Three of the oil industry’s biggest names have tried to face militant shareholders and the courts, but were pressured by the two on Wednesday to do more to limit their carbon emissions.
Royal Dutch Shell PLC, Exxon Mobil Corp. and Chevron Corp. have suffered significant defeats in their approaches to tackling climate change.
A fourth, Suncor Energy Inc. of Canada, has announced a long-awaited goal to achieve net zero emissions by 2050, which puts the oil sands producer’s ambition in line with the federal government’s commitment under the Paris Agreement.
Investors and the general public have demanded that the oil industry put its considerable weight behind efforts to limit the rise in global temperatures.
Shareholders – including the world’s largest fund managers – are also forcing companies to consider and manage the risks they face in the global transition to cleaner energy sources.
Suncor Energy aims to cut emissions by more than a third while boosting oil production
“Obviously there is a tremendous amount of focus on how we move forward,” Suncor CEO Mark Little said in an interview. “I think that actually indicates that people want energy companies and oil producers to be part of the solution, and quite frankly I think there is a lot of wisdom in there.
“The oil industry deploys huge amounts of capital globally, it has enormous technical and operational project execution capabilities, so it’s hard for me to imagine how the world is actually achieving its ambition without that industries such as the oil industry do not participate in the energy transition. ”
Suncor’s net zero plan includes strategies to achieve an interim emission reduction target of 10 megatonnes per year by 2030. They include adopting carbon capture, use and storage; production of low carbon and hydrogen fuels; fuel switching in its oil sands operations; and renewable energy production, including wind power.
Importantly, Suncor sets company-wide CO2 targets rather than intensity targets. This is a departure from most of its Canadian peers, which measure their emissions per barrel produced.
This is part of an overall operating strategy that emphasizes reducing the financial return on each barrel rather than large production gains to generate profits. Even by adopting carbon reduction technologies, Suncor is targeting a percentage return on investment for “teens”.
Elsewhere in the industry, a Dutch court has ordered Shell to cut emissions by more than double its own target, and the ruling could have an impact in Canada. The Hague District Court said Shell has a duty of care to reduce emissions and its current plans are not concrete enough. The case was brought by Friends of the Earth Netherlands, known as Milieudefensie, along with 17,000 co-plaintiffs and six other organizations, including Fossil Free Nederland and Greenpeace Netherlands.
Milieudefensie lawyer Roger Cox said in a statement he expects the verdict to have a global impact. “People around the world are preparing to follow our lead and take oil companies to court,” he said, adding that the ruling means oil companies will be increasingly reluctant to invest in fossil fuels. .
Kristen van de Biezenbos, an associate professor at the University of Calgary specializing in energy law, said it was striking that the judge ordered Shell to cut its carbon emissions which warm the planet by 45% of by 2030 from 2019 levels – the kind of guidance that would usually come from government legislation. The company had set itself a reduction target of 20 percent.
With governments producing a lot of talk but not a lot of action, she said, the move could signal a wider tendency for the public to fight ballot boxes in the courts.
“This is probably what we are seeing now – this really growing consensus among many different stakeholders in large parts of the population that something needs to be done about climate change to reduce emissions quickly,” a- she declared.
Litigation is not the preferred way to push for action – it is expensive and time consuming, said Professor van de Biezenbos. But the courts have always played an important role in the modern environmental movement, and now they push for action on climate issues. The Dutch court system is very different from Canada’s, but a ruling like the one against Shell could inspire new lawsuits against energy companies here.
“If you try to make an argument in a Canadian context, you can’t say the same legal principle applies, but you can say respected jurists in other countries have found the same thing,” a- she declared. “It can be anything convincing.”
The fear of being a target in such a case can also be a big factor of change for big oil companies in particular, she said.
Shell Canada spokeswoman Tara Lemay said in an email that the actions needed to tackle climate change have caused it to step up its efforts to become a net-zero energy company by 2050 and to invest billions of dollars in low carbon energy, including electricity. recharging of vehicles, renewable energies and biofuels. Nonetheless, Ms Lemay said Shell intended to appeal the court’s decision, calling it “disappointing”.
The tribunal announced its decision a week after the International Energy Agency’s Net-Zero by 2050 report called for an end to new oil and gas exploration and the immediate start of a phase-out of fuels. fossils in the world.
And on the same day as the Shell decision, the shareholders of Exxon Mobil Corp. voted to replace at least two of the company’s 12 board members with directors who are considered more adept at tackling climate change, supporting Exxon’s finances and guiding it through a transition to energy cleaner.
The proxy contest, run by an activist fund called Engine No. 1, succeeded despite CEO Darren Woods’ campaign against the offensive. Mr Woods said the company is already diversifying from fossil fuels, but warned that faster acceleration would jeopardize profits.
The fund won over the main institutional shareholders with its message that Exxon Mobil has not sufficiently prepared for the energy transition. He said companies “positioned to capture value in a low-carbon world” were rewarded by the market, as Exxon’s cost of capital rose.
Chevron shareholders, meanwhile, voted in favor of requiring the company to reduce “Scope 3” emissions – those generated when consumers burn the fuels it produces. The vote did not set a specific target or timetable.
Mr. Little of Suncor said the events of the day show investors have grown impatient with climate issues.
“It’s pretty clear that a lot of shareholders are willing to fight if they don’t think you’re going fast enough. Or you can end up in court, ”he said.
With an Associated Press report
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