The Big Picture
After decades of ignoring and denying climate change and undermining climate action, the fossil fuel sector’s latest ploy is how to become “part of the solution.” After a notoriously failed attempt to rebrand to Beyond Petroleum in 2001, BP is having another go, committing to get to “net zero” and align with the Paris Agreement by mid-century. The International Energy Agency (IEA) has also been trumpetting a “Grand Coalition” — with a starring role for the oil and gas sectors — to solve the climate crisis.
The perspective that Big Oil and Gas are on board to plan their own necessary demise is either impressive cognitive dissonance, revisionist history, or simple denial. As journalist Kate Aronoff sagely put it in response to a New York Times op-ed from the industry heavy Climate Leadership Initiative: “This would be a compelling argument if not for every single piece of available evidence.” This is a sector that has invested decades and unmatchable money into killing climate action.
The bottom line is that if the energy sector were to actually align with 1.5ºC without overreliance on unproven negative emissions technologies, even the IEA states that: “oil demand would fall sharply through to 2050, following a trajectory closer to the decline in supply from fields already producing today.” This is a similar conclusion to analysis published by GGON, which has shown that emissions from oil and gas in already operating fields and mines globally would push the world beyond 1.5ºC of warming.
Simply put, there is no room for new fossil fuel production in a climate-safe future.
–The OilWire Team
Given that we know there is no room for new fossil fuel production in a world limited to 1.5ºC warming, how does BP’s announcement stack up? First and foremost, it remains an announcement rather than a plan, with BP promising more detail in the fall. But, a look at the data shows that BP has a long way to go: BP’s planned production and expansion fall dangerously short of the managed decline required for Paris alignment.
One critical question is whether BP will commit to wind down its production at a pace aligned with limiting warming to 1.5ºC. The IPCC Special Report on Global Warming of 1.5 Degrees provides an illustrative pathway of what it will take to limit warming to 1.5ºC without reliance on unproven negative emissions technologies. In that case, oil declines by 37% and gas by 25% by 2030, compared to 2010 levels. Will BP commit to phase down its production at a commensurate or faster pace?
Sources: Rystad Energy, IPCC, Oil Change International analysis*
*Notes: Based on BP’s projected production on an equity basis, including BP’s Rosneft segment and assets in which it has minority interests. The rate of oil and gas decline is taken from the P1 illustrative pathway included in the IPCC Special Report on 1.5C. This pathway is used because it does not rely on unproven negative emissions technologies (bioenergy with carbon capture and storage).
What We’re Tracking
Trends in the Right Direction
Teck Frontier mega tar sands mine proposal dead
In an 11th-hour move, Teck Resources pulled its application for the largest tar sands mine proposal in Canadian history. The Canadian government was expected to make a final decision on the project this week, but was facing powerful frontlines, First Nations, national, and international opposition to the project. Indigenous Climate Action reacted to the win: “Teck withdrawing its application for the Frontier tar sands project, the largest ever proposed open pit mine, is a win for Indigenous rights, sovereignty and the climate. The withdrawal is a signal that the antiquated fossil fuel economy is no longer viable even despite the political backing and support. Our communities need a just transition, not more fossil fuel resource extraction. We need to be in charge of our own futures, lands, and job opportunities that work to solve the climate crisis, address inequality, and respect our rights and sovereignty as Indigenous Peoples.”
The Guardian bans fossil fuel advertising
The Guardian is taking precedent setting action by banning advertisements from the fossil fuel sector. The ban reflects the role the oil, gas, and coal industries have in undermining climate action. Acting CEO, Anna Bateson notes: “[O]ur decision is based on the decades-long efforts by many in that industry to prevent meaningful climate action by governments around the world.”
New York City bans new fossil fuel projects
In another type of ban, New York City mayor Bill de Blasio announced a pending executive order to ban all new fossil fuel projects within and serving the city on climate grounds. NYC marks the biggest municipality to date to take such action, but there is little doubt that this is a trend that is quickly picking up speed as municipalities take climate leadership into their own hands.
Royal Bank of Scotland (RBS) to ban financing for oil and gas exploration projects and align with Paris Agreement
The Royal Bank of Scotland’s CEO Alison Rose announced a new set of commitments to align its business with the Paris Agreement and reduce finance for fossil fuels, marking a remarkable turnaround for a bank which previously marketed itself as the oil and gas bank. Two specific policies stand out: First, the decision to prohibit project financing for fracking and oil and gas exploration highlights that the finance sector is increasingly grasping the scientific reality that oil and gas exploration is unacceptable. Second, the commitment to “withdraw support from non net zero aligned activity in the coal, oil and gas sectors, if they do not have credible transition plans in line with the Paris Agreement in place by end of 2021” presents a robust challenge to the fossil fuel companies, none of which have so far gone beyond vague targets to present a credible transition plan. RBS’s move will no doubt put pressure on other banks to also pull finance from oil and gas, particularly Barclays, which faces a shareholder resolution on the topic at its Annual General Meeting in May.
