Equinor ASA boosted its targets for reducing emissions just as its oil and gas production hit a record high.
For the first time, the Norwegian state-controlled producer set a target for carbon-emissions cuts that also includes the end use of the products it sells. The move, which Equinor had initially resisted, is another illustration of the tremendous pressure building against the oil industry to act on climate change, including from a growing proportion of major investors.
Royal Dutch Shell plc already has a similar target to Equinor, while Spain’s Repsol SA has pledged to eliminate all emissions from its operations and fuel sold to customers by 2050. BP Plc’s new chief is scheduled to make a significant announcement on this topic next week.
Equinor plans to reduce the net carbon intensity of the energy it produces by at least half by 2050, it said as it published fourth-quarter results on Thursday. The target will be reached through an exponential build-up in renewable-energy capacity, but also changes in the company’s oil and gas portfolio, as well as carbon capture and storage.
As the company works toward these targets for total emissions, it also intends to make its own operations carbon neutral by 2030, reducing direct emissions or offsetting them through other mechanisms.
“Our climate target is the best proposition we can also offer to our shareholders,” chief executive officer Eldar Saetre said in an interview on Bloomberg TV. “We need to build a business that is resilient, that is competitive and can offer consistent cash-generation capacity through the energy transition.”
Shares of the company reversed early gains and fell 0.4 per cent to 171.60 apiece as of 9:53 a.m in Oslo.
Equinor’s long-term targets don’t provide a goal for an absolute reduction in emissions, but instead focus on reducing the carbon intensity for each unit of energy produced. The potential flaws in that system are underscored by the company’s record production of 2.198 million barrels of oil equivalent a day in the fourth quarter, which helped it meet profit expectations for the period.
Equinor, which changed its name from Statoil in 2018 to drop the fossil-fuel reference, sees output growing seven per cent this year thanks mainly to the giant Johan Sverdrup oil field, a rare mega-project in Norway’s aging North Sea. Production will then continue to grow, by an average of three per cent in the 2019-2026 period, in line with previous goals.
What comes after that is difficult to know for sure, Saetre said in a separate interview.
“We’re very clear that the world needs to produce less oil, us included, in a low-carbon society,” he said. “What we will do is also very dependent on the opportunities. Are renewable projects available? Carbon capture projects, hydrogen projects? Is the world on board for this journey? If it isn’t, all of this will be much more difficult, and we will still have to produce oil and gas.”
Earlier this year, along with the rest of the Norwegian oil industry, it said it would cut direct emissions from operations in the Nordic country by 40 per cent by 2030 and make them almost carbon neutral by 2050.
Equinor published financial results and its annual strategy update after most of its bigger rivals disappointed investors over the past week. Performance was affected by lower commodity prices, and the world’s biggest oil companies are having a hard time convincing shareholders that their strategies are working amid accelerating change in the energy industry.
© 2020 Bloomberg L.P.