THE BIG PICTURE

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In April, two more jurisdictions joined the growing list taking action to phase out oil and gas production. Spain’s Congress approved a new climate law that bans new licenses for oil and gas exploration and extraction as well as fracking, while California’s Governor announced that his state will end all oil extraction no later than 2045. While California’s new measures are not fast or comprehensive enough, they make the U.S. state the world’s largest oil producer to set a phase-out date.

The “Climate Leaders Summit,” hosted last month by U.S. President Joe Biden, would have been a prime opportunity for wealthy, significant oil and gas producing countries – like the United States, Canada, United Kingdom, and Norway – to step up with their own commitments to stop expanding extraction and help finance an equitable fossil fuel phase-out.

Instead, the U.S., Canada, Norway, Qatar, and Saudi Arabia formed the “Net Zero Producers Forum” as a vehicle to “develop pragmatic net-zero emission strategies.” These countries should be talking about the climate harm of their oil and gas production. Together they account for 40 percent of global production and are among the countries on track to increase production the most to 2030 (as shown in the next section). Unfortunately, the framing and initial objectives of the forum appear more focused on fixes to make oil and gas production slightly less dirty, rather than on substantive measures to keep oil and gas in the ground.

Issues like methane abatement and economic diversification need to be addressed urgently and warrant strong global collaboration. But, as U.S. National Climate Strategist Tamara Toles O’Laughlin put it, “This forum will only be useful if it leads to a transparent, fair, and accelerated phaseout of fossil fuel production … Otherwise, this is next level greenwashing from some of the world’s largest polluters.”

–The OilWire Team

 

THE DATA

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In April, the Stockholm Environment Institute published new data on trends in fossil fuel production. The figures below show the 15 countries on track to increase annual oil and gas production the most to 2030 (compared to 2019 volumes).

The U.S. is projected to add the most to global oil and gas supply by far. More than two-thirds of increased oil and gas volumes globally would come from “onshore unconventional” drilling (shale produced via fracking), largely in the U.S., Canada, and China. 

While the majority of production increases would come from countries already among the largest producers, there are a few exceptions. Guyana and Mozambique could see the sixth largest increases in oil and gas production, respectively.

Top 15 countries by largest projected increases in oil and gas production, 2019 vs. 2030


Source: Ploy Achakulwisut and Peter Erickson, “Trends in fossil fuel extraction: Implications for a shared effort to align global fossil fuel production with climate limits,” SEI working paper, April 2021.

 

WHAT WE’RE TRACKING

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Trends in the right direction

 

Spain is latest ‘first mover’ to end oil and gas expansion
The Spanish Congress approved the country’s first comprehensive climate law last month, sending it for expected final approval by the Senate. The law will add Spain to the growing list of countries, including Costa Rica, Denmark, France, New Zealand, and Ireland, taking action to ban new licenses for oil and gas exploration and extraction. Under the law, licenses already in force will have to stop production by the end of 2042, while licenses in the application stage could produce through 2050.

California commits to oil phase-out, fracking ban – but not soon enough
At the end of April, California Governor Gavin Newsom issued an executive order that initiates processes to end the issuance of new fracking permits by January 2024 and to phase out oil extraction in the state by 2045. This move is both historic – making California the largest oil producer to date to commit to phasing out extraction – but also insufficiently fast and bold, especially for communities on the frontlines of neighborhood drilling. Environmental justice, public health, labor, and climate organizations across California are calling on the Governor to both speed up his timeline and prioritize environmental justice by creating minimum 2,500-foot health and safety buffer zones between drilling activity and homes, schools, and other sensitive sites.

Natixis joins lists of banks with exclusions on Amazon crude oil 
In the wake of a report released last year by Stand.earth and Amazon Watch on the financing of Amazon oil by European banks, a number of financial institutions have introduced exclusions in the region, including Rabobank and UBS. Natixis recently joined this group, becoming the only bank to officially exclude all Ecuadorian oil and gas in its new policy. It has committed to end all trade financing of Ecuadorian oil by April 2022.

