Research from the Institute for New Economic Thinking has found that more than 60% of top oil, gas, and coal companies are not on track to reach the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius.
The report also found that between 2014 and 2020, fossil fuel sectors exceeded the overall production budget set in order to limit warming by 64% (oil), 63% (gas), and 70% (coal). The study explores how, despite net-zero targets announced by some companies, most of their actions currently do not fall in line with the set goals. Despite some countries beginning to phase out fossil fuel development, these findings show that the fossil fuel industry remains a major obstacle to decarbonization and meeting international sustainability targets.
The research project emphasized how to best track fossil fuel companies’ actions to hold them best accountable. Researchers suggested applying more rigorous approaches than the Science Based Targets initiative and instead used publicly available data from the Climate Accountability Institute in order to address a larger number of companies. The study evaluated the 142 largest coal, oil, and gas producers against four possible emission-lowering pathways.
Along with most companies falling short of alignment with the Paris Agreement goals, production increases of up to 68% (coal), 42% (oil), and 53% (gas) above their cumulative production budgets are expected.
The study found that three companies, based in Australia, were far off track, including Woodside Energy exceeding coal production budgets by 232%. Santos oil was also found to be over production budgets by 28% and Santo gas by 33%. Despite most companies’ shortfalls, the study found one company to be on the right path. BHP had actually reduced its coal, oil, and gas production by more than required for the 1.5-degree scenario.
The study promotes its method as a pathway for developing standards, regulations, and guidance on how companies may align themselves with the Paris Agreement. Companies may use the study’s method to assess how much carbon capture and storage would be needed in order to meet the 1.5-degree goal.
“Allocation methodologies are fundamental for tracking progress, assigning responsibilities, and examining financial risks of inaction,” said the report. “For companies in particular, this information is crucial for stakeholders to assess investment risks and make informed and climate-safe decisions.”
