THE BIG PICTURE
November’s global climate summit in Glasgow, Scotland, less than 90 days away, will reveal a lot about the sincerity of countries’ and companies’ net zero or other climate pledges. For example, will they heed the science, recently underlined by the International Energy Agency (IEA), that new fossil fuel extraction projects are incompatible with limiting global warming to 1.5 degrees Celsius (ºC)?
In response to public pressure, the Canadian province of Québec recently showed this type of leadership, rejecting a CAD 14 billion LNG project that would have enabled exports of fracked fossil gas from British Columbia and Alberta to international markets.
For this year’s COP26 host, the UK, the verdict is still out. Will the government approve plans by Shell and Siccar Point Energy to develop a major new offshore oil field that would lock in more global heating? If the government fails to do the right thing, campaigners vow to take it to court.
The Stop the Money Pipeline coalition has set Deadline Glasgow” for Wall Street financial institutions to back up their shiny new climate pledges with substance – including by immediately ending support for any project or company expanding the extraction, production or transportation of oil, gas or coal.
The verdict has long been decided when it comes to major oil and gas companies: The industry most responsible for the climate crisis will not be part of the solution to it.
ExxonMobil and Shell proved this point again over the past month. An Exxon executive was caught on video admitting to the company’s role in fueling climate denial and faking support for climate action. Shell announced that it will appeal a Dutch court ruling mandating that the company align its business plans with a 1.5ºC pathway, despite Shell’s claim to support that goal. As civil society groups worldwide have said, big polluters have no place being at COP.
– The OilWire Team
THE DATA
Step Off the Gas, a report recently released by the International Institute for Sustainable Development (IISD), shows that public finance from G20 countries and multilateral development banks is locking Global South countries into fossil gas dependence.
Gas projects received an average of nearly USD 16 billion in international public finance per year from 2017 to 2019. This is more than any other source of energy and four times as much as wind or solar.
Source: Greg Muttitt et. al., Step Off the Gas: International public finance, natural gas and clean alternatives in the Global South, IISD, June 2021.
WHAT WE’RE TRACKING
Trends in the right direction
Greenland bans oil and gas exploration
Greenland joins the growing list of jurisdictions committing to end new licenses for oil and gas exploration, citing climate and environmental concerns. There are an estimated 18 billion barrels of oil off of Greenland’s west coast, though the recent oil price crash has rendered offshore drilling less economically viable. The announcement comes as Greenlanders face increasingly alarming impacts from the climate crisis, including significant glacial melt and sea level-rise. The Greenlandic socialist-led government, in power since April, aims to prioritise climate action and protect nature and fisheries by focusing on sustainable alternatives.
Quebecers celebrate government’s rejection of LNG project
After more than three years of campaigning and mobilisation from Quebecers, the Quebec government has announced that it will reject the GNL Québec project. The proposed LNG project, consisting of a 750km pipeline, a gas plant, and an export terminal, would have generated 7.8 million tonnes of greenhouse gas emissions and threatened over 30 vulnerable and endangered species. The first protests were organised by frontline activists from the Innu Nation in 2017. Since then a number of other First Nations and local organisations, academics, scientists, students, and health professionals have all taken a stand against the project. It faced 90% opposition during a public consultation, and a petition against it gathered more than 120,000 signatures.
US county becomes first to ban new fossil fuel infrastructure
Whatcom county, in Washington State, has become the first county in the US to ban new fossil fuel infrastructure. In a unanimous decision, the county council passed a measure that bans the construction of new refineries, coal-fired power plants, and other fossil fuel infrastructure, and will make it harder to expand existing infrastructure. The county currently hosts two major oil refineries, overseen by BP and Phillips66, that refine much of the Canadian and Alaskan oil that supplies the US west coast. The result comes after a lengthy battle over the impact of oil refining on local communities, which saw the fossil fuel sector make many attempts to block restrictions. Organisers hope these restrictions will help to catalyse action in other jurisdictions and at the federal level to limit fossil fuel supply.