More banks rule out finance for East African Crude Oil Pipeline
If it goes ahead, the planned East African Crude Oil Pipeline (EACOP), led by Total, would run almost 1,500 kilometres from Tanzania to Tanga, representing the longest electrically heated crude oil pipeline in the world. While Total recently signed agreements to go ahead with construction alongside Uganda, Tanzania, and China’s CNOOC, it does not yet have all its financing, and a growing number of institutions are ruling out support for the project. In April, French media reported that BNP Paribas, Société Générale, and Crédit Agricole have decided not to finance the project, joining Barclays, Credit Suisse, and ANZ, which had already ruled out financing. Additionally, as a consequence of its new policy to end public finance for fossil fuel projects overseas, the UK has confirmed it will not finance EACOP.

German Greens call for supply-side measures to limit fossil fuel production 
As part of their election manifesto, the German Green Party has called for an end to oil and gas exploration and production. They are advocating for “an end to the extraction of fossil fuels,” stating, “In the German Exclusive Economic Zone (EEZ), we want to implement an immediate stop to new oil and gas drilling and an end to production by 2025. At European and international level, we advocate an end to oil and gas production in the entire North Sea and Baltic Sea.”

 

Campaign news

 

Legal opinion puts governments ‘on notice’ over export finance for fossil fuels
A new legal opinion finds that export credit agencies (ECAs) – and the governments that oversee them – could be in violation of international legal obligations if they do not reduce their fossil fuel finance. The opinion was commissioned by Oil Change International and written by Professor Jorge E Viñuales from the University of Cambridge and Barrister Kate Cook of Matrix Chambers. Alongside its release, civil society groups sent letters to relevant officials in Australia, Canada, Denmark, France, Japan, the Netherlands, South Africa, Sweden, and the United States, putting them on notice “to develop a policy that puts an immediate halt to support for fossil fuel projects and associated infrastructure.” 

Health worker uprising puts brakes on fracking in Vaca Muerta
In Argentina’s Neuquén province, public health workers blockaded highways leading to fracking operations in Vaca Muerta for over three weeks last month, demanding fairer pay to keep up with high inflation. The unprecedented uprising disrupted drilling operations in the area, leading to a 10 percent drop in oil and gas production and forcing the government to the negotiating table. 

Some of the protesters linked their struggles on the frontlines of the COVID-19 pandemic to the health impacts brought on by oil exploitation. “We are a sacrifice zone and we know that well,” said Sol Martin, a representative of one of the workers’ groups. In a recent post, Observatorio Petrolero Sur documents the health troubles residents of one neighborhood have faced since oil company YPF started operations, describing the torture of living with noise, air pollution, explosions, heavy traffic, and spills that are making people sick.

Kavango oil drilling decried a ‘stupid bet’ as ReconAfrica announces find  
Canadian company ReconAfrica continues with exploratory drilling in the Kavango basin in northeastern Namibia, one of the fastest-warming areas on the planet. ReconAfrica and Namibia’s Ministry of Mines and Energy made a joint announcement in mid-April that the first of three wells confirmed there is a potential “working petroleum system.” In response, Namibian, South African, and international activists reiterated their opposition and urged investors to be skeptical of the company’s promises. Veruschka Dumeni of Friday’s For Future Windhoek said that ReconAfrica and its enablers in government “give no care to the fate of the environment and those who depend on it (locals and the eco-tourism industry). … [T]he greed of a few should not jeopardise the needs of the future.” South African climate scientist Bob Scholes, who recently passed away, warned the project is a “stupid bet” financially given “overabundant supplies” of fossil fuels “and an urgent need to reduce consumption.”

Biden challenged to lead on climate justice and fossil fuel infrastructure
The Biden administration is facing a number of tests to its commitment to tackle the climate crisis in a just and equitable way.

