. It will take time, but someone else will own the growth technologies of the 2030s, and the surviving oil companies will be trying to market their buggy whips.

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