the industry’s operations account for nine per cent of all human-made greenhouse gases and that the burning of the fuels it produces creates another 33 per cent of global emissions. Amid growing concerns – and activism – over the
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future of the planet, many oil and gas companies are looking to reinvent themselves in 2022 and, according to a recent report on the industry from Deloitte, plan to show renewed emphasis on environmental, social and governance (ESG) goals. The consulting company’s report said that the sharp rise in oil prices over the past year coupled with global demand now almost back to pre-pandemic levels meant the industry was able to invest in riskier and expensive green energy projects, such as carbon capture, utilisation and storage. Bloomberg Intelligence also reported that “oil companies are finding it increasingly difficult to raise financing amid rising environmental, social and governance concerns, while banks are under pressure from their own investors to reduce or eliminate fossil- fuel financing”. According to Goldman Sachs, the cost of developing
fossil fuels has now surpassed that of renewable energy projects. “That’s an extraordinary divergence, which is leading to an unprecedented shift in capital allocation,” said analyst, Michele Della Vigna. “This year will mark the first time in history that renewable power will be the largest area of energy investment.”
GREEN SHOOTS OR GREENWASHING? Nevertheless, demand for both oil and gas are continuing to grow. According to the United Nations Environment Programme, countries across the world still plan to produce twice the amount of fossil fuels than the level needed to meet the target of limiting average global warming to 1.5° Celsius above pre-industrial levels. Oil companies are at least paying lip service to
the need to move away from fossil fuels. “There is a growing recognition and a growing acceptance for the need for a variety of approaches to make sure that we make progress on reducing emissions but, at the same time, don’t compromise the quality of people’s lives,” commented Darren Woods, Chief Executive at Exxon Mobil, as the oil giant checked in earlier this year with fourth-quarter profits of $8.9 billion. Mr Woods said the company was committed to
investing in carbon capture and sequestration, biofuels such as renewable diesel, and hydrogen energy.
et for all its current profitability, the sector has a very real and persistent problem: it is playing a major role in the destruction of our world’s environment. It is estimated that
For its part, BP undertook to spend more on low-
carbon energy alternatives even as it reported eight-year high profits of $12.8 billion for 2021. CEO Bernard Looney told investors that, by 2025, the company planned to dedicate 40 per cent of its spending budget to projects that aided energy transition, such as wind farms, hydrogen projects and electric vehicle charging networks. Much of this work would be concentrated in the UK, Mr Looney told the Guardian newspaper. “BP’s historic links in the UK give us a foundation
here,” he said. “But the real reason we will focus on the UK is the opportunity: the wind resources here are among the best in the world. The UK is also blessed with a society and an economy which wants to transition. It’s a good place to invest and it’s a place that we know.” Charlie Kronick, an analyst at Greenpeace UK, said
that although there was “no doubt that BP now has the most ambitious plans of any of the oil giants to pivot away from climate-wrecking fossil fuels as their core business”, the company was still only “the best of a bad bunch”. He added: “It should be clear by now that we can’t
wait to solve this problem one oil company at a time.” Instead, he said it should be up to governments “to step in to end the growth in fossil fuels and to massively raise ambition to reduce emissions”. Yet even Saudi Arabia – a nation whose name
remains synonymous with massive oil production – recently transferred Aramco shares worth $80 billion to its sovereign wealth fund to invest in green projects.
“ There is a growing recognition and a growing acceptance for the need for a variety of approaches to make sure that we make progress on reducing emissions but, at the same time, don’t compromise the quality of people’s lives”
DARREN WOODS, CHIEF EXECUTIVE, EXXON MOBIL
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