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Big Oil approves US$50b for new projects undermining UN climate goals

Big oil companies have agreed US$50 billion in projects since last year that wouldn’t be economically viable if governments adopt the Paris Climate Change Agreement.

The analysis showed that Royal Dutch Shell, BP, ExxonMobil and other firms’ development plans would not comply with the Paris Agreement 2015, which is aimed at reducing global warming to 1,5 degrees Celsius.

“Every oil major is betting heavily against a 1.5 degree Celsius environment and investing in ventures that are counter to the Paris targets,” co-author Andrew Grant, Barclays’ former natural resources analyst, said.

The UN-backed Paris Agreement, in which the governments agreed to cut greenhouse gas emissions enough to reduce global warming to 1.5 degree Celsius or 2 degree Celsius “well below” by the turn of the century, was supported by major oil and gas companies.

Researchers see 1.5 degrees Celsius as a tipping point for rapidly intensifying the impacts of climates such as rising sea levels, natural disasters, forced migration, poor harvests and deadly heatwaves.

In an analysis co-authored by former geologist Mike Coffin at BP, Carbon Tracker found that 18 newly approved USD 50 billion oil and gas projects could be left “far out of the money” in the lower carbon-intensive world.

The ventures include Shell’s LNG venture for Canada for 13 billion US dollars, an oilfield expansion in Azerbaijan for 4.3 billion US Dollars for BP, Exxon, Chevron, and Equinor, and a deepwater development in Angola for 1,3 billion USD for BP, Exxon, Chevron, Total and Equinor.

The study also estimated that petroleum and gas businesses risk “wasting” US$ 2.2 trillion in new projects by 2030, as governments introduce tighter greenhouse gas emission restrictions.

Previous reports by Carbon Tracker and other analysts on the consequences of climate change for oil and gas companies added to the surge of investment pressure on majors to show that their investments comply with the Paris targets.

Although individual companies, including Shell, BP, Total and Equinor, have increased expenditure on renewable energy and set carbon reduction objectives, they have been saying that they must continue to invest in new projects to meet future oil and gas demand as the Asian economy expands.

“ambition” Shell said in a statement that it set “in step with society as it steps towards achieving the goals of Paris.” to halve net carbon emissions by 2050 “As the energy system develops, so is our sector, to provide the mix of goods that our customers want,”

BP said that its low cost and low-carbon oil and gas strategy was consistent with the IEA and Paris agreement forecasts.

“All of this is aimed at evolving BP from oil and gas focused company to a much broader energy company so that we are best equipped to help the world get to net zero while meeting rising energy demand,” the company stated in a statement.

The requests for comment were not received by Exxon, Chevron, Equinor and Total.

Nonetheless, the new Carbon Tracker report stated that the major oil and gas companies spent at least 30 per cent last year in projects incompatible with the road towards reducing global warming to just 1,6 degrees centigrade.

“These projects represent an imminent challenge for investors and companies looking to align with climate goals,” warned the report.

Carbon Tracker’s estimates have been based on three scenarios developed under different warming pathways by the Paris-based IEA oil and gas supply models.

If the world wants to reduce warming by 1.5 degrees Celsius, the fossil fuels supply is likely to outstrip demand. The study suggests that the projects with the lowest production costs will be most competitive.

“Projects that break-even less than $40 per barrel and operate higher-cost projects risk creating stranded resources which will never produce enough returns,” the report said. “Oil demand can be met.

Benchmark crude futures traded on Thursday for approximately US$ 62 per barrel.

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