Major Oil and Gas Companies’ Business Plans are on a Collision Course with Global Climate Goals
A new analysis adds to growing evidence that Big Oil is not aligned with the Paris Agreement, and is accelerating us down the highway to climate hell.
Major US and European oil and gas companies are failing to take even the bare minimum steps necessary to comply with international targets for limiting global heating, threatening to lock in further climate destruction through their continued fossil fuel extraction plans, according to a new analysis out today from Oil Change International. The report, endorsed by over 200 civil society organizations, finds that these companies are grossly misaligned with the Paris Climate Agreement’s goal to prevent global temperature rise beyond 1.5°C, and are increasing hydrocarbon production at a time when this production must be urgently reduced in order to have a shot at avoiding irreversible climate calamity.
“Our findings reveal how it’s clearer than ever that oil and gas companies – the climate arsonists fueling climate chaos – cannot be trusted to put out the fire,” David Tong, report author and global industry campaign manager at Oil Change International, said in a press release accompanying the analysis, titled “Big Oil Reality Check.” It’s the latest edition of the NGO’s assessment of Big Oil’s climate plans and pledges (the first one came in 2020), and the findings are consistent with other independent evaluations of oil and gas companies’ alignment with global climate goals.
Oil Change’s analysis examined the activities and plans of eight major petroleum producers – BP, Chevron, ConocoPhillips, Eni, Equinor, ExxonMobil, Shell, and TotalEnergies – based on ten criteria for potential alignment with the Paris Agreement under pillars of ambition, integrity, and people-centered transitions, and all companies were found to be ‘insufficient’ or ‘grossly insufficient’ for nearly all criteria. The three American oil majors (Exxon, Chevron, and ConocoPhillips) were rated grossly insufficient across all ten categories. These three companies, according to the analysis, are projected to be the largest investor-owned producers of new oil and gas between now and 2050. They, along with Eni and Equinor, have explicit plans to ramp up production in the near term, while BP and Shell are selling their least profitable fields to other companies as they put forth new extraction projects for approvals. The expansion plans of just these eight companies, the report finds, threaten to exhaust 30% of the world’s remaining carbon budget for keeping warming from exceeding 1.5°C.
“The companies’ own production plans and forecasts,” the report explains, “corroborate that almost every company plans to increase production in the near term, and no company is committing to the immediate and swift declines in oil and gas production required for a livable planet.”
The world’s most authoritative climate and energy experts have established that new fossil fuel development is inconsistent with pathways for achieving net zero greenhouse gas emissions and for limiting warming to well below 2°C – the objective outlined in the Paris Agreement. In its Sixth Assessment Report, the Intergovernmental Panel on Climate Change warned that projected CO2 emissions from existing fossil fuel infrastructure already exceed the remaining carbon budget – or allowable emissions consistent with limiting warming to a certain threshold – for the 1.5°C limit. The International Energy Agency notably stated in a 2021 report there is “no need for investment in new fossil fuel supply” in its net zero pathway, a position that IEA confirmed in its 2023 update to that report. And in the foreword to a 2023 IEA report on the oil and gas industry in net zero transitions, IEA Executive Director Fatih Birol said the industry “faces a choice – a moment of truth – over its engagement with clean energy transitions… The uncomfortable truth that the industry needs to come to terms with is that successful clean energy transitions require much lower demand for oil and gas, which means scaling back oil and gas operations over time – not expanding them.”
Yet as the OCI report and other analyses show, expanding production is what many of the large oil and gas companies are doing, prioritizing immediate short-term profits over the societal imperative to transition away from oil and gas in order to mitigate worsening climate damage.
“Big oil and gas companies will not phase out their own products, manage their own decline, or put the well-being of people and ecosystems over their profits,” the OCI report argues. “Governments and investors must intervene. Courts must hold these companies accountable.”
In 2021 a Dutch court attempted to do just that, issuing a groundbreaking ruling against Shell ordering the company to reduce emissions across its supply chain by 45% by 2030; it was the first time a court anywhere in the world had imposed an emissions reduction obligation on an oil company, in the context of complying with the Paris Agreement and domestic and international human rights law. Shell has appealed the ruling (oral arguments were held in April) and appears to be defying the lower court’s order, as the company has approved at least 20 new oil and gas extraction projects since the May 2021 verdict.
The OCI analysis adds to a growing body of evidence showing that the oil and gas industry is not genuinely committed to leading a just energy transition, as multiple analyses and investigations have confirmed that oil and gas companies are wildly misaligned with the Paris Agreement despite their public claims of support for the climate accord.
As a congressional joint report titled “Denial, Disinformation, and Doublespeak: Big Oil’s Evolving Efforts to Avoid Accountability for Climate Change” released in April states: “Publicly available information and documents produced to the House Oversight Committee demonstrate that fossil fuel companies have no intention of aligning corporate emissions reductions with the Paris Agreement despite public statements supporting the Agreement. Rather than developing plans that recognize the fossil fuel industry’s responsibility to reduce greenhouse gas emissions, the companies (1) de-emphasize or ignore responsibility for reducing emissions from the burning of their oil and gas products for energy, transferring blame and responsibility to consumers for the vast majority of their emissions; and (2) overemphasize minimal investments in clean or renewable energy projects that are insufficient to achieve the goals of the Paris Agreement.”
Companies’ own internal documents and some of their public disclosures reveal that they do not take climate action seriously because it would threaten their business. Some companies acknowledge in their annual securities filings (10-k) that climate action – legislation, regulations or other government actions to reduce GHG emissions – may materially impact their financial condition and therefore could be a risk to their business, and they note that continued hydrocarbon development is important for their business success. Chevron, for example, states in its latest 10-k: “The company is in an extractive business; therefore, if it is not successful in replacing the crude oil and natural gas it produces with good prospects for future organic opportunities or through acquisitions, exploration or technology, the company’s business will decline.”
Moreover, a Carbon Tracker report released in March found that the top 25 oil and gas companies are “way off-track” from alignment with Paris Agreement goals and that most companies are planning for production increases and new extraction developments in the short term. “Companies worldwide are publicly stating they are supportive of the goals of the Paris-Agreement, and claim to be part of the solution in accelerating the energy transition,” said Carbon Tracker’s Maeve O’Connor, an oil and gas analyst and author of the report. “Unfortunately, however, we see that none are currently aligned with the goals of the Paris Agreement.”