  • Last month, federal officials refused to shut down the controversial Dakota Access Pipeline, despite the project not having all the required permits as it undergoes further environmental review and in defiance of demands from Indigenous activists.
  • Indigenous and climate campaigners are also continuing to pressure the Biden administration to intervene and stop the construction of the Line 3 tar sands pipeline. Line 3 is being built in the U.S. state of Minnesota under Trump-issued permits despite ongoing protests, construction accidents, and pending lawsuits.
  • Pressure is also increasing on the administration to Stop Fossil Fuel Exports. A coalition of community leaders from the Gulf Coast launched this campaign effort with an open letter signed by over 200 organisations. Diane Wilson, a fourth-generation shrimper and environmental activist, also began a hunger strike, now one-month long, to protest an oil export dredging project in the Matagorda Ship Channel in Texas. Campaigners say the Biden administration can demonstrate meaningful leadership by using executive authority to stop new export facilities and reinstate the crude export ban.

Dalai Lama and Nobel Laureates urge cooperation to stop fossil fuel expansion
Just over 100 Nobel Laureates, including the Dalai Lama, multiple former presidents, and many of the world’s leading scientists, have written an open letter calling on world leaders to end the expansion of coal, oil, and gas and keep fossil fuels in the ground. The open letter calls for actions in line with the three pillars of the Fossil Fuel Non-Proliferation Treaty Initiative, now endorsed by 300+ organisations.

Sign on: Open letter from scientists, researchers, and academics calling for a Fossil Fuel Non-Proliferation Treaty 
Leading academics recently launched an open letter calling for a global mechanism to manage a just transition away from coal, oil, and gas. Already over 700 scientists, researchers, and academics have signed on calling for a Fossil Fuel Non-Proliferation Treaty. Read the letter and add your name here.

European activists challenge ‘clean gas’ narrative through April Fools AdHack 
On April Fools Day, activists in 16 European cities across ten countries launched a guerilla communication campaign on fossil gas, aiming to “help the fossil gas industry to finally tell the truth” on its polluting effects through prank billboards and bus ads. The campaign drew attention to the potency of methane in terms of atmospheric warming as well as the power of the European Gas lobby, which spends an estimated EUR 100 million per year. Get involved using the hashtag #CleanGasIsADirtyLie and check out some of the creative ads here.

 

More headlines

 

Asian Development Bank pushed to go fossil free during annual meeting
During its annual meeting last week, the Asian Development Bank (ADB) faced growing pressure to exclude new finance for fossil fuels as it revises its lending policy for the first time in a decade. During his remarks to the meeting, U.S. Climate Envoy John Kerry voiced his support for ending fossil fuel subsidies. As the bank’s meetings began, the Fossil Free ADB coalition and Oil Change International released a new briefing showing the ADB spent USD 4.7 billion financing gas projects in the region since the Paris Agreement was reached. Following the meeting, the ADB released its draft energy policy which ruled out coal finance and laid out stricter criteria for gas finance. Campaigners are calling on the bank to align its policy with the Paris Agreement and end all financing for fossil fuels.

Total ‘runs from responsibilities’ in pausing Mozambique LNG project
Total pulled its staff out of Mozambique at the end of April, halting construction of its massive LNG project in response to increasing violence in the Cabo Delgado province linked to fossil fuel development. In doing so Total declared “force majeure” to avoid liability for ongoing contracts. A statement released by the Mozambique group Justiça Ambiental! (JA!) and endorsed by other African and international NGOs underscores that this move allows Total to run from its responsibilities and slip out of obligations to subcontractors, who are mainly local. JA! urges that, “Total must stop the gas exploitation entirely, but it cannot slink away from the mess it has already made. It must take responsibility and provide reparations for all the lives destroyed, all the lands grabbed, and the livelihoods lost.”

Canadian regulators let Trans Mountain pipeline hide its insurers
At the end of April, the Canada Energy Regulator approved Trans Mountain’s request to hide the names of the companies providing insurance coverage for the existing tar sands pipeline, alleging that “ongoing targeting and pressure on those insurers to stop insuring the Pipeline are likely to result in material loss to Trans Mountain and its shippers.” Last year, three European insurers cut ties with Trans Mountain, and 11 insurers now have policies in place that restrict insuring the tar sands sector. Despite the secrecy ruling, a broad coalition of Indigenous communities and global environmental groups are planning to ramp up pressure on insurers that have not yet ruled out supporting Trans Mountain, starting with those that were named on the certificate of insurance in 2020, including AIG, Chubb, and Liberty Mutual.

