Driving Change: Oil Industry's GHG Reduction Target at COP28

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Patrick Pouyanne, TotalEnergies CEO, advocating for greenhouse gas emissions reduction targets at COP28.

Patrick Pouyanne enjoys rugby and, at 1.91 metres tall, would make an excellent second-row forward. Not only is the TotalEnergies CEO physically imposing, but he is also more outspoken than his Anglo-Saxon, Arab, or Chinese rivals. He would have been furious if protestors from the Just Stop Oil movement had disrupted the Gallagher Premiership rugby union final at Twickenham in May. However, at last week's Opec meeting in Vienna, Mr Pouyanne stated that the oil industry should announce targets to decrease greenhouse gas emissions at the Cop28 climate summit, which begins in November in Dubai.

 

"If we can bring something to Cop28 as an oil and gas industry," Mr Pouyanne added, "not only IOCs [international oil companies] but also NOCs [national oil companies] should have some targets." He mentioned the need to reduce methane leakage, which is the major component of natural gas but also a powerful global warming gas in its own right. He also argued for targets to cut oil firms' Scope 1 and Scope 2 emissions by 2030. Scope 1 emissions are from combustion of methane releases in oil firms' own activities; Scope 2 emissions are from power or heat obtained from others.

 

In reality, most major oil companies are already aiming for such reductions. However, when they are reported on, it is usually with the disclaimer that they do not have aims to eradicate Scope 3 emissions - the greenhouse gases generated when their oil and gas is finally consumed. This category would account for around 85 percent of oil and gas emissions, and in the case of Shell, as much as 95 percent. There are few exceptions: BP expects to reduce Scope 3 by 20% to 30% by 2030 and to achieve net zero carbon emissions from upstream production by 2050. TotalEnergies, Mr Pouyanne's company, plans to reduce Scope 3 from oil by 40% by 2030. It aims to achieve net zero by the middle of the century by offsetting 100 million tonnes of annual carbon dioxide emissions through various techniques.

 

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, CEO of Adnoc, and President-designate of Cop28, said at the same Opec event that "the phase down of fossil fuels is inevitable, in fact essential," but that "the speed of the transition will be driven by how quickly we phase up zero-carbon alternatives." So the fundamental question is whether fossil fuel producers are liable for the emissions produced by individuals who utilise their oil and gas. European firms are under the most scrutiny. A Dutch court declared in May 2021 that Shell must reduce its carbon dioxide emissions from activities and products sold by 45 percent by 2030, in line with the global reductions suggested by the 2015 Paris Climate Agreement.

 

Last year, activist groups proposed a number of motions on tighter Scope 3 reductions at shareholder meetings of Shell, BP, ExxonMobil, and Chevron, which received 20-30% support. Just Stop Oil, which has disrupted play at Wimbledon, the Lord's cricket Test, the World Snooker Championships and Premier League football in addition to rugby, wants the UK government to halt all new oil, gas and coal developments. This is precisely the problem with focusing on Scope 3: it concentrates accountability on those who extract the resource rather than those who use it. Certainly, oil firms should cut their own operational emissions to zero as quickly as practicable.

 

But it's difficult to see how they can be held accountable for what their customers do with the product, or how they can change the fact that people all over the world still rely on oil and gas to go around, eat, dress, build, and light, heat, and cool their houses. That demand will decline, but not soon or smoothly. Oil firms have several possibilities for meeting Scope 3 reduction goals. They can sell their upstream assets, but this only shifts the emissions to others, most likely private or state-backed owners with less environmental monitoring.

 

They might stop investing in their upstream initiatives and let the fields deteriorate naturally. If the Europeans do this, the Americans will grab their market - and European oil companies' share prices have lagged far behind their transatlantic competitors. When BP said in February that it would invest more and limit hydrocarbon production by less than previously stated by 2030, its stock rose. If all Western companies decreased output, other state corporations would grab their market share, as their massive reserves are more than enough to meet climate targets on their own. Reduced gas output would result in increased coal usage - someone else's Scope 3.

 

Finally, if all firms were to phase out oil and gas output through binding worldwide agreement, without customers quickly shifting to affordable and abundant alternatives, serious energy shortages would occur, and prices would skyrocket. We got a taste of it last year when Russian actions caused record petrol prices, which elicited public indignation, large government subsidies, and price ceilings. On the other side, if competitive non-oil alternatives arise quickly, oil businesses that have invested in increasing output will find themselves with no market. They will have made poor business judgement and will suffer financial losses as a result. Their emissions will then gradually decrease.

 

So, how practically might petroleum firms shrink Scope 3? They must collaborate with their end-users to ensure ever-greater efficiency of usage, with a preference for non-emitting applications such as the production of long-life petrochemicals and polymers, lubricants, and hydrogen. Combustion should be gradually phased out in favour of carbon capture, utilisation, and storage (CCUS) - on power plants, in industries, and potentially even in oil-powered ships - which traps carbon dioxide rather than releasing it into the sky.

 

They can provide their customers with services to help them co-develop CCUS initiatives, such as reimporting captured carbon dioxide. And they could produce entirely decarbonised oil by absorbing a comparable quantity of CO2 from the atmosphere, which at realistic long-term costs for this process would add about $60 to the price of a barrel of oil, which is high but not crazy. Companies must experiment with such ways in order to reduce their Scope 3 emissions. Otherwise, they will emerge from the climate action frenzy with a black eye.

Source: thenationalnews.com

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luna torres
7 months ago

if all the major oil companies aim for gas emission reduction, it would probably be easy, but how about those other companies relying on this oil.??

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