Axa is latest institution to reject East Africa Crude Oil Pipeline
In a recent statement, French insurance company Axa SA confirmed it will not be involved in the East Africa Crude Oil Pipeline (EACOP) as it was not compatible with their climate commitments. The controversial pipeline has faced heavy opposition from local communities in Uganda and Tanzania and the international #StopEACOP Alliance, which coordinated a letter in March from 250 civil society organisations urging banks and insurers to boycott the project. Axa is the latest in a series of financial institutions announcing they will not finance EACOP.
Campaign news
New evidence ties Big Oil companies to illegal fracking waste dumps in Argentina
July brought a major breakthrough in the criminal investigation of toxic fracking waste dumps in Vaca Muerta, Argentina. The Argentine Association of Environmental Lawyers provided new and convincing evidence that proves the involvement of the State of Neuquén and Big Oil companies (Shell, Chevron, the Argentine YPF, and others) in the violation of the laws related to the treatment of toxic waste. This new information is based on the report La basura del fracking en Vaca Muerta, prepared by OP SUR, Taller Ecologista, and La Izquierda Diario based on a request for access to information submitted by Congressman Andrés Blanco. This report was presented in the framework of a public hearing, which you can access here. The court case was filed in December last year.
DRC activists call for a fossil-free Virunga in new film
Climate activists in the Democratic Republic of Congo (DRC) have released a short film calling for an end to oil exploration in Virunga National Park. The film, “Fossil Free Virunga,” was released by 350Africa.org. It responds to the DRC government’s plans to issue a new series of oil permits in the protected area, highlighting the adverse impacts of exploration on communities and the environment. Sign the petition to support their call to action.
Insurance companies face growing pressure to phase out oil and gas support
The Financial Times reported last month on the growing pressure that climate campaigners, led by the Insure Our Future campaign, are mounting on the insurance industry to phase out support for the fossil fuel sector as a whole. For some time, the insurance industry has recognised the climate and reputational risks associated with coal – around 30 insurers have set out policies on reducing coal exposure in their underwriting. The controversial Trans Mountain tar sands pipeline in Canada has become a test case in challenging the industry’s support for oil and gas. Civil society scrutiny has already driven up insurance costs and, as of this week, led 15 companies to steer clear of the project. With Trans Mountain’s current insurance policy due to expire imminently, insurers will decide in August whether to face the reputational risk of continuing to underwrite the project.
Export Development Canada’s new climate targets fail to phase out fossil fuels
Export Development Canada (EDC) is currently the largest investor in fossil fuels among G20 export credit agencies, averaging CAD 12.9 billion a year in oil and gas support from 2018-2020. Unfortunately, new climate targets released by EDC in late July provide no guarantee of a swift phase-out of fossil fuel finance, despite the IEA’s findings that any new fossil fuel supply investment is incompatible with 1.5°C. EDC’s pledges – to reach net zero emissions by 2050 and reduce support for carbon intensive sectors by 40% below 2018 levels by 2023 – would allow it to continue funneling billions into carbon-intensive sectors this decade.
New campaign exposes methane leaks across European gas infrastructure
On June 24, Clean Air Task Force (CATF) launched its optical gas imaging campaign in the European Union, #CutMethaneEU. Their goals are to expose the scale and impact of methane leaks from oil and gas infrastructure across Europe and put pressure on the European Commission to act. Methane, which is unregulated in the energy sector in the EU, is 80 times more potent than CO2 during its first 20 years in the atmosphere. CATF’s infrared cameras found methane issuing into the atmosphere at 123 oil and gas sites across Europe. Laws to require companies to monitor and report methane emissions and repair leaks have been proposed in the EU this year.
More than 500 groups urge US and Canadian policymakers to reject CCS
More than 500 organisations signed open letters urging political leaders in the US and Canada to take meaningful action on climate by rejecting CCS as a “false solution.” Published via full-page ads in the Washington Post and Ottawa’s Hill Times, the letters argue that CCS is dangerous, expensive, and unproven at scale, and that relying on CCS imposes risks on frontline communities and delays the transition off of fossil fuels. Many high-polluting corporates have recently published climate targets that rely heavily on offsets instead of transforming their business models. British Airways operator International Airlines Group and Italian oil firm Eni alone could use up to 12% of the world’s total available nature-based offsetting capacity if their plans are realised. The letters call for an end to public support and financial incentives for CCS, and instead for direct action to leave fossil fuels in the ground.