Trans Mountain expansion could cost Canadians more than CAD 18bn
A recent study looking into the economic feasibility of the Trans Mountain tar sands pipeline expansion project, which the Trudeau administration bought in 2018, found no likely scenario in which it would be profitable. Weaker oil markets and strengthened climate commitments provide a less favourable backdrop and estimated construction costs have already doubled from CAD 5.4 to 12.6 billion. The study finds that the project could ultimately result in net costs to the Canadian public of CAD 11.9 billion under base case assumptions – or up to CAD 18.5 billion in the worst case.

UN methane report calls for urgent emissions cuts this decade
The United Nations Environment Programme and Climate & Clean Air Coalition published an assessment of rising methane emissions and mitigation strategies in early May. The report finds that methane emissions are rising faster than at any time since the 1980s. The report attributes 35 percent of global human-caused methane emissions to fossil fuels (23 percent to oil and gas and 12 percent to coal). It says a 45 percent cut in human-caused methane emissions by 2030 is needed to maintain a chance of staying under the 1.5°C limit, and that around half of this reduction should come from fossil fuels due to low or negative abatement costs. The further benefits of reducing methane include “preventing some 260,000 premature deaths and 775,000 asthma-related hospital visits annually, as well as 25 million tonnes in crop losses.” 

Industry news

 

‘Gas is the new coal’: USD 100bn stranded asset risk in the EU
Bloomberg reports that Western European companies are struggling to sell gas-fired facilities as the fuel falls out of favour with investors. The steep drop in the cost of renewable power generation has undermined the competitiveness of gas and demand is set to fall in a Europe that has committed to net-zero emissions by 2050. According to a new report from Global Energy Monitor, European gas expansion plans are inconsistent with the bloc’s stated climate goals and represent a potential stranded asset risk of around USD 100 billion.

Study: Oil majors will not voluntarily decarbonise in line with climate science
A new peer-reviewed study analysing the corporate behaviour of the largest investor-owned oil majors, BP, Shell, Exxon, and Chevron, finds it is unlikely they will voluntarily shift towards low-carbon technologies. Despite knowing for decades about the risks associated with burning the products they sold, they have continued to pursue strategies of distraction and delay, while lobbying governments for more favourable business environments. The four companies spent a total of USD 731 million on lobbying between 1998 and 2019. The study identified executive remuneration structures that incentivise continued extraction and exploration as one of the key dynamics that must be addressed. It recommends that policy and public pressure will be required in order to drive meaningful change at the companies.

Investors urged to vote down Shell and Total’s inadequate transition plans 
Shell and Total are putting their updated energy transition plans – both scored as insufficient in a recent Climate Action 100+ report – up for shareholder advisory votes at their upcoming annual general meetings (AGMs). Here is the state of play:

  • Sir Chris Hohn, founder of UK hedge fund The Children’s Investment Fund, warned that the credibility of climate-engaged investors is at stake if they vote for obviously inadequate plans.
  • In a recent letter, six environmental and shareholder groups urged investors to vote against Shell’s plan at their 18 May AGM. Thus far, London-based Sarasin & Partners LLP and UK local authority pension funds have both pledged “no” votes on Shell.
  • This week, 41 civil society groups in Nigeria wrote an open letter to the Archbishop of Canterbury expressing deep disappointment at the Church of England Pensions Board’s announced decision to support Shell’s plan.
  • In late April, nine groups also wrote an open letter to Total investors, urging them to vote down the company’s insufficient climate strategy at its 28 May AGM.

As the letters stress, neither company has provided specific targets for absolute reductions in Scope 3 emissions within the next 5 or 10 years whilst both continue to commit high levels of capex to upstream oil and gas and make dangerous bets on carbon capture and storage (CCS) and offsets.