Fossil fuels now in “Death Knell” phase
Mainstream financial commentator Jim Cramer made waves early this month by stating he is “done with fossil fuels” and that they are in a “death knell” phase. This marks a new degree of mainstreaming the financial risks faced by the sector in an era of climate emergency.
Equinor pulls out on plan to drill for oil in the Great Australian Bight
In a major campaign win in Australia, Equinor announced it would not be proceeding with plans to drill for oil in the Great Australian Bight. Greenpeace Australia Pacific’s CEO called the decision an “incredible win for people power and nature,” in The Guardian.
Removing fossil fuel production subsidies key to climate action
A recent commentary in Nature reasserts why the removal of fossil fuel production subsidies is critical for effective climate action. The paper (lead author: Pete Erickson from the Stockholm Environment Institute) concludes that “Rapid low-carbon transitions consistent with the guardrails of the Paris Agreement require dramatically reduced fossil fuel production. Subsidies to fossil fuel companies pose formidable financial, institutional and political obstacles to this transition, impeding the efficacy of greenhouse gas emission reduction strategies.”
Calls grow for a Fossil Fuel Non-Proliferation Treaty
A group of thought leaders are calling for a Fossil Fuel Non-Proliferation Treaty to limit the continued expansion of oil, gas, and coal production and begin a managed decline in line with meeting the 1.5ºC Paris Agreement limit. The call reflects growing momentum for bold policy and diplomatic initiatives that reflect the scale and urgency of the global climate emergency. More detail can be found fossilfueltreaty.org.
The Financial Times leans into the end of oil
The Financial Times kicked off the month by estimating the USD 900 billion risk of stranded assets if fossil fuel companies move to comply with the Paris Agreement. In an analysis that corroborates analysis by various GGON members, the FT also points out the degree to which fossil fuel reserves outweigh carbon limits. This was followed by a feature story entitled, “Can the world kick its oil habit?”, noting that the fossil fuel has become “politically toxic.” On the same day, the editorial board noted that Big Oil faces an “existential crisis” in its analysis of the BP climate plan.
Bloomberg takes on an evolving discussion on stranded assets
Bloomberg now plays host to a bi-weekly column on stranded assets written by financial journalist and climate consultant Kate Mackenzie. In her first column she explores why Blackrock’s big move is a start, but that arbitrage is not an effective long term strategy for confronting the climate crisis. Her second column looks at the role of sovereign debt in the era of climate emergency and why it is emerging as a focal point for climate activism.
What is the role for OPEC in the “last generation of oil”?
A new book examines the role of OPEC in the new energy order. Greg Muttitt is a contributing author and his chapter explores potential roles for OPEC in a climate constrained world. Muttitt argues that OPEC can choose “between passively accepting decline versus actively managing and owning it,” and that “OPEC once again as an opportunity to lead.”
Wet’suwet’en against a fracked gas pipeline built at gunpoint
Building on a long history of militarized police brutality against Wet’suwet’en and other Indigenous nations, the federal Royal Canadian Mounted Police (RCMP) recently began enforcing a B.C. Supreme Court order to make way for construction of the fracked gas Coastal GasLink Pipeline. This has sparked a powerful wave of Wet’suwet’en solidarity protests that included rail blockades across the country. In the midst of this, a breaking news story revealed that a federal government Crown corporation — Export Development Canada (EDC) — listed the Coastal GasLink Pipeline as a ‘project under consideration’ for financing. EDC has a track record of providing public finance for projects that violate Indigenous rights and push past global carbon budgets — they were a key backer of the Canadian government’s TMX pipeline buyout too. If you are looking for good explainers on the conflict, we can recommend this piece in Maclean’s, this article from First Peoples Law, and this comprehensive compilation of resources. The Wet’suwet’en Supporter Toolkit also provides a list of ways to support the ongoing resistance.
Allen: La planta de YPF, un vecino molesto y peligroso — Argentine communities demanding justice in the face of fracking expansion
Rapid fracking expansion in Allan, Rio Negro as part of the Vaca Muerta mega project is having devestating impacts on the local community. An in depth article (in Spanish) by Observatorio Petrolero Sur outlines the impacts of the expansion on the local economy and how local people and authorities are stepping up to demand justice.
