The bosses of some of the world’s biggest oil companies discussed adopting much more ambitious carbon targets at a closed-door meeting in Davos, a sign of how much pressure they’re under from activists and investors to address climate change.
The meeting, part of a World Economic Forum dominated by climate issues, included a debate on widening the industry’s target to include reductions in emissions from the fuels they sell, not just the greenhouse gases produced by their own operations, people familiar with the matter said on Wednesday.
The talks between the chief executive officers of companies including Royal Dutch Shell plc, Chevron Corp., Total SA, Saudi Aramco, Equinor ASA and BP plc showed general agreement on the need to move toward this broader definition, known as Scope 3, the people said, asking not to be named because the session was closed to the press. The executives didn’t take any final decisions.
Shell declined to comment. Media representatives for Chevron, Total, Aramco and BP weren’t immediately able to respond to requests for comment. Equinor confirmed its CEO Eldar Saetre attended the meeting.
Targeting Scope 3 emissions would be a big shift for an industry that produces the bulk of the world’s planet-warming emissions, once that could eventually require them to sell far less oil and gas. The simple fact that the industry’s top executives were considering it underscored how climate concerns suddenly came into focus in Davos this year.
For the first time, environmental risks occupied the WEF’s top five long-term concerns. Business leaders from BlackRock Inc. CEO Larry Fink to Allianz SE boss Oliver Baete used their platform at the event to focus on sustainable investment. The two highest-profile attendees at the forum – President Donald Trump and climate activist Greta Thunberg – made headlines as they staked out opposing positions on the issue.
The oil and gas executives debated a document produced by the WEF on “neutralizing emissions at the pump,” a reference to the gasoline and diesel sold to customers. There’s an urgent need to shift the industry’s target from production to emissions from end users, said one person.
Several companies have already set targets for Scope 1 and 2 greenhouse gases, which come directly from pumping and refining hydrocarbons. Yet these account for less than 10% of total emissions from the life cycle of oil and gas. Some of their pledges have also focused on curbing emissions intensity -- the amount of carbon dioxide released per unit of energy, which wouldn’t necessarily lead to a reduction in the volume of greenhouse gases produced if a company’s output is growing.
Among major energy groups, only Shell, Total SA and Madrid-based Repsol have publicly announced that they are either targeting or monitoring Scope 3 emissions.
The Spanish company made the boldest move, promising net-zero emissions in 2050 by diverting investment into wind and solar power. Shell has taken more modest steps, pledging to offset the greenhouse gases produced by fuel sold to drivers on their loyalty-card programs in the U.K. and Netherlands.
Eni chairman Emma Marcegaglia said in a Bloomberg TV interview that the company is committed to becoming carbon neutral on a Scope 1 and 2 basis by 2030. The Italian oil and gas giant is in discussions about Scope 3 emissions, but needs more guidance from the government on how to do so, she said.
Other companies, notably U.S. majors Exxon Mobil Corporation and Chevron Corporation have so far resisted specific pledges to cut total emissions, with the latter focusing instead on the carbon intensity of the energy it produces. BP CEO Bob Dudley, who retires later this year, has agreed aims for Scope 1 and 2 gases but in the past opposed a Scope 3 target.
“We need to reduce our carbon intensity, everyone in the industry agrees on that,” Dudley said in an interview in Davos. However, he cautioned that shareholders and companies were using multiple definitions of Scope 3 emissions. “We need to get a common definition” so the industry “can work together in a powerful way.”
© 2020 Bloomberg L.P.