More headlines
UK oil company sues Italy over offshore drilling ban
The Italian government could be forced to pay millions of pounds in damages to a UK oil company over a ban on new drilling near its coast, due to controversial rules within the European Union’s Energy Charter Treaty (ECT). In response to public pressure, the Italian parliament instituted a ban on oil and gas projects within 12 miles of the Italian coast in 2016. British company Rockhopper Exploration, which had bought a drilling license off of Italy’s Adriatic coast, is now seeking “monetary damages” through the ECT’s investor-state dispute settlement (ISDS) mechanism. ISDS enables private companies to litigate against national governments to recover foregone profits in response to alleged ‘discriminatory practices,’ which can include protective climate and environmental regulations. Climate activists and some EU politicians are calling on member governments to quit the ETC unless provisions that threaten climate action are removed.
Canadian university suspends oil and gas engineering program
The University of Calgary, located in Alberta, Canada, the site of massive tar sands extraction, has announced it will be suspending admissions of new students to its undergraduate program in oil and gas engineering. After more than two decades of high demand, the university has seen a marked decline in interest, with students recognizing the oil and gas sector’s downturn and the need to transition to renewable sources.
Indigenous communities demand justice and protection after 50 years of oil exploitation in the Peruvian Amazon
UN Special Rapporteurs focused on human rights, Indigenous rights, and toxic waste are calling on the Government of Peru to hold oil companies accountable for decades of damage to the environment and Indigenous communities. Pluspetrol Norte S.A. has discharged 1.67m barrels of toxic water from production in the Loreto oil fields and is responsible for 94% of the oil spills in the Peruvian Amazon in the past 14 years. By liquidating its Peruvian operations, Pluspetrol is now seeking to avoid responsibility for the destruction it has caused, following in the tracks of Frontera Energy and Occidental. Meanwhile, impacted Kichwa, Quechua, Achuar, and Urarina communities lack adequate sanitation, drinking water, and health infrastructure. The UN officials call on the Government of Peru to ensure the rights of its people, take measures to protect the environment, and hold to account those who have violated environmental laws.
Industry news
What happens if oil majors sell USD 140 billion in assets?
As publicly listed oil and gas companies come under increasing pressure to align with the low carbon transition, they are looking to sell billions of dollars worth of assets to raise cash and avoid reputational risk and stranded assets. The total value of disposals stood at USD 140 billion in mid-July. The Financial Times digs into who the buyers could be – smaller private companies, independent operators backed by private equity, energy traders, and state-owned companies – and the consequences of production shifting to entities with less public scrutiny or accountability. But the full picture remains uncertain. Not all assets may sell – there are currently more assets than buyers. The reallocation of capital by international oil companies (IOCs) could have ripple effects throughout the market, given IOCs often operate joint ventures with state-owned companies.
Chevron’s flagship CCS project fails to deliver on emissions target
Chevron conceded last month that its major CCS project at the Gorgon LNG facility in Australia has failed to meet a five-year target for capturing and storing carbon. The flagship project, which had received AUD 60 million in funding from the Australian government, has faced numerous challenges and technical setbacks. The facility breached its annual CO2 emissions limit in the two most recent years for which data was available, and now may deliver on just 30% of the sequestration mandated during its first five years of operation. Campaigners are calling for Chevron to be heavily fined. Former oil and gas industry executive Ian Porter stated: “it is reckless and disingenuous for the industry to keep pretending that it can expand operations and reach net zero.”
Shell is forced to address Nigerian oil spill case in UK courts
Shell is being sued over an oil spill in Nigeria in a major lawsuit brought by thousands of Nigerians. In a precedent-setting legal ruling earlier in the year, the UK supreme court ruled that Shell’s parent company was responsible for the actions of its Nigerian subsidiary and could be sued in UK courts. The company recently abandoned its latest attempt to block the UK high court’s review of the case. This likely means more documents about Shell’s activities in Nigeria will be made public. While this is a significant win, affected communities continue to experience contamination of land and waterways with no commitment to a clean-up.