African civil society calls for an end to fossil fuel development
African civil society groups issued a powerful declaration calling on African governments to “put an end to fossil fuel development; to manage the decline of existing production of oil, gas, and coal; and to rapidly initiate a transition to clean and safe renewable sources of energy that fully supports access to energy for those who currently lack it.” The declaration is a wake up call to export finance agencies and that despite what African politicians may say, communities do not want these oil and gas projects.
Nobel Laureates call on Canadian government to #RejectTeck
42 Nobel Laureates from across various disciplines wrote to Canadian Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland calling on them to reject the proposal for the Teck Frontier tar sands mine. The letter states: “Projects that enable fossil-fuel growth at this moment in time are an affront to our state of climate emergency, and the mere fact that they warrant debate in Canada should be seen as a disgrace.” Shortly after, Teck Resources withdrew its application for the tar sands mine.
G20 funnelling 30 billion to fossil fuel projects annually through ECAs
G20 countries continue to undermine their own climate commitments by providing financing of USD 30 billion per year to fossil fuel projects through government-backed Export Credit Agencies (ECAs).
UK undermining climate action with fossil financing abroad
A Global Witness report found that public funds from the UK amounting to USD 750 million have been used to fund fossil fuel development in African countries. According to report author, Adam McGibbon, “[i]t flies in the face of claims by the UK government, ahead of hosting a major UN climate summit this year, that the UK is a global leader in fighting climate change.”
California facing unprecedented clean-up costs
Like other major fossil fuel producing regions, California is facing massive costs for decommissioning old oil and gas infrastructure. A Los Angeles Times investigation points out that industry has given the state USD 110 million for onshore well decommissioning, while actual clean up costs are estimated at around USD 6 billion (not to mention billions more for offshore decommissioning).
Financial exodus from the tar sands
The New York Times published the latest on the financial exodus from the Canadian tar sands. This leaves Canadian financial institutions increasingly exposed as global players head for the door.
The Financial Times reviews the future of oil
The FT is questioning how the world will kick its oil habit despite growing demand. In a wide-ranging article, the article notes that the fossil fuel has become politically toxic. In the same edition, the paper’s editorial notes that “Big Oil, often seen as the villain in the climate change debate, faces an existential crisis.”
TransMountain costs soar
The costs of the TransMountain pipeline expansion project are soaring, leaping from an originally estimated cost of CAD 7.4 billion to 12.6 billion. The project was purchased last year by the Canadian government after owner Kinder Morgan deemed the project too risky given mounting opposition. The purchase was widely ridiculed given the government’s declaration of a climate emergency days earlier, and is clear evidence indicating that the project is not financially viable.
Canada’s federal fossil fuel subsidies in 2020
A new report from a coalition of Canadian NGOs finds that fossil fuel subsidies in Canada “reached at least CAD 600 million in 2019,” without including “potential subsidies related to the TransMountain pipeline and expansion.” The report also finds the subsidies increasingly go towards fossil fuel production and transportation infrastructure. It confirms that these subsidies continue to undermine climate commitments.
Reinstating the U.S. crude export ban would lead to massive emissions reductions
A new briefing from Oil Change International and Greenpeace USA finds that reinstating the U.S. crude oil export ban could lead to reductions in global carbon emissions by as much as 73 to 165 million metric tons of CO2-equivalent each year — comparable to closing 19 to 42 coal plants.
Gas is a bridge to climate chaos
In a message that bears repeating, Food and Water Watch published a new report outlining the devastating impacts of fracking on communities and the climate. The report confirms that gas is not a bridge fuel and that, “Only a dramatic economic reorientation to 100% renewable energy can stave off climate catastrophe.”
New Mexico’s oil and gas could cook the climate and make a mockery of climate goals
A new briefing finds that the U.S. state of New Mexico’s share of the Permian Basin could add a staggering amount of emissions to the atmosphere by 2030 unless action is taken to constrain oil and gas production. Released by Oil Change International and New Mexican partners during a press conference at the state’s capitol building in Santa Fe, the analysis found that fossil fuel production in the New Mexican Permian could grow another 85% by 2030, and that emissions from burning New Mexico’s oil and gas in 2030 could amount to over 10 times the governor’s stated emissions goals for the entire state in that year.
Methane emissions from Oil and Gas have an even larger impact on climate change than previously thought
New research published in Nature suggests methane emissions from oil and gas may be far higher than previously thought, and that the industry is once again attempting to absolve itself from its current and historical responsibility of fueling the climate crisis.