Oil and gas majors will need to cut their combined production by 35% if they are to align with the Paris Agreement's goals by 2040, a study by Carbon Tracker has uncovered.
In a report published today, the NGO said that there is “very little headroom“ for new fossil fuel projects because there are already enough planned to nearly meet demand in a 1.6ÀöC world.
It also found that none of the major oil and gas companies' emission targets are aligned with the Paris Agreement, despite public statements to the contrary.
ConocoPhilips faces a production cut of 85% if it is to align with the climate goals by 2040 – the largest output reduction of the firms studied – while ExxonMobil, the biggest oil major, needs a cut of 55%.
The industry is trying to have its cake and eat it – reassuring shareholders and appearing supportive of Paris, while still producing more fossil fuels, said report author, Mike Coffin, said.
“If companies and governments attempt to develop all their oil and gas reserves, either the world will miss its climate targets or assets will become 'stranded' in the energy transition, or both.“
Carbon Tracker analysed current and future oil and gas projects to identify which would be economical in a 1.6ÀöC world using the International Energy Agency's Beyond 2 Degrees Scenario (B2DS).
It found that Shell's portfolio is most aligned with the Paris Agreement, but that it still needs a production cut of 10% by 2040. Eni, Chevron, Total and BP require reductions of 40%, 35%, 35% and 25% respectively.
The analysis also factors in a relative shift from oil to gas, with average absolute carbon emissions reductions of 40% by 2040 required by the majors to stay within budgets.
Only Shell, Total and Repsol have targets that include scope 3 emissions created by burning their products, but even they have only pledged to reduce the carbon intensity of the energy produced, not overall production.
The findings come after the Intergovernmental Panel on Climate change warned that total carbon budgets to limit global temperature rises to 1.5ÀöC and 1.75 will be exceeded in 13 years and 24 years respectively under current trends.
Most fossil fuels must remain in the ground, yet companies and governments that grant them their licences are still intent on expansion, said Carbon Tracker founder, Mark Campanale.
It is now more urgent than ever that shareholders promote, then support, plans for the oil and gas sector to manage rapid decline in production.“
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