BHP Group considers divesting from oil and gas
The world’s largest mining company, BHP Group, is considering its options for exiting from oil and gas. The company is looking into selling now in order to minimise future losses on its assets. Unlike rival Anglo American, BHP continues to own coal mines; it had explored sale options but aborted after bids for its Australian mines came in lower than expected last year.
Oil and gas companies pitch ‘greener’ or ‘carbon neutral’ LNG
While US gas producers attempt to market gas dubiously certified as ‘low-emissions’ or ‘responsibly produced’ to buyers at a premium price, oil majors like BP and Shell are touting their deals to ship ‘carbon offset’ or ‘carbon neutral’ LNG. Yet, there is no agreed upon global standard for quantifying what counts as lower emissions. In the case of BP and Shell, these companies are relying on offset schemes rather than reducing the emissions impact of the LNG being delivered. All in all, these schemes add up to greenwashed LNG rather than ‘greener’ LNG.
RESOURCES
Confronting the Myth of Carbon-Free Fossil Fuels: Why carbon capture is not a climate solution
This report from the Center for International Environmental Law (CIEL) examines how CCS and CCUS technologies are not only unnecessary for the rapid transformation required to keep warming under 1.5°C but how they delay that transformation, providing the fossil fuel industry with a license to continue polluting. CIEL also developed a short, two-page version in collaboration with frontline communities in Louisiana.
How Subsidies Aided the US Shale Oil and Gas Boom
This study from the Stockholm Environment Institute provides one of the first estimates of the extent to which federal government policy – in the form of three tax incentives – increased the expected value of investments in new unconventional oil and gas developments in the US over the last two decades.
LNG Industry Plans to Capture Carbon
A briefing from Global Energy Monitor examines the role of CCS in the US gas sector, and the way in which it has become a key part of industry claims for “green LNG,” “carbon neutral LNG,” and “net-zero LNG.” Gas industry CCS plans often do not hold up to scrutiny, amounting to greenwashing. Further, even if CCS is applied to LNG export facilities, it would capture only a small fraction of the total life-cycle emissions occurring from the extraction, transport, and use of natural gas.
Pipelines or Progress: Government support for oil and gas pipelines in Canada
A new report from IISD documents CAD 23 billion in support over the past three years that Canadian governments have put towards fossil fuel pipelines (Trans Mountain, Keystone XL, and Coastal GasLink). Of this, CAD 10 billion was provided during the pandemic alone. The report finds that project finance is increasingly being provided by governments, creating financial risk for taxpayers on projects that may never be able to recoup costs. Many of the documented support measures qualify as fossil fuel subsidies under international definitions, but calculating their full value is impossible due to a lack of government transparency.
Hijacking the Recovery through Hydrogen
The campaign for fossil free politics has released this report looking into how the oil and gas industry has captured EU recovery funds through its push for hydrogen. The findings of the report show that industry has been aggressively lobbying at the national and EU level not just for ‘green’ hydrogen and biomethane but also for ‘blue’ hydrogen and CCS. And despite the Commission appearing to exclude them from EU recovery funds, there are still other European and domestic funds available to support these fossil fuel projects.
FracTracker: Updated National Energy and Petrochemical Map
FracTracker just released an updated National Energy & Petrochemical Map. This interactive map offers an extensive view of current energy and petrochemical infrastructure in the US.
Banking on Amazon Destruction
In Amazon Watch and Stand.earth’s latest report, Banking on Amazon Destruction, researchers compare the Environmental and Social Risk (ESR) policies of target banks to their actions. The report found that banks investing in Amazon oil are failing their own ESR commitments and remain highly exposed to risk related to fueling corruption, human rights violations, and environmental harms. Authors call on banks to exclude all types of finance (including investment) for any company engaging in the oil industry in the Amazon, setting markers to end new financing by 2022 and existing financing by 2025.
A Hot Fracking Mess: How the lack of regulation of oil and gas production leads to radioactive waste in our water, air, and communities
This report from the Natural Resources Defense Council sets out the risks associated with oil and gas production to communities and the environment. Despite these risks being well proven, the US continues to lack federal regulations governing the handling and disposal of radioactive waste and materials generated from these activities. To protect public health and communities from the dangers of radiation, the US Congress must close federal gaps, states should enact their own comprehensive regulations, and the oil and gas industry must provide worker and community protections.