Oil majors plan to profit from CCS – but depend on public subsidies
Oil giants including Exxon, Chevron, BP, Shell, Total, and Equinor have all announced plans to invest in new CCS projects over the past year. Oil companies have a long history of capturing and injecting carbon into the ground to maximise oil extraction through the process of enhanced oil recovery. The Wall Street Journal reports that companies are now banking on selling CCS capacity as a service to other businesses, particularly those in heavy industry, in order to generate new revenue streams. But, given the technology’s continued high costs, these companies are at present relying on public subsidies to jumpstart these ventures. As a case in point, this week the Dutch government committed USD 2.4 billion to a CCS venture led by Shell and Exxon.

Fossil fuel companies cut thousands of U.S. jobs despite billions in federal COVID relief
New research by BailoutWatch finds that the U.S. fossil fuel sector received more than USD 8.2 billion from federal COVID relief packages last year. Despite this, companies were not required to use this support to retain workers on their payroll and the sector cut almost 60,000 jobs.

 

RESOURCES

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ClientEarth’s ‘Greenwashing Files’ expose the industry’s misleading marketing
ClientEarth recently released The Greenwashing Files, an online resource highlighting how the advertising of some of the world’s biggest fossil fuel companies is misleading the public over climate change. Following their legal complaint against BP’s advertising in 2019, they have examined nine other major polluters, including: ExxonMobil, Aramco, Chevron, Shell, Equinor, Total, RWE, Drax, and Ineos. These companies have been presenting themselves as clean energy providers while they continue to double down on fossil fuels, diverging further from safe climate pathways. Explore the dossiers on each company.

Toxic Assets: Making polluters pay when wells run dry and the bills come due
The Center for International Environmental Law (CIEL) launched a new report examining the mounting environmental, social, and financial risks that the unmanaged shutdown of oil and gas wells poses to communities, governments, and investors. It argues that confronting the toxic pollution the industry leaves behind is critical to a just transition to a fossil-free future, and warns that the costs of closing down and cleaning up oil and gas production loom larger and closer on the horizon than previously thought.

How Canada Pays Polluters: Federal financial support for oil and gas in 2020 
A new report from Environmental Defence finds that Canada’s federal government provided or announced at least CAD 18 billion in support and subsidies for fossil fuel companies in 2020. Even that total is likely to be an underestimate, since there is a lack of public transparency from the government and oil companies on tax breaks and financial support. It has been more than a decade since Canada committed to ending subsidies for the fossil fuel industry, and yet little progress has been made.

2021 Pipeline Incidents Update: Safety record not improving
FracTracker periodically takes a deep dive into pipeline incidents that are reported to the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) to examine their impacts, understand the causes for the failures, and look for data trends. The map in FracTracker’s latest report shows 6,950 total incidents since 2010, or 1.7 per day. Pipelines are dangerous, in part because regulation around them is ineffective. The public needs better access to data regarding pipeline location in order to assess existing and incoming projects that threaten health and safety.

Fossil Fuel Racism: How phasing out oil, gas, and coal can protect U.S. communities 
A report released by Greenpeace USA, Movement for Black Lives, and Gulf Coast Center for Law & Policy summarises the latest science showing that every stage of the fossil fuel lifecycle releases harmful air pollutants that disproportionately harm Black, Brown, Indigenous, and poor communities in the U.S. A fossil fuel phase-out would help ensure that climate policy does not lead to pollution “hotspots” that delay or deny justice for environmental justice communities.

The Myth of Carbon-Free Fossil Fuels: Why carbon capture is not a climate solution 
As part of an Environmental Working Group series on “false energy solutions,” Dana Drugmand and Carroll Muffett of CIEL analyse the state of CCS, arguing that it should not be seen as a climate solution. They set out key technological risks and uncertainties and warn that CCS threatens to delay meaningful emissions reductions by perpetuating the notion of “climate-safe” fossil fuels.

Climate scientists: Concept of net zero is a dangerous trap
In The Conversation, three climate scientists set out their concerns with the concept of ‘net zero’ and its limitations. They warn against relying on the uncertain technologies of carbon dioxide removal and geoengineering, especially for corporations who use the notion as a “blank cheque” for continued extraction and habitat destruction. The article calls for an end to such delay tactics and for deep and immediate emissions reductions.

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